Lemon Tree Hotels (LEMONTREE) Q1 24/25 earnings summary

Executive summary

• Achieved record Q1 FY25 revenue of INR 268.4 crore, up 19% year-over-year, despite sector headwinds from elections and heatwave.

• EBITDA grew 8% year-over-year to INR 115.4 crore, with a margin of 43%, down 456 bps due to renovation and digital transformation investments.

• Gross ARR rose 9% year-over-year to INR 5,686; RevPAR increased 4% to INR 3,788; occupancy was 66.6%, down 360 bps.

• Management and franchise fees from third-party hotels rose 21% year-over-year to INR 12.5 crore; total management fees up 22% to INR 29.1 crore.

• Added 331 rooms through 4 new operational hotels and signed 3 new contracts adding 187 rooms to the pipeline.

Financial highlights

• Revenue from operations grew 20% year-over-year to INR 268.0 crore; total revenue up 19% to INR 268.4 crore.

• PAT declined 27% year-over-year to INR 20.1 crore; cash profit increased 9% to INR 54.7 crore.

• Cost of debt as of June 30, 2024, was 8.80%, down 13 bps year-over-year.

• Total expenses rose 30% year-over-year to INR 153.0 crore.

• Group inventory as of June 30, 2024: 107 operational hotels, 10,125 rooms, with a pipeline of 4,036 rooms across 61 hotels.

Outlook and guidance

• Confident in sustaining growth via stabilization of Aurika Mumbai, accelerated management/franchise expansion, and timely renovation completion.

• Renovation expenses to continue into FY26, then normalize to 1.5%-1.6% of revenue.

• Targeting over 20% ROCE from next year, with all 5,900 rooms fully renovated and operational by FY27.

• Revenue expected to exceed INR 1,250 crore in FY25, with a return to 50% net EBITDA margins as one-off costs subside.

• Demand growth is expected to outpace supply growth, with investments in renovation positioning the brand for superior pricing in the mid-market segment.