Lemon Tree has a sweet listing

There is a new listing on the bourses today –Lemon Tree. As against the IPO price of Rs.56, it got listed on the BSE at Rs.61.60, premium of 10% over IPO price.

The company’s IPO had got a good response, aided mainly by the QIB’s whose portion was subscribed 3.89 times. Retail investors preferred to stay out with just 0.12 times subscription and ditto for HNIs.

Lemon Tree Hotels is India’s third largest hotel chain and the largest in the mid-market segment, operating 4,697 keys under 3 brands (Lemon Tree Premier for upper mid-scale, Lemon Tree in mid-scale and Red Fox in economy segment) across 45 hotels in 28 Indian cities.

In our New Issue Analysis, we had said, “While the industry opportunity may be large and tempting, highly demanding nature of the service industry, cyclical turns and steep valuation expectations make this IPO unexciting. Weak primary and secondary market conditions provide no respite either. Hence we recommend one to skip Lemon Tree Hotels IPO!”