Lemon Tree Hotels Q2 PAT rose 90% as profit drivers aligned

Lemon Tree Hotels reported profit after tax of Rs 79.8 crore in Q2 FY27, up 90.2% year on year, after total revenue rose 18.1% to Rs 363.8 crore, net EBITDA increased 22.4% and a Rs 22.1 crore exceptional item lifted pre-tax profit.

What drove Lemon Tree's Q2 FY27 profit increase?

Lemon Tree's Q2 FY27 profit after tax, or PAT, rose from Rs 41.9 crore in Q2 FY26 to Rs 79.8 crore, with operating growth, lower borrowing costs and the exceptional item contributing. Total revenue increased by Rs 55.8 crore to Rs 363.8 crore, while net earnings before interest, tax, depreciation and amortisation, or EBITDA, rose by Rs 29.8 crore to Rs 162.2 crore. Net EBITDA margin increased to 44.6% from 43.0%, a rise of 157 basis points.

The exceptional item widened the difference between underlying pre-tax growth and reported pre-tax growth. Profit before tax, or PBT, before exceptional items rose 59% to Rs 88.8 crore from Rs 55.8 crore, while PBT after exceptional items rose 99% to Rs 110.9 crore. The presentation reports a Rs 22.1 crore exceptional item but does not disclose its nature.

Cash profit increased 27.5% year on year to Rs 97.2 crore, but rose 1.3% from Rs 96.0 crore in Q1 FY27. Lemon Tree defines Q2 FY27 cash profit as PAT plus depreciation and provision for stock appreciation rights, less non-cash exceptional items. That definition means cash profit does not move directly in line with reported PAT when exceptional items are recorded.

How did room demand and pricing support Lemon Tree revenue?

Lemon Tree's owned and leased hotels delivered revenue per available room, or RevPAR, of Rs 5,137 in Q2 FY27, up 18% year on year. Average room rate, or ARR, rose 8% to Rs 6,751 and occupancy increased 633 basis points to 76.1% from 69.8%. Against Q1 FY27, ARR increased 6%, occupancy rose 42 basis points and RevPAR increased 7%.

The operating portfolio grew mainly through managed and franchised hotels. Owned and leased rooms declined 1% to 5,679 from 5,759 in Q2 FY26, while managed and franchised rooms increased 24% to 6,452. Total rooms consequently rose 11% to 12,131, showing that the demand metrics, which cover owned and leased hotels, were achieved despite a smaller owned and leased room base.

Owned hotels generated Rs 337 crore of revenue in Q2 FY27, up 15% year on year. Aurika and Lemon Tree Premier accounted for 58% of owned-hotel revenue and 63% of hotel-level EBITDA. Mumbai contributed 26% of owned-hotel revenue and 30% of hotel-level EBITDA, with a 61% hotel-level EBITDA margin; Hyderabad also reported a 61% margin.

How did costs and borrowing costs affect Lemon Tree margins?

Lemon Tree's total expenses rose 14.9% to Rs 201.7 crore in Q2 FY27, slower than the 18.1% increase in total revenue. Payroll expenses were 18.4% of revenue, down 62 basis points from Q2 FY26; food and beverage and raw-material costs were 5.9%, down 64 basis points; and power and fuel costs were 6.5%, down 80 basis points.

Other expenses increased by 49 basis points to 24.7% of revenue. The Q2 FY27 expense ratio included stock appreciation rights provision equal to 0.8% of total revenue and a goods and services tax, or GST, impact equal to 2.4%, compared with no such disclosed impacts in Q2 FY26. Before the GST impact and stock appreciation rights provision, like-for-like net EBITDA was Rs 173.7 crore and the corresponding margin was 47.7%, up 474 basis points year on year.

Finance costs on borrowings fell 16% year on year to Rs 28.8 crore in Q2 FY27, while finance costs on leases were unchanged at Rs 10.7 crore. Lemon Tree's cost of debt was 7.44% on September 30, 2026, down 28 basis points from 7.72% a year earlier. At H1 FY27, gross debt was Rs 1,429.2 crore, down 11%, and debt to equity was 0.64 times compared with 0.86 times in H1 FY26.

What does Lemon Tree's first-half result show?

Lemon Tree reported H1 FY27 PAT of Rs 137.1 crore, up 52% year on year, on total revenue of Rs 710.6 crore, up 14%. Net EBITDA increased 14% to Rs 314.0 crore and its margin rose 29 basis points to 44.2%. PBT before exceptional items rose 41% to Rs 167.9 crore, while PBT after exceptional items rose 60% to Rs 190.0 crore.

H1 FY27 finance costs on borrowings declined 17% to Rs 59.3 crore from Rs 71.6 crore, and lease finance costs declined 3% to Rs 20.7 crore. Tax expense increased 85% to Rs 52.9 crore, while cash profit rose 22% to Rs 193.2 crore. The same Rs 22.1 crore exceptional item recorded in Q2 FY27 was also included in the first-half result.

The quarterly comparison shows that the second quarter improved on Q1 FY27 across revenue, EBITDA and reported profit. Revenue increased 4.9% from Rs 346.8 crore, net EBITDA increased 6.8% from Rs 151.9 crore, and PAT increased 39.1% from Rs 57.3 crore. PBT before exceptional items increased 12% from Rs 79.1 crore, while the exceptional item further increased reported PBT.

How is Lemon Tree expanding its hotel network?

Lemon Tree opened eight managed and franchised hotels with 523 rooms in Q2 FY27 and signed 11 more properties with 825 rooms. Its operational portfolio stood at 138 hotels and 12,131 rooms on September 30, 2026, and the disclosed pipeline comprised 11,930 rooms. Management fees were Rs 40.8 crore, up 19% year on year, including Rs 18.7 crore from third-party hotels, up 30%.

Lemon Tree also acquired land for a 172-room owned Lemon Tree Premier in Bandra East, Mumbai. Land consideration was about Rs 120 crore, excluding stamp duty and registration charges, and the conveyance deed was registered in September 2026. The company expects the property, described as its seventh Mumbai hotel and first in Bandra, to open in FY30 with all-day dining, a fitness centre and a pool.

Conclusion

Lemon Tree's 90.2% rise in Q2 FY27 PAT reflected several components rather than revenue growth alone. Revenue rose 18.1%, RevPAR rose 18%, net EBITDA increased 22.4%, finance costs on borrowings fell 16%, and the Rs 22.1 crore exceptional item lifted PBT after exceptional items to Rs 110.9 crore.

The next disclosed developments are the conversion of 11 signed managed and franchised hotels with 825 rooms into operating properties and progress on the 172-room Bandra East project. Lemon Tree expects the Bandra hotel to open in FY30, while its network had 11,930 pipeline rooms as of September 30, 2026.