Analysts see a 40% rise in Leela Palaces shares on expansion plans and growing travel demand

ET Intelligence Group: Leela Palaces Hotels & Resorts stock has risen in the last ten trading sessions till December 24, gaining almost 8%, after a muted move in the previous six months till December 10, during which it lost over 4%. The ET Hospitality Index is up 2% in recent trading sessions, while losing 6% in the six-month period. The recovery in Leela’s shares follows expectations of better growth prospects in the coming quarters, given the company’s efforts to expand its presence both organically and through acquisitions to capitalize on the growing travel and tourism business. Analysts expect a rise of over 40% for the stock from Wednesday’s closing price of ₹420.3. In November, the hospitality company, which operates a chain of luxury hotels under its flagship brand The Leela, acquired a 25% stake in a 546-key Sofitel The Palm in Dubai’s Palm Jumeriah and will also co-invest ₹800 crore for a 50% stake in Leela Palace BKC Mumbai (250 keys).

The Dubai project marks The Leela’s first international foray, with the equity investment estimated at approximately $49 million (₹437 crore). Spanning over 23 hectares, this property will consist of a hotel, branded residences and villas. The full recovery of equity is expected within two to 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 in leisure, wildlife and spiritual destinations such as Agra, Ayodhya, Ranthambore and Srinagar. Anarock expects a widening gap between supply and demand in the Indian luxury hospitality segment, with demand growing 13.7% annually in FY25 and FY28, compared to the 8.8% growth in room supply. This makes The Leela’s expansion plans timely.

During the September 2025 quarter, operating revenue rose 12.1% to ₹310.7 crore, while operating profit before depreciation and amortization (Ebitda) rose 17% to ₹160.7 crore. The Ebitda margin increased by 246 basis points year-on-year to 48.2%. The company reported a net profit of ₹74.7 crore in the September 2025 quarter, compared to a net loss of ₹51.2 crore a year ago. Its net debt fell to 0.2 in September 2025 from 1.1 in March 2025 after it paid off ₹2,300 crore of debt through IPO proceeds in June 2025. Analysts expect the ratio to remain around 0.1 despite the aggressive expansion plan. ICICI Securities expects revenue and Ebitda to grow 16-17% annually in FY25-28. It has set a ‘BUY’ rating with a target price of ₹600.