Analysts see 40% upside in Green Palaces stock due to expansion plans, growing travel demand

ET Intelligence Group: Shares of Leela Palaces Hotels & Resorts have rallied in the last 10 trading sessions till December 24, rising around 8% after a slow move in the six months before December 10, during which it fell over 4%. ET Hospitality Index rose 2% in the last trading session while falling 6% in the six-month period. The recovery in Leela’s shares follows expectations of better growth prospects in the coming quarters, as the company makes efforts through acquisitions to expand presence organically as well as take advantage of growing travel and tourism activities. Analysts expect the stock to gain more than 40% from Wednesday’s closing price of ₹420.3.

In November, the hospitality company, which operates a chain of luxury hotels under the flagship brand The Leela, acquired a 25% stake in the 546-key Sofitel The Palm in Dubai’s Palm Jumeirah and will also co-invest ₹800 crore for a 50% stake in The Leela Palace BKCs key2 (Mumbai).

The Dubai project marks The Leela’s first international foray, where its equity investment is estimated to be around $49 million (₹437 crore). The property is spread over 23 acres and will include a hotel, branded residences and villas. Full recovery of equity is expected in two-three years.

On the domestic front, The Leela continues to expand its footprint, operating 14 properties with 4,090 keys. It has a pipeline of six owned hotels with 763 keys and three managed hotels with 283 keys expecting growth in leisure, wildlife and spiritual destinations like Agra, Ayodhya, Ranthambore and Srinagar. Anarock projects demand-supply expansion in India’s luxury hospitality segment, with demand growing at 13.7% year-on-year between FY25 and FY28, compared to 8.8% growth in room supply. This makes Leela’s expansion plans timely.

During the September 2025 quarter, revenue from operations rose 12.1% to ₹310.7 crore while operating profit before depreciation and amortization (Ebitda) rose 17% to ₹160.7 crore. Ebitda margin increased by 246 bps year-on-year to 48.2%. The company reported a net profit of ₹74.7 crore in the September 2025 quarter, against a net loss of ₹51.2 crore a year ago. Net debt-equity declined to 0.2 in March 2025 from 1.1 in March 2025 after paying off ₹2,300 crore of debt through an IPO in June 2025. Analysts expect the ratio to remain around 0.1 despite an aggressive expansion plan. ICICI Securities expects revenue and Ebitda to grow 16-17% YoY in FY25-28. It has initiated a ‘BUY’ rating with a target price of ₹600.