Feb'25 View on Lemon Tree Hotels Ltd

Lemon Tree Hotels Ltd is largest mid-priced and the third largest overall hotel chain in India. It operate in the upscale segment and in the mid-priced sector, consisting of the upper-midscale, midscale and economy segments. It delivers differentiated yet superior service offerings, with a value-for-money proposition. • In Q3FY25, Lemon Tree reported healthy 32% yoy EBITDA growth. • Lemon Tree has paused its enhanced renovation program in the seasonally strong H2FY25 (to be resumed in H1FY26), which improved the margins to 52%. • Management highlighted that Aurika is seeing better trends in Q4FY25. • Addition of a 120-key owned hotel at Shillong to the pipeline is a welcome move; commissioning would be in FY29. • We expect co. to report earnings per share of Rs3.5 in FY26E and Rs4.9 in FY27E. • Occupancy for Lemon Tree was strong at 74.2% (+826 bps yoy, +582 bps qoq). • Aurika, Mumbai, saw better occupancy of 70-75% in Q3FY25. • EBITDA margin improved to 52% in Q3FY25, from 48% in Q3FY24 and 46% in Q2FY25.