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Deleveraging timelines key to re-rating

Quick Pointers:

* Debt declines by Rs1,905mn in FY25

* Aurika, MIAL reported an occupancy of 80% with an EBITDA margin of 67% in 4QFY25

LEMONTRE’s operational performance was broadly in-line our estimate with EBITDA margin of 53.9% (PL 53.0%), led by 14.9% growth in RevPAR to Rs5,462 while PAT was aided by a lower tax rate of 11.5%. Aurika, MIAL’s performance showed an improvement with an occupancy of 80% and EBITDA margin of 67% in 4QFY25. Led by stabilization of Aurika, MIAL and improvement in RevPAR amid the ongoing renovation exercise, we estimate revenue/EBITDA CAGR of 12%/15% over FY25-FY27E. In addition, as no major capex is lined up in near term barring the hotels in Shimla and Shillong, we expect debt reduction to gather pace from FY26E onwards (Rs1,905mn of debt was repaid in FY25) translating into a PAT CAGR of 32% over the next 2 years. We broadly maintain our estimates and retain BUY on the stock with a TP of Rs174 (24x FY27E EBITDA; no change in target multiple).

RevPAR increased 14.9% YoY: Revenue increased 15.6% YoY to Rs3,785mn (PLe Rs3,768mn). ARR increased 6.6% YoY to Rs7,042. RevPAR grew 14.9% YoY to Rs5,462, while occupancy stood at 77.6%.

EBITDA margin rises to 53.9%: EBITDA increased 19.0% YoY to Rs2,041mn (PLe Rs1,996mn) with a margin of 53.9% (PLe 53.0%). PAT after MI increased 26.4% YoY to Rs846mn (PLe Rs637mn) with a margin of 22.4% (PLe 16.9%) as against 20.5% in 4QFY24. PAT beat was driven by a lower-than-expected tax rate of 11.5% (PLe of 28.8%) arising on account of recognition of DTA.

Con-call highlights: 1) The negotiable (corporate) and non-negotiable (retail) business mix for FY25 stood at 55%:45%. 2) Aurika, MIAL’s occupancy stood at 80% for 4QFY25. During the quarter, Aurika, MIAL clocked an EBITDA of Rs420mn with an EBITDA margin of 67%. 3) LEMONTRE’s loyalty program accounts for ~25- 30% of its total business, backed by a rising base of 1.5mn members. 4) Renovation capex was Rs1,000mn in FY25, with an estimated Rs1,300mn planned for FY26E. 5) During the quarter, ~18-20% of inventory in Hyderabad was shut for renovation, resulting in an ~8-10% drop in gross ARR and a 20% decline in revenue. Despite this, Hyderabad achieved a 9% RevPAR growth, with ARR at Rs7,700. 6) Of the ~6,000 owned keys, 1,000 require minor refurbishments and 1,500 need upgrades to meet brand standards. The remaining 3,500 keys will undergo full renovation. With 70% of the portfolio already renovated, the remaining 30% is expected to be completed in FY26E. 7) Revenue grew 21% YoY in April’25, while May’25 saw a moderate growth of 14% YoY due to geopolitical tensions. 8) Post-renovation, the keys portfolio is expected to generate EBITDA of over Rs600mn. 9) ~25–27% of Aurika, MIAL’s revenue is driven by the crew business.

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