Lemon Tree Hotels Reports Strong Growth Amid High Debt Concerns and Valuation Challenges

Lemon Tree Hotels, a small-cap player in the Hotels & Resorts industry, has recently undergone an adjustment in its evaluation. The company reported positive financial performance for the quarter Q1 FY25-26, showcasing a notable growth trajectory. Over the past year, Lemon Tree Hotels generated a return of 29.23%, with profits rising by 48.5%. The company has also demonstrated healthy long-term growth, with operating profit increasing at an annual rate of 38.86%.
Despite these positive indicators, the company carries a high debt burden, reflected in its average debt-to-equity ratio of 1.78 times. This high leverage is coupled with a return on equity of 9.13%, indicating a modest profitability per unit of shareholders' funds. Furthermore, the company's valuation appears expensive, with a 4.6 enterprise value to capital employed ratio.

Lemon Tree Hotels has consistently declared positive results for the last four consecutive quarters, with a profit after tax of Rs 185.46 crore, growing at 51.78%. The company also boasts high institutional holdings at 41.16%, suggesting a robust analytical capability among its investors.

Discover the Latest Mojo Score and Financial Trend Performance - SignUp in less than 2 Minutes and get FREE Premium Access.