Buy Lemon Tree Hotels, target price Rs 174: ICICI Securities

ICICI Securities has a buy call on Lemon Tree Hotels with a target price of Rs 174. The current market price of Lemon Tree Hotels is Rs 141.3. Lemon Tree Hotels. incorporated in 1992, is a Mid Cap company with a market cap of Rs 11188.90 crore, operating in the Tourism & Hospitality sector.

Lemon Tree Hotels' key products/revenue segments include Income from Rooms, Restaurants & Other Services and Other Operating Revenue for the year ending 31-Mar-2024.

Financials

For the quarter ended 31-03-2025, the company has reported a Consolidated Total Income of Rs 379.40 crore, up 6.63% from last quarter Total Income of Rs 355.80 crore and up 13.65 % from last year same quarter Total Income of Rs 333.84 crore. The company has reported net profit after tax of Rs 108.77 crore in the latest quarter.

The company?s top management includes Mr.Patanjali Govind Keswani, Mr.Niten Malhan, Mr.Willem Albertus Hazeleger, Mr.Aditya Madhav Keswani, Ms.Freyan Jamshed Desai, Mr.Paramartha Saikia, Ms.Smita Anand, Mr.Praveen Garg, Mr.Sanjiv Nandan Sahai. Company has Deloitte Haskins & Sells LLP as its auditors. As on 31-03-2025, the company has a total of 79 crore shares outstanding.


Investment Rationale
Lemon Tree Hotels reported Q4FY25 consolidated revenue of Rs 3.8 billion (up 15% YoY) in-line with I-Sec estimates as portfolio ARRs (including Mumbai Aurika) grew 7% YoY, while occupancy for the quarter stood at 77.6%, which increased 557bps YoY. This translated into a RevPAR of Rs 5,462, rising 15% YoY. Hence, Q4FY25 EBITDA of Rs 2 billion was up 19% YoY at a margin of 54%, which was up 154bps YoY. ICICI Securities expects the company's net debt to reduce to ~Rs 11 billion by Mar'27E (Rs 17 billion, as of Mar'25) driven by scale-up in Aurika Mumbai ARRs to over Rs 12,000. The brokerage retains the BUY rating with an SoTP-based target price of Rs 174, based on 22x Mar?27E EV/EBITDA. Key risks are demand slowdown in occupancies and room rates.

Promoter/FII Holdings
Promoters held 22.49 per cent stake in the company as of 31-Mar-2025, while FIIs owned 20.89 per cent, DIIs 19.66 per cent.