Lemon Tree Hotels Limited (LEMONTREE): Comprehensive Stock Analysis Report | Scrolls

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Sep 23
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by KarNivesh | 23 September, 2025

Lemon Tree Hotels Limited has grown into one of India’s most recognized mid-scale hospitality brands. Starting in 2002 with just a 49-room property, it has now expanded to over 226 hotels with more than 18,000 rooms across 70+ cities. With such a journey, Lemon Tree is not just a hotel chain, but a story of vision, scale, and ambition.

Exterior view of a Lemon Tree Hotel property showcasing the modern architecture and greenery surrounding the building.

Strong Performance and Expansion

The company has shown impressive financial growth. From just ₹244 crores in FY2021, revenues have risen to ₹1,286 crores in FY2025. That’s a strong sign of recovery from the pandemic and proof that Lemon Tree has managed its business well. Profitability has also improved, with margins expanding and earnings per share growing almost nine times in just four years.

Beyond financial numbers, Lemon Tree’s brand strategy is worth noting. With seven distinct brands, it caters to different customer groups – from upscale stays to economy options. This mix ensures that the company can serve both business and leisure travelers across India’s fast-growing cities.

Lemon Tree Hotels Shareholding Pattern (June 2025)

Big Plans for the Future

One of the company’s boldest moves is shifting towards an asset-light model. This means instead of owning all properties, it will focus more on managing hotels for others. This approach reduces costs, improves returns, and allows faster growth. With over 110 new properties in the pipeline, Lemon Tree is preparing for the next phase of expansion.

The company is also aiming high – targeting between 30,000 to 40,000 rooms in the coming years. By moving into Tier-2 and Tier-3 cities, it is capturing opportunities in markets where demand is growing rapidly.

The Bright Side

Strong Growth: Revenue and profits have shown consistent improvement.
Market Position: As India’s largest mid-scale hotel chain, Lemon Tree has a strong identity and reach.
Future Focus: Expansion through management contracts reduces financial risk and opens up more growth.
Shareholder Support: With strong institutional and retail investor backing, the company enjoys credibility.

The Challenges

Like every growth story, there are some caution points. Lemon Tree carries significant debt, with a debt-to-equity ratio of 2.44x. While management aims to be debt-free by 2028, this goal will require discipline. Another point is valuation – the stock trades at high multiples, which means investors are paying a premium for expected growth. If growth slows, it could impact returns.

The hospitality sector is also sensitive to economic ups and downs. Factors like travel demand, competition, and regulatory challenges can all affect performance.

Final Thoughts

Lemon Tree Hotels is a company with exciting growth prospects, backed by strong operational performance and a clear expansion strategy. However, its high debt and expensive valuation mean that investors should stay cautious.

For those who believe in India’s long-term travel and hospitality growth story, Lemon Tree represents an opportunity – but one that requires patience and a willingness to handle some risks along the way.