Buy Lemon Tree Hotels; target of Rs 173: ICICI Securities

ICICI Securities's research report on Lemon Tree Hotels

Lemon Tree Hotels (LEMONTRE) reported Q3FY25 consolidated revenue of INR 3.6bn (up 23% YoY), in line with I-Sec’s estimate as portfolio ARRs (including Mumbai Aurika) grew 7% YoY, while occupancy stood at 74.2%, up 826bps YoY. Further, 25% of keys portfolio continued to be shut in Q3 for renovation; renovation expenses rose INR 80mn YoY. This translated into RevPAR of INR 5,018, up 21% YoY. Hence, Q3 EBITDA of INR 1.8bn was up 32% YoY with EBITDA margin of 52%, up 346bps YoY. Considering robust medium-term demand outlook, we maintain our estimates and retain BUY

Outlook

With SoTP-based revised TP of INR 173 (earlier: INR 164), based on 23x Dec’26E EV/EBITDA (earlier Sep’26E). Key risks: Demand slowdown in occupancies and room rates.