LEMONTREE - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 2.8
| Stock Code | LEMONTREE | Market Cap | 10,127 Cr. | Current Price | 128 ₹ | High / Low | 181 ₹ |
| Stock P/E | 94.2 | Book Value | 16.4 ₹ | Dividend Yield | 0.00 % | ROCE | 11.2 % |
| ROE | 8.33 % | Face Value | 10.0 ₹ | DMA 50 | 148 ₹ | DMA 200 | 151 ₹ |
| Chg in FII Hold | 0.05 % | Chg in DII Hold | -0.26 % | PAT Qtr | 22.6 Cr. | PAT Prev Qtr | 20.5 Cr. |
| RSI | 30.7 | MACD | -8.26 | Volume | 29,06,317 | Avg Vol 1Wk | 43,91,226 |
| Low price | 111 ₹ | High price | 181 ₹ | PEG Ratio | 0.93 | Debt to equity | 0.28 |
| 52w Index | 24.9 % | Qtr Profit Var | 16.5 % | EPS | 1.36 ₹ | Industry PE | 32.6 |
📊 Financials: Lemon Tree Hotels has a market cap of 10,127 Cr. with quarterly PAT rising to 22.6 Cr. from 20.5 Cr. (16.5% growth). ROE at 8.33% and ROCE at 11.2% show moderate efficiency. Debt-to-equity ratio of 0.28 indicates manageable leverage. EPS is low at 1.36 ₹, reflecting thin profitability margins.
💹 Valuation: Current P/E of 94.2 is nearly three times the industry average of 32.6, suggesting significant overvaluation. P/B ratio is ~7.8 (128 ₹ / 16.4 ₹), which is steep. PEG ratio of 0.93 indicates growth is somewhat aligned with valuation, but intrinsic value appears lower than current price, making the stock expensive.
🏨 Business Model & Competitive Advantage: Lemon Tree operates in mid-market hospitality, focusing on affordable premium hotels. Its competitive advantage lies in strong brand recognition and wide presence across India. However, profitability is sensitive to occupancy rates and tourism cycles.
📈 Entry Zone: With RSI at 30.7 (oversold territory) and support near 111–115 ₹ (52-week low), a cautious entry zone would be 110–120 ₹. Current price at 128 ₹ remains above fair value, so accumulation should be gradual.
🕰️ Long-Term Holding Guidance: The company has growth potential in India’s expanding hospitality sector, but stretched valuations and low EPS suggest waiting for earnings improvement before aggressive long-term holding.
Positive
- Strong brand presence in mid-market hospitality.
- Debt-to-equity ratio at 0.28 shows manageable leverage.
- Quarterly PAT growth of 16.5% indicates improving performance.
- RSI at 30.7 suggests oversold levels, potential rebound.
Limitation
- High P/E (94.2) compared to industry average (32.6).
- Low EPS (1.36 ₹) reflects weak profitability.
- P/B ratio of 7.8 is steep.
- DII holdings decreased by 0.26%, showing reduced domestic confidence.
Company Negative News
- Profit margins remain thin despite revenue growth.
- Trading volumes lower than weekly average, indicating reduced investor activity.
Company Positive News
- Quarterly PAT improved from 20.5 Cr. to 22.6 Cr.
- FII holdings increased slightly (0.05%), showing foreign investor interest.
Industry
- Hospitality sector in India is expanding with rising domestic tourism.
- Industry P/E at 32.6 indicates moderate valuation compared to Lemon Tree.
Conclusion
⚖️ Lemon Tree Hotels is fundamentally stable with brand strength and sector growth tailwinds, but current valuations are stretched and profitability remains weak. Entry is advisable near 110–120 ₹ for long-term investors. Sustained earnings growth is essential before strong conviction in long-term holding.
Would you like me to also prepare a comparative HTML table showing Lemon Tree vs. The Leela to highlight differences in valuation and profitability?