Target: ₹165
CMP: ₹134.10
Lemon Tree Hotels reported in-line revenue of ₹410 crore (+14 per cent on year), largely led by ARR, which grew 11 per cent to ₹7,487; Occupancy was 73.4 per cent (down 82 bps). EBITDA increased 11 per cent to ₹200 crore (5 per cent above on JMFe) as margin dropped 147 bps driven by accelerated refurbishment activity, technology investments and GST-related impacts. The management expects these headwinds to gradually moderate.
The company has renovated 65 per cent of its owned and leased inventory, and the balance will be completed by FY27. As renovation costs normalize and renovated hotels ramp up occupancy and pricing, margins are expected to improve meaningfully.
During the quarter, Lemon Tree signed 17 new management and franchise contracts, which added 1,855 rooms to the pipeline, and operationalized nine hotels, adding 816 rooms to its portfolio. Lemon Tree is actively evaluating acquisitions and greenfield developments in high-demand urban markets such as Mumbai, Bengaluru, and Pune, with most pipeline additions skewed towards business hotels rather than leisure assets.
We expect the company to deliver Revenue/EBITDA/PAT CAGR of 12 per cent/12 per cent/20 per cent over FY25-28E aided by low double-digit RevPAR growth and rapid scale-up of the fee business. The stock has corrected meaningfully in the last month; thus, we change our rating to Buy from Add, whereas we reduce our March 27 TP to ₹165 (from ₹175 earlier).
Published on February 11, 2026