Another Big Move! This Hotel Chain Bets Big on Punjab’s Tourism – Stock Soars 13 per cent in 3 Months!
With multiple brands under its belt, this company is redefining mid-market hotels.
Lemon Tree Hotels has signed a franchise agreement for a new property under its Keys Lite brand in Moga, Punjab. The hotel will have 30 rooms, a restaurant, a terrace lounge, a meeting room, a banquet hall, and a fitness center. It is expected to start operations in FY 2026.
Expanding Presence in Punjab
Moga is a growing industrial and agricultural hub known for its dairy industry. The city’s economic growth and increasing tourism make it a strategic location for the new hotel. This addition strengthens Lemon Tree Hotels’ presence in Punjab, where it already operates two hotels and has six more in the pipeline.
Strong Financial Performance
Lemon Tree Hotels recorded its highest-ever Q3 revenue at Rs 355.8 crore, reflecting a 22 per cent year-on-year growth. EBITDA increased by 30 per cent to Rs 184.8 crore, with margins improving by 316 basis points to 51.9 per cent. The occupancy rate rose to 74.2 per cent, and RevPAR increased by 21 per cent to Rs 5,018. Profit after tax surged by 82 per cent to Rs 79.9 crore, while cash profit stood at Rs 114.9 crore, up 49 per cent.
Growth in Management Fees
Lemon Tree earned Rs 43.7 crore in management fees, a 35 per cent increase year-on-year. Fees from third-party hotels rose by 24 per cent to Rs 18.4 crore, while revenue from Fleur Hotels grew by 45 per cent to Rs 25.3 crore.
Asset-Light Expansion Strategy
The company signed 13 new management and franchise contracts, adding 766 rooms to its pipeline. As of December 31, 2024, Lemon Tree operates 112 hotels with 10,317 rooms and has a pipeline of 88 hotels with 6,068 rooms. The company remains focused on an asset-light strategy to accelerate growth.
Renovation and Market Strategy
Renovation efforts have boosted pricing and occupancy, as seen in its Pune Keys property, which reported a 24 per cent increase in ARR. The company expects EBITDA from the Keys portfolio to reach Rs 60 crore. Renovation investments will continue into FY26 and FY27 to enhance property value.
Stock Performance and Valuation
Lemon Tree Hotels has a market capitalization of Rs 10,588 crore, trading at a P/E ratio of 59.2, higher than the industry average of 36.5. The company has an ROCE of 11.4 per cent and an ROE of 16.3 per cent. Over the past three years, sales have grown by 62 per cent, and profit has increased by 46.9 per cent. In the last three months, the stock has delivered a return of 13.45 per cent. As of February 13, 2025, the stock is trading at Rs 134.12, up 2.62 per cent.
Disclaimer: The article is for informational purposes only and not investment advice.