LEMONTREE - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 2.9
| Stock Code | LEMONTREE | Market Cap | 8,990 Cr. | Current Price | 114 ₹ | High / Low | 181 ₹ |
| Stock P/E | 77.9 | Book Value | 16.4 ₹ | Dividend Yield | 0.00 % | ROCE | 11.2 % |
| ROE | 8.33 % | Face Value | 10.0 ₹ | DMA 50 | 116 ₹ | DMA 200 | 132 ₹ |
| Chg in FII Hold | 0.09 % | Chg in DII Hold | -3.78 % | PAT Qtr | 36.4 Cr. | PAT Prev Qtr | 22.6 Cr. |
| RSI | 47.5 | MACD | -1.05 | Volume | 16,79,889 | Avg Vol 1Wk | 22,40,151 |
| Low price | 99.6 ₹ | High price | 181 ₹ | PEG Ratio | 0.77 | Debt to equity | 0.28 |
| 52w Index | 17.1 % | Qtr Profit Var | 27.8 % | EPS | 1.29 ₹ | Industry PE | 27.2 |
📊 Core Financials: Lemon Tree Hotels posted quarterly PAT of ₹36.4 Cr (up from ₹22.6 Cr), showing healthy growth. ROE at 8.33% and ROCE at 11.2% reflect moderate efficiency. Debt-to-equity ratio of 0.28 is manageable, indicating controlled leverage. EPS at ₹1.29 remains low relative to market cap, highlighting limited profitability.
💹 Valuation Indicators: Stock P/E of 77.9 is significantly higher than industry average (27.2), suggesting overvaluation. Book value at ₹16.4 vs CMP ₹114 shows a steep premium. PEG ratio of 0.77 indicates some earnings growth potential, but intrinsic value appears lower than CMP, limiting upside.
🏨 Business Model & Advantage: Lemon Tree operates in mid-market hospitality, focusing on affordable yet quality hotels. Competitive advantage lies in brand recognition, wide presence, and cost-efficient operations. However, profitability remains modest compared to luxury peers.
📈 Entry Zone & Holding Guidance: The stock trades near DMA 50 (₹116) and below DMA 200 (₹132), showing weakness. RSI at 47.5 indicates neutral momentum. A better entry zone would be closer to ₹100–₹105. Long-term holding may be viable if industry recovery sustains, but valuations demand caution.
Positive
- ✅ Strong quarterly PAT growth (₹22.6 Cr → ₹36.4 Cr)
- ✅ Manageable debt-to-equity ratio (0.28)
- ✅ Expanding presence in mid-market hospitality segment
Limitation
- ⚠️ High P/E (77.9) vs industry average (27.2)
- ⚠️ Low EPS (₹1.29), limited profitability
- ⚠️ Weak ROE (8.33%) and ROCE (11.2%) efficiency
Company Negative News
- 📉 DII holding decreased by 3.78%, showing reduced domestic institutional confidence
Company Positive News
- 📈 Quarterly profit growth of 27.8% indicates operational improvement
- 📈 FII holding increased slightly (+0.09%), showing marginal foreign interest
Industry
- 🌐 Hospitality industry PE at 27.2, reflecting moderate valuations
- 🌐 Industry recovery driven by tourism and mid-market demand
Conclusion
🔎 Lemon Tree Hotels shows improving profitability and controlled debt, but valuations are stretched with weak efficiency metrics. Entry near ₹100–₹105 could be considered for better risk-reward. Long-term investors may hold cautiously, while new investors should wait for correction before buying.
For deeper insights, you could explore a peer comparison or a valuation analysis to assess its position against competitors and intrinsic value.