Lemon Tree Shares Upgraded To 'Buy' By Dolat Capital Post Healthy Q1 Results — Check Target Price

Lemon Tree is undergoing a major renovation drive, with ~75% already completed and most of it to be completed by FY27E (earlier guided FY26), mainly across high-ARR Lemon Tree Premier hotels and the key portfolio.

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Dolat Capital Report

Lemon Tree Hotels Ltd.’s Q1 FY26 results came in line and were healthy. revenue/Ebitda/adjusted profit after tax grew by +18/22/94% YoY. APAT grew higher due to Oplev.

The company's FY26-27 outlook is driven by several key triggers, including

1. the renovation of big-box Lemon Tree Premier hotels in key cities during FY25 (to drive average room rate growth in FY26),

2. uptick from renovation of ‘Keys brand’ portfolio,

3. stable renovation expenses in FY26 vs FY25,

4. ramp-up at Aurika Mumbai with occupancies hitting desired levels of ~80-85%,

5. strong pipeline of rooms under management contracts,

6. deleveraging and

7. potential listing of Fleur.

We increase our FY26/27E Ebitda by 2/3% to factor Q1 FY26 performance. Upgrade to ‘Buy’ rating from Accumulate, led by the aforementioned triggers.

Our revised target price is Rs 175 at 24 times FY27E preIndAS EV/E (vs Rs 170 earlier).

We estimate revenue/Ebitda/APAT CAGR of 13%/19%/32% over FY25–27E. Lemon Tree has undergone six months of time correction (another three months likely due to high base of Q2 FY25).

Key risks include a potential reversal in the industry upcycle.

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