Hotel Boom, Lemon Tree

$LEMONTREE Lemon Tree Hotels is trying to turn India’s hotel boom into shareholder value, and the story looks promising but not risk-free. The company posted FY26 revenue of Rs 1,444 crore, net profit of Rs 288 crore, and ROCE of 14%, while the latest quarter showed revenue of Rs 416.4 crore and profit of Rs 91.5 crore. India’s travel demand is still strong, with domestic airlines carrying 8.64 crore passengers in the first half of 2026, and hotel occupancy staying above 70% with room rates at record highs. For Lemon Tree, that backdrop helps because higher demand supports better pricing, fuller rooms, and stronger cash generation. The company is also expanding fast. It ended FY26 with 131 hotels and 11,811 rooms across 80+ cities, and added 20 hotels with 1,523 rooms in FY26, while 55 hotels with 4,912 rooms were signed for the future pipeline. For shareholders, this is mostly positive because Lemon Tree is moving toward a lighter, fee-driven model that can improve returns on capital over time. The article also says the stock trades at 15.1x EV/EBITDA and 34.9x P/E, both below its five-year averages of 24.4x and 66.7x, which suggests the market is still waiting for the shift to fully play out. Still, the near term has some drag. EBITDA margin slipped to 48.1% in FY26 from 49.4% in FY25 because of renovation costs and technology spending, so earnings growth may not be smooth every quarter. Overall, Lemon Tree looks beneficial for long-term shareholders if management keeps improving ROCE, reducing capital intensity, and converting its expansion pipeline into steady fee income. The main downside is that execution delays, margin pressure, or weak room-rate gains could slow the rerating, so the stock works better as a patient holding than a quick trade.