Synopsis: Morgan Stanley recommends buying Leela Palaces stock, expecting strong domestic travel demand to support growth. Despite temporary challenges, recovery is likely, with improving occupancy and a double-digit growth outlook.
This hospitality Stock, engaged in owning, developing, and managing luxury hotels and resorts across India, providing premium hospitality services, exceptional guest experiences, fine dining, and world-class amenities, is in focus after Morgan Stanley Buy target of Rs. 579, which has an upside potential of 35.87 percent.
With a market capitalization of Rs. 14,285.05 crores, the share of Leela Palaces Hotels & Resorts Limited has reached an intraday high of Rs. 429.90 per equity share, rising nearly 0.88 percent from its previous day’s close price of Rs. 426.15. Since then, the stock has retreated and is currently trading at Rs. 427.75 per equity share.
Reason Behind the Surge:
Morgan Stanley, a prominent brokerage firm, has recommended a “Buy” call on Leela Palaces Hotels & Resorts Limited with a target price of Rs. 579 per share, indicating an upside potential of 35.87 percent from its previous day’s close price of Rs. 426.15 per share.
Morgan Stanley maintains an Overweight rating on Leela Palace because strong domestic travel demand is helping offset the weakness in international tourism. While occupancy has been temporarily affected due to the Middle East conflict, demand from Indian travelers remains steady, supporting overall performance and limiting downside risk.
The company expects this pressure to be short-term, with recovery likely in the coming months as travel normalizes. With improving occupancy and steady demand, Leela Palace is targeting double-digit growth in Q1. This outlook suggests earnings visibility is improving, which supports a positive view on the stock’s future performance.
Hotel Portfolio:
Leela Palaces Hotels & Resorts Limited has a strong hotel portfolio spread across major cities and tourist destinations in India, along with an international presence in Dubai. The company operates 15 luxury hotels offering around 4,162 rooms, located in places like Delhi, Mumbai, Bengaluru, Jaipur, and Udaipur. These hotels focus on both business and leisure travelers, providing high-quality services and premium experiences.
The company is also growing steadily, with 9 new hotels in the pipeline that will add over 1,065 rooms. Its portfolio is balanced, with about half the hotels owned and half managed, ensuring steady expansion and efficient operations.
Future Outlook:
Leela Palaces Hotels & Resorts Limited plans to focus on strengthening its growth in FY27 by building on earlier progress and improving performance across existing properties. Key priorities include stabilising growth drivers introduced in FY26 and continuing expansion of premium offerings such as The Leela Jaisalmer and luxury residences in Mumbai. The company is also enhancing its presence in major cities through new facilities in Bengaluru, including world-class wellness spaces and specialty dining outlets to attract high-end customers.
Looking ahead to FY28 and FY29, the company aims to accelerate growth through both domestic and international expansion. It expects steady income from management fees, especially from its Dubai property, along with capacity expansion in Udaipur. New hotel openings are planned in Srinagar, Bandhavgarh, Sikkim, Ayodhya, Agra, and Ranthambore, which will further strengthen its luxury hospitality portfolio.
Company Overview:
Leela Palaces Hotels & Resorts Limited was founded in 1986 and is an Indian luxury hospitality company that owns and operates hotels and resorts under the “The Leela” brand across key leisure and business destinations in India. It is positioned firmly in the upper-luxury segment, emphasizing “true Indian luxury” through architecture, service, and curated experiences.
Recent Quarter Results:
Coming into financial highlights, Leela Palaces Hotels & Resorts Limited’s revenue has increased from Rs. 425 crore in Q4 FY25 to Rs. 484 crore in Q4 FY26, which has grown by 13.88 percent. The net profit has also grown by 47.01 percent from Rs. 117 crore in Q4 FY25 to Rs. 172 crore in Q4 FY26. Leela Palaces Hotels & Resorts Limited’s revenue has grown at a CAGR of 21.09 percent over the last three years.
In terms of return ratios, the company’s ROCE and ROE stand at 8.72 percent and 8.20 percent, respectively. Leela Palaces Hotels & Resorts Limited has an earnings per share (EPS) of Rs. 12.1, and its debt-to-equity ratio is 0.28x.
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