Shares of Lemon Tree Hotels surged over 7% on Thursday, reaching a high of Rs 123.30, following the announcement of robust second-quarter results for the fiscal year 2027. The positive performance prompted Axis Capital to revise its target price for the hospitality major.
Strong Financial Performance in Q2 FY27
For the September quarter, Lemon Tree Hotels reported a significant 18% year-on-year increase in total revenue, reaching Rs 363.8 crore. The company's net EBITDA grew by 22% to Rs 162.2 crore, with the net EBITDA margin expanding by 157 basis points to 44.6%.
Profit after tax (PAT) saw an impressive 90% surge year-on-year, climbing to Rs 79.8 crore. Key operational metrics also showed strong growth: Revenue per Available Room (RevPAR) rose 18% to Rs 5,137, supported by an 8% increase in average room rates (ARR) to Rs 6,751. Occupancy rates improved by 633 basis points, reaching 76.1%.
Neelendra Singh, Managing Director of Lemon Tree Hotels, commented on the results, stating that Q2 was a strong quarter, achieving the company's highest-ever Q2 revenue, EBITDA, and profitability.
Axis Capital Revises Target Price
Brokerage firm Axis Capital maintained its 'ADD' rating on Lemon Tree Hotels, raising its target price to Rs 130 from the previous Rs 123. This revision implies an upside of approximately 13% from the price considered in its report. The brokerage highlighted healthy revenue growth, improved room occupancy, and expansion in RevPAR as key drivers for its positive outlook.
Growth and Cautious Outlook
During the quarter, all of Lemon Tree's brands recorded double-digit growth, and management fee income increased by 30%. The company also expanded its footprint by signing 11 new managed and franchised hotels, adding 825 rooms, and opening eight hotels with 523 rooms.
Despite the strong performance, Axis Capital expressed caution regarding the broader recovery of hotel demand. The brokerage noted that corporate demand has yet to fully revive, and the mid-scale hotel segment continues to face challenges in translating improved travel demand into stronger business. Axis Capital anticipates that the recovery in demand may remain gradual.