Operational performance exceeds expectations Lemon Tree Hotels (LEMONTRE) reported an EBITDA margin of **44.2%**, beating Prabhudas Lilladher’s prior estimate of **42.8%**. The profit uplift was largely due to a **net exceptional gain of INR 221 million** stemming from the termination of a lease on a Gurgaon hotel. Despite GST‑related headwinds that amount to **2.4% of sales** and a **0.8% provision for statutory audit requirements (SAR)**, the company delivered stronger‑than‑expected results.
Revised EBITDA outlook for FY27‑FY29 The research house has nudged its EBITDA forecasts upward by roughly **3%** for the FY27‑FY29 period. It attributes the improvement to a tapering renovation intensity—projected at **1.9%** in FY27E and **1.3%** in FY28E—and pricing actions that are expected to offset GST pressure. Consequently, EBITDA margins are forecast to improve to **48.6% in FY27E, 49.7% in FY28E and 51.0% in FY29E**.
Growth drivers and pipeline expansion Lemon Tree plans to expand its Aurika brand with **165 new keys in Shillong (FY28E)**, **90 keys in Shimla (FY27E)** and **47 keys in Varanasi (FY29E)**. Combined with ongoing renovations that enable higher room rates, the analyst projects an **11% revenue compound annual growth rate (CAGR)** from FY26 to FY29E. Two flagship assets in Mumbai and the National Capital Region are slated to become operational after FY29E, further bolstering the pipeline.
Valuation and rating Prabhudas Lilladher retains a **BUY** recommendation on Lemon Tree Hotels, setting a **stock target price of INR 160**. The valuation applies a **22x FY28E EBITDA multiple for the fee‑business segment** and a **20x multiple for the asset‑heavy segment**, unchanged from the prior model.
--- *The analysis reflects figures disclosed in Prabhudas Lilladher’s research note and does not constitute investment advice.*