Jefferies has initiated coverage on Leela Hotels with a Buy rating and a price target of Rs 675, implying 22% upside from the reference price of Rs 554.10.The brokerage views Leela as a play on India’s premiumisation trend, supported by growing demand for luxury and experiential travel, an expanding owned portfolio and greater exposure to leisure destinations.Shares of Leela Hotels gained 2.72% to Rs 570.35 in early trade on August 31 following Jefferies’ coverage initiation, against the previous close of Rs 555.25.Jefferies said constrained luxury-hotel supply and sustained premium-travel demand should support superior room-rate and RevPAR growth.Strong growth outlookJefferies expects revenue to grow at a 20% CAGR between FY26 and FY29, from Rs 1,527 crore to Rs 2,651 crore.EBITDA is forecast to rise at a 19% CAGR, from Rs 743 crore to Rs 1,253 crore, while adjusted profit is projected to grow at a 20% CAGR, from Rs 408 crore to Rs 703 crore.Owned-property RevPAR is expected to grow at a 9-10% CAGR, including 13% growth in FY27 and about 8% annually in FY28 and FY29.
Jefferies attributed the discount to Leela’s lower return ratios, asset-heavy expansion and high revenue concentration.Owned-led expansionLeela’s pipeline comprises 10 hotels and 1,095 rooms, implying a 5% CAGR in total room inventory through FY31.Owned rooms are expected to grow at an 8% CAGR, increasing their share of the portfolio from 44% in FY26 to around 50% by FY31.Eight of the 10 planned hotels are focused on leisure destinations, including Agra, Ranthambore, Srinagar, Jaisalmer and Ayodhya.
