Lemon Tree Hotels (LEMONTREE) Q2 25/26 earnings summary

Executive summary

• Achieved highest-ever Q2 revenue at INR 308 crore, up 8% year-on-year despite industry headwinds such as geopolitical tensions, floods, and GST revisions.

• Net EBITDA grew 1% to INR 132.4 crore, with margin at 43%, down 306 bps due to increased renovation, technology investments, and a one-time ex gratia payment.

• Profit after tax rose 20% year-on-year to INR 41.9 crore; cash profit increased 9.2% to INR 76.3 crore.

• Debt reduced to INR 1,610 crore as of September 30, down INR 212 crore from last year; credit rating improved to A-plus, lowering borrowing costs to 7.72%.

• Signed 15 new management/franchise contracts in Q2, adding 1,138 rooms to pipeline; operationalized five hotels with 272 rooms.

Financial highlights

• Gross ARR for Q2 FY2026 was INR 6,247, up 6% year-on-year; occupancy at 69.8%, up 139 bps; RevPAR at INR 4,358, up 8%.

• Management and franchise fees from third-party hotels rose 7% to INR 14.3 crore; Flio/Fleur hotel fees up 8% to INR 19.9 crore; total management fees reached INR 34.3 crore in Q2 FY2026.

• Total network revenue for Q2 FY26 was INR 467 crore, up 10% year-on-year; H1 FY26: INR 965 crore, up 14%.

• H1 FY26 revenue: INR 625.4 crore (up 13% YoY); PAT: INR 90 crore (up 63% YoY); Net EBITDA: INR 274.6 crore (up 11% YoY); Cash profit: INR 158.6 crore (up 27% YoY).

• Standalone and consolidated unaudited financial results for the quarter and half year ended September 30, 2025, were approved by the Board on November 12, 2025.

Outlook and guidance

• H2 outlook is highly positive, with expected material increases in occupancy and ARR from ongoing renovations and tech upgrades.

• EBITDA margin for FY2026 expected to match FY2025, with significant margin expansion targeted by FY2028 as extraordinary expenses subside.

• Expense heads for renovation, technology, and ex-gratia expected to reduce to ~5% of revenue in FY27 and stabilize at ~2% by FY28.

• Mid-teens revenue growth anticipated for Q3, with Aurika Mumbai expected to deliver over 15% growth.

• Results are not indicative of full-year performance due to the seasonal nature of the Indian hotel industry.