Lemon Tree Hotels (LEMONTRE IN) – Q1FY27 Result Update – Margin recovery key to re-rating – BUY
Published on 11 Aug 2026
In a quarter impacted by geo-political tensions in the Middle East, elevated renovation spends, GST-related headwinds (~2.3% impact) and continued investments in technology, LEMONTRE IN’s operational performance was broadly in line with our estimates with EBITDA margin of 43.4% (PLe 43.9%). As renovation intensity tapers (1.9%/1.3% in FY27E/FY28E respectively) and pricing actions mitigate GST impact, we expect EBITDA margins to improve to 48.6%/49.8% in FY27E/FY28E, respectively. Led by inventory addition at Aurika, Shillong (165 keys in FY28E) and Aurika, Shimla (90 keys in FY27E) coupled with renovation led repricing, we expect 9% revenue CAGR over FY26-FY28E. We broadly maintain our EBITDA estimates and maintain BUY with an SoTP based TP of INR143 (valuing the fee business/asset heavy business 22x/20x FY28E EBITDA; no change in target multiple). Demerger of Fleur with fund infusion of INR9.6bn by Warburg Pincus can change the growth trajectory (pipeline of 2,500+ rooms under active discussion) materially and drive re-rating. Retain BUY.
