What are brokerages saying about this hotel stock after its Q1 results?

Lemon Tree Hotels in focus: Brokerages remain positive on hotel operator Lemon Tree Hotels after the company posted its best-ever first-quarter performance in Q1FY26. 

On the bourses, Lemon Tree Hotels share price rose up to 3.37 per cent to an intraday high of ₹146.90 per share. At 11:20 AM, Lemon Tree Hotels share was trading 2.39 per cent higher at ₹145.50 per share. In comparison, BSE Sensex was trading flat at 80,581.92 levels.

 

Nuvama said the hotel operator’s Q1 growth was “driven by improving average room rates (ARRs) and occupancies across portfolio brands” despite geopolitical tensions and air travel disruptions. 

 

 

While renovation and technology expenses weighed on margins sequentially, the brokerage noted that the major renovation program is expected to conclude by H1FY27. It has tweaked its FY26E/27E revenue estimates by -0.8 per cent/-0.7 per cent and Ebitda by +4.3 per cent/+0.1 per cent, maintaining a ‘Buy’ rating, with a target price of ₹166, implying a 17 per cent upside.

 

On the other hand, Motilal Oswal highlighted the “significant improvement” in occupancy to 72.5 per cent (up 590bps Y-o-Y) and a healthy 10 per cent increase in ARR to ₹6,236. It said operating leverage helped expand the Ebitda margin 160bps Y-o-Y despite renovation-related costs. 

 

The brokerage expects growth to be supported by the ramp-up of Aurika Mumbai (~72 per cent occupancy in Q1, guided to ~80 per cent in FY26), favorable demand-supply dynamics, renovation-led improvements, the upgraded Infinity 2.0 loyalty programme with 2.1 million members generating 45 per cent repeat business, and retail demand initiatives contributing 45 per cent of Q1 room revenue. Therefore, analysts retained a FY27 SoTP-based target price of ₹185, with a ‘Buy’ rating.   JM Financial also retained its positive stance after the company delivered a healthy performance, with revenue rising 18 per cent Y-o-Y to ₹3,174 crore (3 per cent ahead of JMFe) on the back of a 10 per cent ARR increase and a 591bps Y-o-Y occupancy gain. Ebitda grew 22 per cent Y-o-Y to ₹1,421 crore, with margins improving 156bps to 44.5 per cent, supported by Aurika Mumbai’s strong performance and positive operating leverage. The brokerage highlighted the strengthening of LTH’s leadership team, including the appointment of Neelendra Singh as Managing Director and new senior hires as part of succession planning. It expects revenue/Ebitda/PAT CAGR of 11 per cent/13 per cent/14 per cent over FY25-28E, driven by low double-digit RevPAR growth and the rapid expansion of the asset-light model, maintaining a ‘Buy’ with a March 2026 target price of ₹175 (valuing LTH at 24x EV/Ebitda).   

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Lemon Tree Q1 results

 

In Q1FY26, Lemon Tree Hotels’ total revenue rose 18 per cent Y-o-Y to ₹317.4 crore, while net Ebitda grew 23 per cent to ₹142.1 crore. Net Ebitda margin expanded 178bps to 44.8 per cent. Profit after tax surged 139 per cent to ₹48.1 crore, and cash profit increased 51 per cent to ₹82.3 crore. The company’s cost of debt declined to 8.01 per cent, down 79bps from a year earlier.

 

Operationally, gross ARR climbed 9.7 per cent Y-o-Y to ₹6,236, and the occupancy rate improved to 72.5 per cent from 66.6 per cent. This drove revenue per available room (RevPAR) up 19.4 per cent to ₹4,523. Debt was reduced to ₹1,658 crore, down ₹206 crore Y-o-Y.

 

Patanjali Keswani, chairman and managing director, said, “In Q1, despite the headwinds faced by the industry due to the geopolitical tensions and Covid scare, Lemon Tree recorded its highest-ever Q1 revenue …the occupancy for the quarter stood at 72.5 per cent, an increase of 591 bps Y-o-Y. This translated into a RevPAR of ₹4,523, marking a 19 per cent Y-o-Y increase.”

 

Keswani added that ongoing investments in renovations, technology, business development, and renewable energy – currently about 6 per cent of revenue – will drop to 2-2.5 per cent once upgrades are complete in the next 15-18 months, boosting profitability. The company aims to achieve 50 per cent renewable energy use in its owned portfolio, having already cut power and fuel costs to 6.9 per cent of revenue from 8.7 per cent a year ago.

 

On the asset-light side, Lemon Tree signed 14 new management and franchise contracts in the quarter, adding 1,273 rooms to its pipeline, and operationalised five hotels with 392 rooms. Total inventory now stands at 18,431 rooms in 226 hotels, with 10,661 rooms operational. Management fees grew 29 per cent Y-o-Y to ₹37.4 crore.

 

About Lemon Tree Hotels

 

Lemon Tree Hotels Limited (LTHL) is among India’s largest hotel chains, operating across the upscale, upper-midscale, midscale, and economy segments through a mix of owned, leased, managed, and franchised properties. The group offers differentiated yet high-quality service with strong value for money, catering to diverse guest needs through seven brands – Aurika Hotels & Resorts, Lemon Tree Premier, Lemon Tree Hotels, Red Fox Hotels, Keys Prima, Keys Select, and Keys Lite.

 

Starting with a 49-room property in May 2004, LTHL has grown to a portfolio of over 220 hotels, comprising more than 110 operational properties and an equal number in the pipeline, both in India and overseas. Its network spans major metro markets such as NCR, Mumbai, Kolkata, Bengaluru, Hyderabad, and Chennai, as well as key tier I, II, and III cities including Pune, Ahmedabad, Chandigarh, Jaipur, Indore, Aurangabad, Udaipur, Visakhapatnam, Kochi, Ludhiana, Thiruvananthapuram, and Vijayawada.

 

The company has also expanded internationally, opening its first overseas property in Dubai in December 2019, followed by hotels in Bhutan in February 2020 and Nepal in April 2024.