Lemon Tree up over 4%

Shares of Lemon Tree Hotels rose sharply today, gaining as much as 4.1% to an intraday high of Rs 155.99, their highest level since January 7, before paring gains to trade around Rs 152 by mid-morning, outperforming a weak broader market where the Nifty 50 was down about 0.5%. The stock remains well below its 52-week high of around Rs 173, while staying comfortably above its 52-week low near Rs 84, underscoring renewed investor interest after a period of consolidation.

The rally followed the company’s announcement of a corporate restructuring aimed at unlocking value by clearly separating its asset-light hotel management business from its asset-heavy ownership platform. Under the proposed scheme, Lemon Tree Hotels will emerge as a pure-play management, brand, loyalty and distribution company, while Fleur Hotels will house owned and leased hotel assets. Ahead of the reorganisation, Warburg Pincus will acquire APG’s stake in Fleur Hotels and infuse up to Rs 960 crore of primary equity to fund growth, with Fleur slated to be listed as a separate entity post approvals. Lemon Tree will retain a 41.03% stake in Fleur, while Warburg Pincus will hold 26.01%, without altering Lemon Tree Hotels’ shareholder structure.

Strategically, the restructuring sharpens focus, improves capital efficiency and enhances transparency by aligning business models with distinct return profiles. The asset-light management business offers scalable growth, higher margins and lower capital intensity, while the ownership platform gains balance-sheet strength and growth capital through the Warburg Pincus partnership. With the stock still trading below its recent peak, the market appears to be factoring in medium-term value creation from improved structure, faster expansion and clearer earnings visibility, even as execution and regulatory approvals remain near-term monitorables.