Lemon Tree Hotels (LEMONTRE IN) – Q2FY27 Result Update – Margin recovery expected in 2HFY27E – BUY
Published on 12 Nov 2026
We increase our EBITDA estimates by ~3% over FY27E-FY29E as we fine-tune our RevPAR growth assumptions. Despite GST-related headwinds (2.4% of sales) and provision on SAR (0.8% of sales), LEMONTRE IN’s operational performance was ahead our estimates with EBITDA margin of 44.2% (PLe 42.8%). PAT beat was driven by net exceptional gain of INR221mn arising from lease termination of a hotel in Gurgaon. 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%/49.7%/51.0% in FY27E/FY28E/FY29E, respectively. Led by inventory addition at Aurika, Shillong (165 keys in FY28E), Aurika, Shimla (90 keys in FY27E) and Aurika, Varanasi (47 keys in FY29E) coupled with renovation led repricing, we expect 11% revenue CAGR over FY26-FY29E (two marquee assets at Mumbai and NCR are expected to operationalize after FY29E). We maintain BUY on the stock with an SoTP based TP of INR160 (valuing the fee business/asset heavy business 22x/20x Sep-28E EBITDA; no change in target multiple).
