- Jefferies initiated buy coverage on Leela Palaces with a Rs 675 target, 21.5% upside.
- Leela operates 15 hotels in 13 cities and leads in ARR and RevPAR in luxury hotels.
- Luxury segment supply additions are limited, supporting sustained premium travel demand.
Shares of Leela Palaces Hotels & Resorts Limited will be in focus after Jefferies initiated 'buy' coverage on the stock citing rising luxury and experiential travel demand. The brokerage has set a target price of Rs 675 per share, marking an upside of 21.5% from its last closing price of Rs 555.25.
According to Jefferies, Leela is India's only listed pure-play luxury hotel operator, with the highest average room rate (ARR) and revenue per available room (RevPAR) among peers. The chain operates 15 hotels across 13 cities and has been a beneficiary of the hospitality upcycle, aided by its strong presence in the luxury segment, the fastest-growing hotel category.
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While acknowledingthe best for the hospitality sector is over, the brokerage expects limited supply additions in the luxury segment, given its high execution barriers, and sustained growth in premium travel demand should support superior RePAR growth for Leela.
Additionally, Leela's 10-hotel pipeline is expected to drive 5% annual room growth through FY31, while its owned rooms are projected to grow at an 8% CAGR, the highest among its peers. This could take the share of owned rooms to around 50% by FY31 from 44% in FY26.
The company is also expanding from a relatively small base and focusing more on leisure, wellness and spiritual tourism, which are seen as high-growth segments. Around eight of its 10 upcoming hotels are in leisure destinations such as Agra, Ranthambore, Srinagar, Jaisalmer and Ayodhya.
Further, Brookfield's ownership gives Leela the access to deep capital, global hospitality expertise and strong governance and accelerate expansion curve for Leela. This is already visible in Leela's first international venture in Dubai, where Brookfield acquired a 75% stake in a $500 million deal, and through the planned mixed-use hospitality and commercial asset at BKC, Mumbai.
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