Why Did Lemon Tree Hotels Shares Jump 9% Today? Here’s the Reason

Synopsis: Lemon Tree Hotels jumped sharply after reports emerged that global PE firm, Warburg Pincus, might take a major stake in the company. It is reported that the transaction may begin with the purchase of APG’s stake, followed by a preferential allotment later for further stakes.

The shares of this leading hospitality company, which is one of the leading chains in the mid-priced hotel chains, are in focus after a potential rumour of Warburg Pincus, a major global PE firm, might acquire a significant stake in the business. In this article, we will dive more into the details of it.

With a market capitalization of Rs 12,137 crore, the shares of Lemon Tree Hotels Ltd reached a day’s high of Rs 157.65 per share, up nearly 9 percent from its day’s low price of Rs 144.80 per share. Over the past five years, the stock has delivered a robots return of 261 percent, outperforming NIFTY 50’s return of 84 percent.

About the news

According to sources, Warburg Pincus (PE) is eyeing to acquire a significant stake in Lemon Tree Hotels, in a phased manner. Firstly, the global private equity giant plans to buy all of APG Strategic Real Estate Pool’s 14.99 percent stake in the company. Right now, Lemon Tree’s promoters own about 22 percent, with APG as one of the main institutional shareholders.

After that, Lemon Tree aims to issue new shares to Warburg Pincus through a preferential allotment. This move brings in fresh capital, fueling the hotel chain’s growth ambitions. If everything falls into place, Warburg Pincus will become a major long-term backer, giving Lemon Tree’s balance sheet a solid boost and powering its expansion.

Financial and other highlights

The revenue from operations for Lemon Tree Hotels stands at Rs 306 crores in Q2 FY26 compared to Q2 FY25 revenue of Rs 284 crores, up by about 8 per cent YoY. However, on a QoQ basis, it reported a decline of 3 percent from Rs 316 crore. 

Coming down to its profitability, the company’s net profit stood at Rs 42 crore in Q2 FY26, up from Rs 35 crore in Q2 FY25, which is a growth of 20 percent YoY. However, on a QoQ basis, it reported a net profit of Rs 48 crore, which is a decline of 12.5 percent.

Lemon Tree Hotels emerged in the early 2000s to address a significant void in India’s hotel market when most branded hotels were luxurious and expensive, and affordable choices were limited. The company concentrated on midscale and economy hotels, thereby providing quality stays at reasonable prices and establishing itself as a leader in this sector in a short span of time. 

As of now, Lemon Tree is counted among India’s largest hotel chains and has over 160 hotels in India and abroad. It has hotels in metropolitan cities like Delhi, Mumbai, Bengaluru, and Chennai, as well as in a number of Tier I, II, and III cities. The company operates multiple brands across segments from luxury to budget, such as Aurika, Lemon Tree Premier, Lemon Tree Hotels, Red Fox, and the Keys brands, thus catering to the needs of a diverse range of travellers in India and abroad.

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