Jefferies initiated coverage with a “buy” rating and a price target of ₹675 per share. This indicates an upside of 22% from its previous close.
The brokerage said Leela Palaces offers a differentiated listed play on India’s premiumization theme. It benefits from rising luxury and experiential travel demand.
Leela Palaces is backed by Brookfield and is pursuing an owned-expansion strategy with the highest owned-room growth among peers and rising leisure share, Jefferies said.
Jefferies expects the company’s earnings before interest tax depreciation and amortization (EBITDA) and its Profit After Tax (PAT) to grow at a Compounded Annual Growth Rate (CAGR) of between 19% to 20% over financial year 2026-2029.
The brokerage is valuing the stock at 21 times its September 2028 estimated EBITDA, which will be a 25% discount to its peer Indian Hotels.
In a bull case scenario, Jefferies has a target price of ₹800 apiece, indicating an upside of 44% from its previous close.
The brokerage said in an upside scenario, it expects an increased demand for travel and tourism to inflect over FY26-29 and the company to report strong growth over the next few years.
Jefferies said it expects supply to remain notably constrained, resulting in 12% CAGR in revenue per available room with new hotels driving a 23% CAGR in EBITDA for FY26-29.
However, in a bear case, the brokerage has a target price of ₹420 apiece, which is 24% lower than its previous closing price.
Jefferies said it expects increased demand for travel and tourism to remain flat over FY26-29 and the company to report low growth over the next few years in its bear case projections.
The brokerage said it expects the supply to increase, resulting in 4% CAGR in revenue per average room with new hotels driving 10% CAGR in EBITDA for FY26-29.
Jefferies, in its note, also stated that key risks for Leela Palaces stem from sensitivity to macroeconomic, aviation and geopolitical disruptions, high earnings concentration in owned luxury assets and execution risk from rapid expansion into new cities and international markets.
Rising ownership intensity and nascent international exposure increase balance sheet sensitivity and earnings volatility compared to asset-light peers.
All 19 analysts who have coverage on the Leela Palaces Hotels & Resorts stock have “buy” ratings.
Shares of Leela Palaces Hotels & Resorts are trading 3.9% higher on Monday at ₹576.6. The stock has risen 17% in the last one month, taking its year-to-date advance higher to 33%.
The stock is up 34% from its issue price of ₹435 apiece and 43.6% from its listing price of 406 apiece.
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