Lemon Tree Q3 Results Review: Dolat Capital Upgrades Rating To ‘Accumulate’, Hikes Target Price — Here's Why

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Dolat Capital Report

Lemon Tree Hotels Ltd.’s Q3 FY25 results came in line and were healthy. Revenue/ Ebitda/adjusted profit after tax grew by +23/32/77% YoY.

The company has multiple triggers over FY26-27 viz.

1. renovation of big-box LT Premier hotels in key cities during FY25 to drive average room rate growth,

2. renovation expenses to be stable in FY26 versus FY25,

3. uptick in Aurika Mumbai with occupancies hitting desired levels of ~85%,

4. deleveraging and

5. potential listing of Fleur.

We have increased our FY25-27E Ebitda estimates by 5/10/7% and EPS estimates by 11/15/8% and target multiple from 20x to 24x FY27E EV/E, driven by impending triggers, strong execution and cycle tailwinds.

We expect a robust Rev/Ebitda/APAT CAGR of 12/17/32% over FY25-27E. We upgrade our rating to ‘Accumulate’ from Reduce.

Our revised target price is Rs 170 at 24x FY27E EV/E (pre IndAS) versus Rs 128 at 20x FY27E EV/E.

Key risks include cycle reversal after three robust years or sub-par performance of Aurika Mumbai.

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