Analysts see 40% upside in Leela Palaces stock on expansion plans, growing travel demand

ET Intelligence Group: The stock of Leela Palaces Hotels & Resorts has shown an uptick over the past 10 trading sessions up to December 24, gaining nearly 8%, after a subdued movement in the prior six months to December 10 during which it lost over 4%. The ET Hospitality Index has gained 2% in the past trading sessions while losing 6% in the six-month period. The rebound in Leela’s stock follows expectations of better growth prospects in the coming quarters given the company’s efforts to expand presence organically as well as through acquisitions to take advantage of growing travel and tourism activities. Analysts expect over 40% upside to the stock from its Wednesday’s closing price of ₹420.3.

In November, the hospitality company, which operates a chain of luxury hotels under the flagship brand The Leela, acquired 25% stake in a 546-key Sofitel The Palm in Dubai’s Palm Jumeriah and will also co-invest ₹800 crore for 50% stake in Leela Palace BKC Mumbai (250 keys).

The Dubai’s project marks The Leela’s first international foray, where its equity investment is estimated at about $49 million (₹437 crore). This property spans over 23 acres and will comprise a hotel, branded residences and villas. The full recovery of equity is expected within two-three years.

On the domestic front, The Leela continued to expand its footprint, operating 14 properties with 4,090 keys. It has a pipeline of six owned hotels with 763 keys along with three managed hotels with 283 keys which is expected to drive growth spanning leisure, wildlife and spiritual destinations such as Agra, Ayodhya, Ranthambore and Srinagar. Anarock projects a widening demand-supply gap in India’s luxury hospitality segment, with demand growing at 13.7% annually through FY25 and FY28 compared with the 8.8% growth in the room supply. This makes The Leela’s expansion plans timely.

During the September 2025 quarter, revenue from operations grew 12.1% to ₹310.7 crore while operating profit before depreciation and amortisation (Ebitda) rose 17% to ₹160.7 crore. The Ebitda margin expanded by 246 bps on-year to 48.2%. The company reported net profit of ₹74.7 crore in September 2025 quarter compared with a net loss of ₹51.2 crore a year ago. The net debt-equity dropped to 0.2 as of September 2025 from 1.1 in March 2025 after it repaid ₹2,300 crore of debt through the IPO proceeds in June 2025. Analysts anticipate the ratio to remain around 0.1 notwithstanding the aggressive expansion plan. ICICI Securities expects revenue and Ebitda to grow 16-17% annually over FY25-28. It has initiated a ‘BUY’ rating with a target price of ₹600.