LEMONTREE - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

Fundamental Rating: 4.3

📊 Core Financials & Profitability

Earnings & Growth: PAT declined from ₹36.0 Cr to ₹20.5 Cr QoQ, but YoY profit variation is still positive at 22.8%. EPS of ₹1.32 is modest for a ₹172 stock, though the company has delivered a 511.6% return over 5 years

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Return Metrics

ROE: 8.33% and ROCE: 11.2% — decent, though not exceptional.

Debt Profile: Debt-to-equity at 0.32 — moderate and well-managed for a capital-intensive hospitality business.

Dividend Yield: 0.00% — no payouts, consistent with reinvestment into expansion.

💸 Valuation Indicators

Metric Value Insight

P/E Ratio 131 Extremely high vs. industry PE of 37.5 — richly valued.

P/B Ratio ~10.8 Elevated relative to book value ₹15.9.

PEG Ratio 1.29 Fairly priced — growth is moderately valued.

🔍 Conclusion: Lemon Tree Hotels is trading at a premium, but its asset-light model and expansion strategy justify part of the optimism.

🏨 Business Model & Competitive Edge

Core Operations: Lemon Tree Hotels is India’s largest mid-priced hotel chain, operating across economy, midscale, and upscale segments through brands like Lemon Tree Premier, Red Fox, and Aurika Hotels

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Strategic Strengths

Asset-light expansion via management contracts.

Strong presence in Tier 1 and Tier 2 cities, catering to domestic travel demand.

Institutional sentiment improving: FII and DII holdings both increased.

Growth Outlook

Expected to cross 20,000 rooms ahead of schedule.

Revenue CAGR of 10% projected over FY25–FY27

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Target price of ₹217 by Asit C Mehta, implying ~26% upside

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📉 Technicals & Entry Zone

RSI: 57.8 — neutral, offering buying comfort.

MACD: 5.35 — mild bullish signal.

DMA Levels: Price above both 50-DMA and 200-DMA — trend strength confirmed.

📌 Suggested Entry Zone: ₹160–₹165 — near 50-DMA, offering a better margin of safety.

🕰️ Long-Term Holding Guidance

Hold if Invested: Strong brand, scalable model, and domestic travel tailwinds support long-term compounding.

Buy on Dips: Prefer entry near ₹165, especially if RSI dips below 55.

Monitor: Room additions, occupancy rates, and margin trends.

You can explore Asit C Mehta’s full research note and Trendlyne’s analyst consensus for deeper insights. Let me know if you'd like a peer comparison with Indian Hotels or Chalet Hotels next.

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stockpricearchive.com

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www.moneycontrol.com

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