Lemon Tree Hotels Limited — Investor Meet, 11-02-2025: Analysts/Institutional Investor Meet/Con. Call Updates

1. **Financial Performance**: Lemon Tree Hotels reported impressive financial growth for Q3, with total revenue reaching ₹355.8 Cr, marking a 22% increase year-over-year. EBITDA surged 30% YoY to ₹184.8 Cr, translating to an EBITDA margin of 51.9%, up 316 bps from the previous year. The net profit after tax soared 82% YoY to ₹79.9 Cr, while cash profit increased by 49% to ₹114.9 Cr. Key metrics showed gross ARR at ₹6,763 (up 7% YoY) and occupancy at 74.2% (an increase of 826 bps YoY).

2. **Future Outlook and Growth Drivers**: Management indicated confidence in future growth by focusing on management and franchise expansion. Renovation efforts are set to enhance room quality and thereby improve ARR and occupancy rates, with continued investments expected through FY26 into FY27.

3. **Order Book and Operational Updates**: Recently, Lemon Tree secured a letter of award for the redevelopment of the Orchid Hotel in Shillong into an Aurika brand property, expected to be operational within 2.5 to 3 years. They signed 13 new management contracts adding 766 rooms, growing the portfolio to 200 hotels with 16,385 rooms.

4. **Analyst Q&A Insights**:

- *Revenue and Profitability*: Analysts questioned the long-term RevPAR growth projections for Aurika hotels, with management suggesting expectations of 11,000-12,000 after stabilization.

- *Market Position*: Concerns about competitiveness in Mumbai due to new airport supply were addressed, with management confident in the market absorbing new supply while capitalizing on brand strength.

- *Capex and Capital Allocation*: Management reiterated plans to become debt-free in 2 to 3 years, with cash flow projections indicating significant debt repayment potential.

- *Strategic Priorities*: The focus remains on mid-market and tier-2 city expansion, anticipating a shift toward branded mid-market supply amid ongoing urbanization.

5. **Market or Regulatory Updates**: Ongoing feedback from economic dynamics indicates positive demand growth outpacing supply in the mid-market segment, signaling a favorable environment for branded hotels.

6. **Strategic Focus Areas**: Lemon Tree appears focused on enhancing operational efficiencies, incorporating extensive renovations across its portfolio to position itself as a leader in the mid-market segment.

7. **Investor Insight**: Given the strong financial performance, anticipated portfolio expansion, and effective management strategies aimed at driving profitability, the outlook aligns well with a ‘buy’ position for potential investors, particularly in light of the ambitious growth targets and market demand trends.