Lemon Tree Hotels FY26 Performance & Demerger Update

Lemon Tree Hotels reported record revenue of ₹1,452.7 crore and Profit After Tax (PAT) of ₹288.3 crore for FY26, marking a 19% increase year-on-year.

Reader Takeaway: Strong operational results are tempered by margin pressure and demerger uncertainty.

What just happened

Lemon Tree Hotels announced its financial results for the fiscal year 2026. Key highlights include a total revenue of ₹1,452.7 crore, up 13% year-on-year, and a Net EBITDA of ₹699.3 crore, showing a 10% increase. Profit After Tax (PAT) grew by 19% to ₹288.3 crore. The company's occupancy rate stood at a healthy 73.5%.

Why this matters

The strong revenue and profit growth indicate robust operational performance for the hotel chain. However, EBITDA margins saw a contraction of 126 basis points to 48.1% in FY26, mainly due to higher renovation expenditure, technology investments, and GST-related changes. The company aims for these renovation costs to normalize by FY28. Additionally, the company is undertaking a significant corporate action – a composite scheme of demerger.

The backstory

Lemon Tree Hotels has been navigating a dynamic hospitality market. In FY26, the company successfully reduced its total borrowings to ₹1,500 crore from ₹1,699 crore in the previous year, and the cost of debt decreased by 115 basis points to 7.42%.

What changes now

The proposed demerger will split the company into two entities: Lemon Tree Hotels, which will operate as an asset-light entity focusing on hotel management and digital services, and Fleur Hotels, an asset-heavy platform consolidating the group's owned hotels. Lemon Tree shareholders are expected to hold approximately 74% of Fleur Hotels post-reorganization. This move aims to unlock value by creating distinct investment propositions.

Risks to watch

Key watch points include potential headwinds from corporate travel slowdown, which management is addressing by pivoting to retail demand. Margin pressure in the short term due to renovation and setup costs for new hotels is also a concern, though management expects normalization by FY28.

Peer comparison

(No peer comparison data available in the filing.)

Context metrics (time-bound)

In FY26, total revenue reached ₹1,452.7 crore, with Net EBITDA at ₹699.3 crore and PAT at ₹288.3 crore. Total borrowings were reduced to ₹1,500 crore. The EBITDA margin for FY26 was 48.1%, down from 49.4% in FY25.

What to track next

Investors will be closely watching the progress of the demerger, which requires SEBI/NCLT approvals and is estimated to take 12-18 months. The normalization of operating margins as renovation expenditure phases out and the success of the strategy to boost retail demand will also be key indicators.