Lemon Tree Hotels Ltd. has reported better-than-expected operational performance, with an EBITDA margin of 46.0%, surpassing the projected 44.6%. This improvement is due to effective cost control and a 3% revenue beat.

The occupancy rate at Aurika, MIAL exceeded 50% in the second quarter of FY25, and management expects a significant recovery in the second half of FY25, projecting an EBITDA margin of 60%+. The renovation efforts are focused on the first half of the fiscal year, so overall operational performance is expected to improve in the latter half.

Revenue and EBITDA are forecasted to grow at CAGRs of 11% and 21%, respectively, from FY25E to FY27E. Currently, Lemon Tree Hotels trades at EV/EBITDA multiples of 13.7x and 11.9x for FY26E and FY27E estimates, respectively, without considering minority interest in Fleur. Prabhudas Lilladher maintains a "BUY" rating on the stock, with a target price of Rs 158, based on a 24x FY26E EBITDA multiple.