ICICI Securities has issued a buy rating on Lemon Tree Hotels with a revised target price of ₹156, down from the earlier target of ₹172, as reported in their research report dated May 31, 2026. The brokerage values the stock at 22x Sep'27E EV/EBITDA, though it has reduced FY27/28E EBITDA estimates by 5% due to near-term demand headwinds. This recommendation adds to the existing mixed analyst opinions, with Nuvama Research maintaining a buy call at ₹186 and Nirmal Bang assigning a hold rating at ₹123.
The hotel chain delivered stable Q4FY26 consolidated revenue of ₹4.2 billion, up 10% year-on-year, according to the latest reports. However, EBITDA grew only 6% YoY due to GST and renovation/technology costs. The company's profit after tax surged 42.3% to ₹84 crore from ₹59 crore, though EBITDA margin declined by 363 basis points to 79.5% from 83.1% in the corresponding quarter last year. The company achieved record-high full-year occupancy of 73.5% for FY26, the highest in company history.
The company is proceeding with a demerger scheme that will split Lemon Tree Hotels into a pure-play, asset-light brand with targeted 70-75% steady-state EBITDA margin, and Fleur Hotels into a separate, growth-oriented listed hotel ownership platform. As reported in the latest updates, the company maintains a pipeline of 22,581 rooms across 268 hotels, providing significant growth visibility. Management expects renovation-related costs to moderate from FY27, which should support corresponding improvement in EBITDA margins.
According to the latest reports, the company faced headwinds including geopolitical tensions in the Middle East, rising airfares, and a slowdown in corporate travel demand from mid-March. Management strategically prioritized occupancy growth over ARR growth and adopted tactical pricing measures to shift focus toward the retail segment. Lemon Tree reported 7% YoY RevPAR growth to ₹5,855 in Q4FY26, driven by a 6% YoY increase in average room rate while occupancy reached 78.5%. However, near-term demand headwinds have led to an increased focus on occupancy rather than pricing, with May'26 showing green shoots of recovery.
Lemon Tree Hotels is a constituent of the BSE 500 index and continues to trade at ₹112.40 at the time of reporting. The mixed brokerage recommendations reflect the company's strong operational performance amid ongoing market challenges, with analysts divided on the stock's near-term prospects despite its strategic positioning in India's hospitality sector. Key risks identified include slowdown in occupancies and room rates, as noted by ICICI Securities in their latest research report.
