LEMONTREE - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.0
| Stock Code | LEMONTREE | Market Cap | 8,520 Cr. | Current Price | 108 ₹ | High / Low | 181 ₹ |
| Stock P/E | 73.8 | Book Value | 16.4 ₹ | Dividend Yield | 0.00 % | ROCE | 11.2 % |
| ROE | 8.33 % | Face Value | 10.0 ₹ | DMA 50 | 124 ₹ | DMA 200 | 142 ₹ |
| Chg in FII Hold | 0.05 % | Chg in DII Hold | -0.26 % | PAT Qtr | 36.4 Cr. | PAT Prev Qtr | 22.6 Cr. |
| RSI | 36.4 | MACD | -6.24 | Volume | 47,01,148 | Avg Vol 1Wk | 65,90,168 |
| Low price | 99.6 ₹ | High price | 181 ₹ | PEG Ratio | 0.73 | Debt to equity | 0.28 |
| 52w Index | 9.79 % | Qtr Profit Var | 27.8 % | EPS | 1.29 ₹ | Industry PE | 28.4 |
📊 Financial Overview
- Revenue & Profitability: PAT improved from 22.6 Cr. to 36.4 Cr. QoQ, showing growth momentum. EPS at 1.29 ₹ remains low relative to valuation.
- Margins & Returns: ROE at 8.33% and ROCE at 11.2% are moderate, better than some peers but not strong enough to justify high valuations.
- Debt & Liquidity: Debt-to-equity ratio of 0.28 indicates manageable leverage.
- Cash Flow: Positive trajectory supported by profit growth, though reinvestment capacity remains limited.
💹 Valuation Metrics
- P/E Ratio: 73.8 vs Industry PE of 28.4 → Overvalued.
- P/B Ratio: ~6.6 (Price 108 ₹ / Book Value 16.4 ₹) → Expensive relative to assets.
- PEG Ratio: 0.73 → Indicates growth is priced at a premium but not extreme.
- Intrinsic Value: Current price appears above fair value zone given modest returns.
🏢 Business Model & Competitive Advantage
Lemon Tree Hotels operates in mid-market hospitality, focusing on affordable yet quality accommodations. Its brand positioning and wide presence across India provide a competitive edge. However, the sector is cyclical and sensitive to tourism and economic conditions, limiting consistent profitability.
📈 Entry Zone & Long-Term Guidance
Technically, RSI at 36.4 and negative MACD suggest bearish momentum. A better entry zone would be closer to 95–100 ₹ (near recent lows). Long-term holding is advisable only if profitability continues to improve and valuations normalize.
✅ Positive
- QoQ PAT growth from 22.6 Cr. to 36.4 Cr.
- Moderate debt levels (D/E 0.28).
- Strong brand presence in mid-market hospitality.
⚠️ Limitation
- High P/E and P/B ratios make valuation unattractive.
- EPS remains low (1.29 ₹).
- DII holdings decreased (-0.26%), showing reduced domestic confidence.
📉 Company Negative News
- Valuation significantly above industry average.
- Weak EPS relative to price.
📈 Company Positive News
- Quarterly PAT improved strongly.
- FII holdings increased (+0.05%), signaling some foreign confidence.
🏭 Industry
The hospitality industry is recovering post-pandemic, driven by tourism and business travel. Mid-market hotels are expected to benefit from rising domestic travel demand. Industry PE at 28.4 highlights Lemon Tree’s premium valuation.
🔎 Conclusion
Lemon Tree Hotels shows improving profitability but remains fundamentally overvalued with weak EPS and modest return ratios. While the brand strength and manageable debt are positives, investors should wait for a correction near 95–100 ₹ before considering long-term accumulation, contingent on sustained earnings growth.