Lemon Tree Hotels Ltd. shares climbed as much as 5% on Thursday morning, trading at ₹119.67 in Mumbai after brokerage CLSA reiterated its bullish call on the mid-market hospitality major. The global investment bank maintained an "outperform" rating and pinned a price target of ₹163 per share. That implies a 41.6% upside over Wednesday's closing price.
Buyers moved in fast. While the stock remains down 24% so far this calendar year, sentiment has turned—shares logged an 8% gain over the past month as quarterly operational figures beat estimates.
Consolidated net profit jumped 63.7% to ₹56.6 crore for the second quarter, up from ₹34.6 crore in the same period last fiscal year. Revenue from operations advanced 18% to ₹361.4 crore against ₹306.3 crore. Operating EBITDA rose 22.2% to ₹159.7 crore from ₹130.7 crore, expanding operating margins by 150 basis points to 44.2%.
Cash flow stayed resilient. According to the CLSA report, revenue topped broker estimates on concurrent increases in average room rates (ARR) and guest occupancy. And the operational beat held firm despite absorbing goods and services tax (GST) adjustments alongside statutory provisions for stock appreciation rights (SAR).
| Metric | Q2 FY25 | Q2 FY24 | YoY Change (%) |
|---|---|---|---|
| Revenue from Operations | ₹361.4 Cr | ₹306.3 Cr | +18.0% |
| EBITDA | ₹159.7 Cr | ₹130.7 Cr | +22.2% |
| EBITDA Margin | 44.2% | 42.7% | +150 bps |
| Consolidated Net Profit | ₹56.6 Cr | ₹34.6 Cr | +63.7% |
Lemon Tree remains on schedule to open 2,000 operational keys during the financial year 2027. Rollout velocity will accelerate further from the financial year 2028 onwards. Scale dictates operating leverage in corporate hospitality. During the second quarter, Lemon Tree signed a memorandum of understanding with developer Omaxe to manage 4,000 upcoming keys—marking one of the largest management contracts in the hotel chain's operating history.
Margins will widen as major hotel renovation cycles wrap up and newly contracted rooms begin generating fee income.
Market Context: Broker sentiment across the Street is near-unanimous. Out of 27 analysts tracking Lemon Tree Hotels Ltd., 25 maintain active "buy" recommendations, two rate the counter a "hold," and zero analysts advise selling.
Traders are now monitoring execution schedules on the 2,000-key FY27 target and initial licensing progress on the Omaxe portfolio ahead of third-quarter corporate bookings.