LEMONTREE - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

📊 Investment Analysis: Lemon Tree Hotels Ltd (LEMONTREE)

Investment Rating: 3.8

Lemon Tree Hotels is a high-growth hospitality player with improving profitability and strong brand momentum. However, its premium valuation, zero dividend yield, and moderate ROCE suggest that long-term investors should be selective with entry timing and monitor debt levels.

✅ Why It’s a Mixed Long-Term Candidate

Strengths

ROE (18.4%) → solid shareholder returns.

Qtr Profit Growth (26.4%) → strong earnings momentum.

PEG Ratio (0.98) → fair valuation relative to growth.

Debt-to-Equity (1.85) → manageable for a capital-intensive sector.

FII/DII Holding Increase → improving institutional sentiment.

Concerns

P/E (60.6) vs Industry P/E (37.4) → trading at a steep premium.

Dividend Yield (0%) → no income stream for investors.

Price-to-Book (≈10.2) → expensive relative to asset base.

MACD (3.45) and RSI (53.0) → neutral to mildly bullish, but not compelling.

🎯 Ideal Entry Price Zone

Based on DMA and support levels

Entry Zone: ₹135–₹145

₹145 is the 50 DMA, a key support level.

₹139 is the 200 DMA, ideal for accumulation.

₹111 is the 52-week low, offering deep value if sentiment weakens.

Avoid entry near ₹162 unless breakout sustains with volume.

🧭 Exit Strategy / Holding Period

If you already hold LEMONTREE

Holding Period: Minimum 3–5 years to benefit from hospitality sector recovery and ROE compounding.

Exit Strategy

Partial Exit near ₹160–₹165** if price approaches 52-week high and valuation stretches.

Full Exit if ROCE drops below 10% or debt-to-equity rises above 2.2.

Trailing Stop Loss: Consider placing it around ₹140 to protect downside.

⚠️ Risks to Monitor

Valuation Premium → monitor PEG and P/E for signs of overheating.

Zero Dividend Policy → limits passive income potential.

Debt Load → while manageable, any increase could pressure margins.

Volume Below Average → suggests waning short-term interest.

Would you like a comparison with other hospitality stocks like Indian Hotels or Chalet Hotels to see how Lemon Tree stacks up?

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