Lemon Tree Hotels IPO is launched today, 26th March 2018.  Should you invest in this IPO. Is this a good IPO for long-term investment or for listing gains?

To decide if this Lemon Tree Hotels IPO is a good option, you need to conduct due research. Look at the company’s future prospects before deciding to go ahead with subscriptions in this IPO.

If you do have the required knowledge, research carefully and decide! Read the information below to make a decision.

 

Lemon Tree Hotels IPO Details

Issue Open Dates 26th March – 28th March, 2018
Issue Size Equity Shares of Rs 10
Issue Price Rs 54 – Rs 56
Market Lot 265 Shares
Listing at BSE, NSE

Lemon Tree Hotels is one of the largest hotel chains in India in the mid-price category.

The issue opens on 26th March and closes on 28th March. The Lead Manager for Lemon Tree are Kotak Mahindra Capital Company, CLSA India, J. P. Morgan, and YES Securities. The registrar is Karvy Computershare Pvt Ltd.

The IPO consists of an offer to sell 18,54,79,400 equity shares.

Lemon Tree Hotels is a New Delhi based company. It has a total of 4700 rooms on offer. These rooms are spread across 45 hotels in 28 cities.

Lemon Tree Hotels aims to attract the Indian middle-class customers. Most of Lemon Tree’s guests are domestic guests.

With the rising disposable income of the Indian population, Lemon Tree Hotel seems to be targetting the right segment for growth in hotels.

Nearly all of Lemon Tree’s hotels are strategically located. Usually, they are close to major business hubs – attracting both the Indian middle class as well as the business traveler.

That said, the Lemon Tree chain is threatened by the rapid entry of competitors into this space.

Should You Subscribe to Lemon Tree Hotels IPO?

 Hem Securities: Hem Securities advises investors to avoid subscribing to the Lemon Tree IPO as the company does not have a long track record of generating profits.

ICICI Securities: ICICI Securities recommends avoid  due to the high capex oriented nature of expansion, low RoCE, higher competition in the mid-scale segment.

Boost to Mutual Funds

All this increase in funds into the capital market through Initial Public Offerings (IPOs) have not just improved the market in terms of market capitalisation, but has also boosted the investor’s sentiment.

Because of more and more number of companies getting listed, Mutual Fund companies are also getting more option of companies to invest in. All this has ultimately increased the number of people willing to invest in the market through mutual funds.

First-time investors prefer investing in mutual funds rather than directly investing in the market because mutual funds are basically a portfolio of different stocks and so the risk gets reduced.

IPO vs Mutual Funds

If you have no knowledge of the equity markets but are looking to gain from the equity markets, mutual funds are ideal. Investments can be made in Mutual Funds since they provide a wide variety and also the amount of investment can vary as per investor’s preference.

Many mutual funds invest in IPOs – many times at discounted rates that are not available to retail investors.

It is necessary to not get carried away by the hype surrounding IPOs. Don’t jump into IPO if you do not have the necessary skills.

In a mutual fund, a skilled and trained professional handles all investments for you and therefore, you can benefit from the equity markets without spending too much time gaining the skills needed to understand the markets.

Mutual Funds for 2018

Large Cap Fund:

These funds invest in large companies that have a history of good performance and stable balances.

Mid Cap Fund:

These are funds that are high risk – high return. They’re a bit riskier than large cap funds.

Small Cap Fund:

These are the funds that you can invest in if you want very high growth. They are very high risk too.

If you want to see more funds to invest in 2018, check out: 30 best funds to invest in 2018. 

Happy investing!

Disclaimer: the views expressed here are those of the author. Mutual funds are subject to market risks. Please read the offer document carefully before investing.