Lemon Tree Hotels stock nears 52-week high as new Rajasthan, Tamil Nadu, and Maharashtra properties fuel growth optimism

Lemon Tree Hotels Limited (NSE: LEMONTREE, BSE: 541233) continued its aggressive 2025 expansion drive with the launch of two new operational properties and the signing of two managed hotels across three states, reinforcing its asset-light growth strategy. The hospitality group inaugurated Keys Lite by Lemon Tree Hotels in Banswara, Rajasthan, and Lemon Tree Hotel in Erode, Tamil Nadu, while entering into agreements for Lemon Tree Premier, Navi Mumbai, and Lemon Tree Hotel, Jalgaon, Maharashtra.

The announcements come at a time when Lemon Tree Hotels’ stock closed at ₹156.25 on 21 July 2025, gaining 1.08% from the previous session, with 42.9 lakh shares traded worth ₹67 crore. The stock has delivered a solid run-up over the past nine months, climbing close to its 52-week high of ₹162.40 against a low of ₹112.29 recorded in October 2024. However, analysts remain divided over its elevated adjusted price-to-earnings (P/E) ratio of 50.31, which is significantly higher than many midscale hospitality peers. Institutional sentiment suggests that while growth prospects remain strong, investors are beginning to scrutinize earnings visibility from its rapid expansion.

How do the new openings in Rajasthan and Tamil Nadu strengthen Lemon Tree Hotels’ regional footprint and brand positioning?

The operational launch of Keys Lite by Lemon Tree Hotels in Banswara represents the group’s 11th property in Rajasthan. This 54-room midscale hotel includes a multi-cuisine Keys Café, a fitness center, and expansive banquet and conference facilities. Positioned in Banswara, known as the “City of Hundred Islands” for its scenic river islets, the property is designed to cater to leisure travelers exploring Rajasthan’s tribal heritage and cultural temples. Analysts believe this opening strengthens Lemon Tree Hotels’ strategy of tapping into underpenetrated leisure markets with growing domestic tourism demand.

In Tamil Nadu, the debut of Lemon Tree Hotel, Erode expands the group’s portfolio to six properties in the state. Offering 64 rooms, a Citrus Café, and conference facilities, the hotel targets business and trade travelers in a city known as India’s “Loom City” and “Turmeric Capital.” With seamless connectivity to Coimbatore, Salem, and Bangalore, Erode provides a steady inflow of corporate and SME travelers. Institutional investors consider this a strategic location choice, combining commercial demand with the brand’s midscale positioning.

Market watchers view these openings as a continuation of Lemon Tree Hotels’ deliberate approach to capture secondary markets with limited branded competition. According to sector experts, such properties typically achieve occupancy stability faster than metro hotels due to lower supply saturation and consistent local demand drivers.

What role do the Maharashtra signings play in Lemon Tree Hotels’ growth and investor confidence in the western market?

The two managed property signings—Lemon Tree Premier, Navi Mumbai and Lemon Tree Hotel, Jalgaon—further strengthen Lemon Tree Hotels’ footprint in Maharashtra, where it already operates 14 hotels. The Navi Mumbai property will feature 67 rooms, a banquet hall, a swimming pool, and a fitness center. Located 24 kilometers from Chhatrapati Shivaji Maharaj International Airport and 21 kilometers from Panvel Railway Station, it is expected to tap into premium corporate travel and MICE (meetings, incentives, conferences, and exhibitions) segments in India’s financial hub.

The Jalgaon property, offering 100 rooms with a spa, swimming pool, and banquet facilities, is strategically positioned in one of Maharashtra’s agro-industrial hubs. Its proximity to Jalgaon Airport and key industrial clusters makes it suitable for long-stay corporate guests and regional trade travelers. Analysts interpret these managed agreements as a low-risk growth lever, as they require minimal capital expenditure while expanding brand visibility in high-demand corridors.

In an earlier disclosure, Kapil Sharma, Chief Financial Officer of Lemon Tree Hotels, highlighted that these signings reinforce the group’s growing footprint in Maharashtra and align with its plan to expand through asset-light management contracts. Institutional sentiment remains positive on this strategy, with investors expecting steady revenue contributions from such contracts, which carry higher EBITDA margins than owned properties.

How does the stock market interpret Lemon Tree Hotels’ high P/E ratio amid its rapid expansion?

Lemon Tree Hotels’ market capitalization stood at ₹12,378.85 crore as of 21 July 2025, with a free float market cap of ₹7,716.81 crore. The stock has been trading in a relatively volatile range, with annualised volatility at 43.94% and daily volatility around 2.3%, reflecting strong investor activity and heightened sensitivity to expansion updates. Deliverable quantity as a percentage of traded volume stood at 43%, indicating sustained participation from retail and institutional investors rather than short-term speculative trades.

However, its adjusted P/E ratio of 50.31 is drawing attention. Analysts argue that while the high multiple reflects expectations of strong revenue growth from over 100 new properties in the pipeline, it also raises concerns about earnings execution risk. Institutional investors are particularly focused on RevPAR (revenue per available room) performance in newly opened properties and the contribution of managed contracts to EBITDA margins over the next two fiscal years.

The stock’s movement toward its upper band of ₹185.49 suggests that near-term investor optimism is tied to the hospitality sector’s recovery and Lemon Tree Hotels’ early-mover advantage in tier II and III cities. However, a failure to sustain occupancy growth or manage operating costs efficiently could trigger a valuation correction.

What are analysts projecting for Lemon Tree Hotels’ financial performance and expansion outlook?

Lemon Tree Hotels operates over 110 hotels, with more than 100 under development across India and international locations such as Dubai, Bhutan, and Nepal. Its seven brands—from luxury Aurika Hotels & Resorts to economy-focused Keys Lite—offer differentiated positioning across segments. Analysts expect the company’s asset-light strategy to remain the primary driver of margin expansion, as managed contracts deliver higher returns without the burden of capital-heavy ownership.

Institutional sentiment is moderately bullish, with expectations of 2–3% incremental revenue growth in FY26 driven by new property openings in both leisure and commercial hubs. RevPAR growth in secondary cities such as Banswara, Erode, and Jalgaon is projected to outpace metro markets due to growing domestic travel and improving regional connectivity. Analysts also highlight that brand loyalty and operational efficiency in managed properties will be crucial to sustaining high occupancy rates and justifying the stock’s premium valuation.

Future growth will depend on maintaining consistency in guest experience across expanding geographies and optimizing pricing strategies in competitive markets. Investors will monitor occupancy ramp-up in the newly opened Rajasthan and Tamil Nadu properties and pre-opening bookings for the Maharashtra hotels as early indicators of performance.