Posted on February 5, 2025, by Niftynews
Shares of Lemon Tree Hotels soared by nearly 5% after the company reported robust Q3 results for FY25. The company saw a remarkable increase in profitability and revenue for the quarter ended December 31, 2024. Lemon Tree share price rose as much as 4.9% to ₹154.72 on the NSE, reflecting the market’s positive response to the strong performance numbers.
The key figures from Lemon Tree Hotels Q3 FY25 results indicate healthy growth across multiple financial metrics, signaling continued strength in its operations despite broader market uncertainties. The company’s consistent focus on expansion, strong revenue generation, and improvements in key performance indicators have bolstered its position in the hospitality industry.
Key Highlights from Lemon Tree Hotels Q3 FY25 Performance
Lemon Tree Hotels’ net profit for the quarter amounted to ₹62.49 crore, marking an impressive 76.2% increase compared to ₹35.45 crore during the same period in the previous fiscal year. This significant rise in profit is a reflection of the company’s efficient operational management, strong demand for rooms, and higher-than-expected revenue generation.
The total revenue for the quarter was ₹355.8 crore, which represents a 22% year-on-year (YoY) growth. The company’s EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) also saw a notable increase of 30%, reaching ₹184.8 crore. This resulted in EBITDA margins expanding by 316 basis points (bps) to a strong 51.9%, a testament to Lemon Tree Hotels’ operational efficiency and strategic initiatives.
Lemon Tree Hotels’ cash profit for the quarter stood at ₹114.9 crore, a YoY increase of 49%. This growth highlights the company’s solid cash generation capabilities, which play a crucial role in funding its ongoing expansion and renovation efforts.
Performance Metrics and Operational Insights
During the quarter, the company’s occupancy rate was 74.2%, marking a significant increase of 826 basis points YoY. This improvement in occupancy reflects the growing demand for Lemon Tree Hotels’ offerings in India’s competitive hospitality market.
In addition to higher occupancy, the company’s Average Room Rate (ARR) grew by 7% YoY, reaching ₹6,763, indicating that Lemon Tree Hotels properties are able to command higher rates for their rooms amidst increased demand. As a result, the company’s Revenue per Available Room (RevPAR) surged by 21% YoY to ₹5,018, which further underscores the operational success during the quarter.
Lemon Tree Hotels’ chairman and managing director, Patanjali Keswani, commented on the company’s performance, noting that Q3 FY25 marked the highest-ever third-quarter revenue for the company. With a net EBITDA margin of 51.9%, Lemon Tree Hotels is poised to continue its growth trajectory.
Strategic Expansions and Future Outlook
Beyond financial performance, Lemon Tree Hotels is focused on expanding its footprint and enhancing its offerings to meet the growing demand for branded hospitality in India. The company recently received a Letter of Award from the Directorate of Tourism, Government of Meghalaya, to redevelop and operate the existing Orchid Hotel in Shillong. The new hotel, to be rebranded as Aurika Shillong, is expected to open in the next three years and will feature 120 rooms, a restaurant, a bar, banquet facilities, and a spa.
In addition, Lemon Tree Hotels signed 13 new management and franchise contracts, adding 766 rooms to its pipeline. The company also operationalized one new hotel with 38 rooms, bringing its total operational inventory to 112 hotels with 10,317 rooms. With a pipeline of 88 hotels and 6,068 rooms, the company is well-positioned for continued growth in the hospitality sector.
The company remains optimistic about sustaining growth in the coming quarters by focusing on expanding its management and franchised portfolio, which will drive fee-based income. Timely renovation activities in its owned properties will further improve the average room rate (ARR) and occupancy levels.
Market Performance and Investor Confidence
Lemon Tree Hotels stock performance has been positive over the past year, with shares gaining nearly 6% over the past 12 months. This consistent upward trend reflects investor confidence in the company’s ability to maintain a strong market presence in the mid-market hospitality segment.
Increased discretionary spending on branded hotels, combined with expected demand growth outpacing supply in the next few years, positions Lemon Tree Hotels for sustained success in the Indian hospitality industry. The company’s increased focus on renovation activities and expansion in high-demand regions will ensure its competitive edge in the evolving market.
Conclusion
Lemon Tree Hotels Q3 FY25 results demonstrate the company’s strong financial performance, operational efficiency, and continued growth potential. With a solid pipeline of new hotels, ongoing renovations, and a strong commitment to expanding its management and franchised portfolio, Lemon Tree Hotels is well-positioned to capitalize on the growing demand for branded hotels in India. As the company continues to execute its strategy, its stock remains an attractive investment option in the hospitality sector.
