Mirae Asset Sharekhan bullish on Lemon Tree on strong pipeline, RevPAR

Lemon Tree Hotels management has guided for mid-teens revenue growth driven by a busy wedding season, surge in MICE activities, higher share from Aurika, Mumbai and contribution from new hotels

Hotel chain Lemon Tree Hotels is well-positioned for double-digit growth on the back of aggressive room additions, favourable industry tailwinds and an asset-light model, according to Mirae Asset Sharekhan. The company's revenue and earnings before interest, tax, depreciation, and amortisation (Ebitda) grew by 13 per cent and 10 per cent year-on-year (Y-o-Y), respectively, in H1FY26. 

 

For Q3, management has guided for mid-teens revenue growth driven by a busy wedding season, surge in MICE (meetings, incentives, conferences, and exhibitions) activities, higher share from Aurika, Mumbai and incremental contribution from new hotels. The brokerage expects Revenue Per Available Room (RevPar) to grow in the range of 12 to 15 per cent Y-o-Y in Q3, primarily driven by ARR growth. 

 

 

According to the brokerage, long-term industry tailwinds, renovation of owned portfolio, and addition of 10,500 rooms to the existing inventory of 11,600 rooms will help the company’s revenues and PAT to post 13 per cent and 29 per cent CAGR, respectively, over FY25-28E.

 

"We retain our Positive view on LTHL and expect an upside of 29 per cent from current levels," Mirae Asset Sharekhan said in a note dated December 30, 2025. The stock is trading at attractive valuations, with EV/Ebitda multiples of 17x for FY26E, 14x for FY27E, and 13x for FY28E.

 

On Wednesday, December 31, Lemon Tree Hotels' stock fell over 1 per cent to hit an intraday low of ₹159.89 on the NSE. Around 02:00 PM, the stock was trading at ₹159.9, down 1.1 per cent from the previous session's close of ₹161.72. In comparison, the benchmark NSE Nifty50 was trading at 26,159.90 levels, up by 221 points or 0.85 per cent.

Here's why Mirae Asset Sharekhan holds a positive stance on Lemon Tree Hotels:

Industry RevPars to grow in double digits: According to analysts, Indian hotel companies are expected to deliver strong performance in Q3FY26, driven by healthy demand in the MICE segment, a strong wedding season, higher corporate travel, robust domestic tourism, and a favourable demand-supply gap boosting average room rates (ARR). Additionally, contributions from new hotel openings are expected to support revenue growth. 

 

Analysts expect key hotel players to report revenue per available room (RevPAR) growth of around 12–15 per cent year-on-year in Q3, largely led by ARR gains. Over the medium to long term, factors such as stronger economic activity, recovery in foreign tourist arrivals, and growing interest in spiritual and wildlife tourism are likely to sustain industry growth.

 

Strong room pipeline: Lemon Tree ended H1FY26 with 10,956 operational rooms across 121 hotels and a pipeline of 9,118 rooms in 121 hotels. In Q3FY26, the company signed 17 hotels, adding 1,855 rooms and opened 9 hotels with 646 rooms. Currently, the company has a robust pipeline of around 10,500 rooms across approximately 130 hotels in the coming years, with a significant portion of the inventory expected to come through management contracts, limiting balance sheet stress.

 

Ebitda margins to rise in the long run: Lemon Tree expects its FY26 Ebitda margin to remain stable compared with FY25, as revenue growth offsets higher expenditures. In H1FY26, margins declined 90 basis points (bps) Y-o-Y, but are expected to improve in the seasonally stronger H2FY26. Elevated spends in Q2FY26—including renovations, technology upgrades, and a one-time ex gratia payment linked to Covid-era salary cuts—accounted for around 8 per cent of revenue. Management expects these expenses to decline to about 5 per cent in FY27 and 2 per cent from FY28 onwards, supporting Ebitda margin expansion. Additionally, improved operating leverage and incremental contributions from Aurika are expected to further strengthen margins in the coming years.  (Disclaimer: Target price and stock outlook has been suggested by Mirae Asset Sharekhan. Views expressed are their own.)