Leela Hotels: Luxury Growth Stock Poised for 47% Upside
India's hotels and resorts sector is experiencing a robust post-pandemic recovery, projected to reach USD 24-26 billion in 2024 with a high single to low double-digit CAGR. This growth, fueled by rising domestic travel and recovering foreign arrivals, has pushed nationwide hotel occupancy to 68-70%, supporting strong room pricing. Within this flourishing market, Leela Palaces Hotels & Resorts Ltd, a pure-play luxury hospitality brand with a market capitalization of Rs 13,602.10 crore, has garnered a ‘Buy' rating from ICICI Securities. The brokerage projects a target price of Rs 600 per share, indicating a significant 47% upside from its current trading price of around Rs 407.
Leela stands out with 14 operational properties and over 4,000 keys, boasting a strong mix of owned and managed assets. Its owned portfolio consistently outperforms the broader luxury segment in Average Room Rate (ARR) and Revenue Per Available Room (RevPAR), showcasing premium positioning and pricing power. The company has an ambitious expansion roadmap to exceed 5,000 keys by FY30, complemented by asset upgrades, repurposing initiatives, and new verticals like ARQ members' clubs and luxury residences, all aimed at enhancing revenue growth and medium-term earnings visibility.
Financially, Leela demonstrated a sharp turnaround in Q2FY26, with revenue climbing 12% year-on-year to Rs 311 crore. Crucially, it transitioned from a net loss of Rs 57 crore in Q2FY25 to a profit of Rs 75 crore in Q2FY26, reflecting improved operations and cost control. The company anticipates mid-to-high teens growth in FY26, driven by strong luxury demand and operating leverage. Furthermore, Leela is embarking on international expansion, having secured board approval to acquire a 25% stake in a luxury beachfront resort in Palm Jumeirah, Dubai, a 23-acre property with 546 keys. While the article highlights significant growth prospects, investors should always be aware that investing in equities carries inherent risks of financial losses.
(Source: https://tradebrains.in/stock-to-buy-smallcap-stock-that-can-deliver-returns-of-47-do-you-own-it/)
