Lemon Tree Hotels shares rallied over 5 percent on Thursday after global brokerage CLSA maintained ‘buy’ rating on the stock with a target price (TP) of Rs 80 per share.

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The brokerage believes that Q3FY20 has been strong for hotel industry as occupancy levels already exceed 70 percent in Mumbai, Hyderabad and Delhi.

“Increasing occupancy levels setting the base for average daily rate (ADR) hikes going ahead. We expect a slow but steady ADR improvement,” CLSA said.

CLSA expects mid to high-single digit ADR hikes for the company in Q3.

Average daily rate represents the average rental income per paid occupied room in a given time period.

Further, it also expects share of lucrative markets like Mumbai to increase for Lemon Tree Hotels. The brokerage said that the premium valuation of the company is justified given its high-growth plans.

At 9:45 am, shares of Lemon Tree Hotels gained 3.27 percent to Rs 63.25 on the BSE.