Strong Luxury Travel Demand Drives Revenue Growth, While Jefferies and JM Financial See Further Upside With Targets of ₹735 and ₹750
Shares of Leela Palaces Hotels & Resorts surged as much as 10% in early trade on Thursday, October 15, 2026, touching a fresh record high after the luxury hospitality company reported strong financial results for the second quarter of FY27. Robust room pricing, healthy domestic travel demand and improving contributions from managed properties helped the company deliver double-digit growth across key operating parameters.
The stock reached an intraday high of ₹650.40 on the BSE, extending its gains to approximately 42% over the preceding four months. At around 9:30 AM, the shares were trading nearly 6% higher at ₹624, outperforming the broader market, with the Sensex up around 0.61% at the time. The stock's subsequent price movements reflected continued investor interest following the earnings announcement.
The strong performance has also prompted leading brokerages to raise their earnings estimates and price targets, citing the company's premium positioning in India's luxury hospitality market and its expansion pipeline.
Leela Palaces Hotels Q2 FY27 Results: Profit Rises 27%
Leela Palaces Hotels & Resorts reported a 27% year-on-year increase in profit after tax (PAT) to ₹94.6 crore for the quarter ended September 2026.
Operating revenue climbed 33% year-on-year to ₹411.9 crore, while earnings before interest, tax, depreciation and amortisation (EBITDA) increased 36% to ₹187.7 crore. The faster growth in EBITDA compared with revenue indicates an improvement in operating performance during the quarter.
The results highlight the company's ability to benefit from stronger pricing in the luxury hotel segment while maintaining healthy demand across its business. Premium hospitality operators can generate substantial operating leverage when room rates rise and occupancy remains supportive, as a significant portion of their operating costs is relatively fixed in the short term.
However, the sustainability of these growth rates will depend on continued demand, the company's ability to maintain pricing power and the performance of its upcoming properties.
RevPAR Jumps 30% as Room Rates Drive Growth
One of the key highlights of the quarter was a 30% year-on-year increase in revenue per available room (RevPAR) to ₹17,225. RevPAR measures the revenue generated per available room and is widely used to assess hotel operating performance.
The improvement was entirely driven by higher average room rates, according to the brokerage commentary cited in the report. Average daily rate (ADR) rose 30% to ₹25,046, while India headline occupancy stood at 69%.
The figures indicate that pricing strength, rather than a major increase in occupancy, was the principal driver of RevPAR growth. This is significant for a luxury hotel operator because higher room rates can support profitability when demand remains strong.
Favourable domestic travel trends and robust demand for meetings, incentives, conferences and exhibitions or events (MICE) also supported the company's performance. Corporate gatherings, weddings, premium leisure travel and destination events can contribute to demand for high-end hotels.
Nevertheless, investors should monitor whether room-rate growth remains sustainable. If new hotel supply increases or consumer demand weakens, operators may face pressure to offer discounts, potentially slowing RevPAR growth.
Domestic Business, Room Revenue and Food Services Show Strength
The domestic segment recorded revenue growth of more than 30% year-on-year, reflecting favourable demand conditions across the company's customer segments.
Room revenue increased 39%, while food and beverage (F&B) revenue grew 21%. The difference in growth rates suggests that accommodation remained the primary contributor to the quarter's operating momentum, while restaurants, banquets and related services also benefited from stronger business activity.
Hotel management agreement (HMA) fees rose 76%. This is an important development because management fees can help a hospitality group expand its brand presence without necessarily owning every hotel it operates.
An asset-light management model can support expansion with comparatively lower capital requirements than developing and owning every property. It can also diversify revenue streams, although the pace of fee growth depends on new hotel openings, contractual terms and the operating performance of managed properties.
Jefferies Raises Estimates, Maintains Buy Rating
Brokerage firm Jefferies attributed the company's strong performance to 30% RevPAR growth, favourable domestic travel trends and healthy MICE demand. It also noted that management had raised its guidance, with the company now expected to deliver high-teens EBITDA growth in the second half of FY27.
According to Jefferies, this outlook implies EBITDA growth in the mid-20% range for the full financial year. The brokerage raised its EBITDA and PAT estimates by 3% to 7% and maintained a positive view on the company's long-term prospects.
Jefferies continues to view Leela as a high-quality luxury hospitality business and forecasts revenue, EBITDA and PAT compound annual growth rates of approximately 21% to 23% over FY26–FY29.
The brokerage reiterated its Buy rating and increased its price target to ₹735 from ₹675, valuing the company at 22 times estimated September 2028 EBITDA.
These estimates are based on the brokerage's operating assumptions and valuation methodology; they are not guaranteed outcomes.
JM Financial Raises Price Target to ₹750
JM Financial Institutional Securities also maintained a positive outlook, highlighting the company's operating performance relative to peers and its balance-sheet position.
The brokerage noted that net debt-to-EBITDA stood at 1.4 times, a metric that investors can use to assess leverage relative to operating earnings. While this level provides context for the company's financial position, future borrowing needs and capital expenditure remain important considerations as the hotel pipeline expands.
JM Financial expects the company's performance to remain supported by a growing portfolio and healthy operating trends. It raised its FY27 and FY28 EBITDA estimates by 6% and 5%, respectively, and expects revenue and EBITDA to grow at a compound annual rate of approximately 21% over FY26–FY29.
The brokerage retained its Buy rating and raised its September 2027 price target to ₹750 from ₹685. Its valuation framework uses 21 times estimated September 2028 EBITDA, compared with 20 times previously.
The revised targets from Jefferies and JM Financial indicate that both brokerages see further potential based on their earnings forecasts. However, the targets depend on the assumptions used in their models and should not be interpreted as assured returns.
Expansion Pipeline Provides a Long-Term Growth Opportunity
Leela's development pipeline remains unchanged at 10 properties, representing approximately 1,100 rooms, according to the brokerage update.
The Jaisalmer hotel and Mumbai luxury residences projects are on track for opening in FY27. Other greenfield developments are planned across several years, including Srinagar and Bandhavgarh in calendar year 2027; Agra, Ayodhya, Ranthambore and Sikkim in 2028; and Tadoba in 2030.
The expansion plan could strengthen the company's presence in luxury leisure destinations and broaden its geographic reach. New properties may also create opportunities to generate additional room revenue, food and beverage income, event-related business and management fees.
However, greenfield projects typically require substantial investment and time before reaching stable operating levels. Delays in construction, approvals, staffing or market development could affect the timing of expected returns. Investors should therefore track project execution, capital expenditure and the contribution of newly opened properties to overall profitability.
Key Risks Investors Should Consider
Despite the strong quarterly results, investors should avoid evaluating the stock solely on the basis of its recent rally or brokerage upgrades.
High expectations after a sharp rally: The stock has risen approximately 42% over four months and reached a new high. A strong share-price performance can increase the risk of volatility if future results fall short of market expectations.
Premium valuation: Brokerage price targets rely on future EBITDA forecasts and valuation multiples. If earnings growth slows or investors assign a lower multiple to the business, the stock could face a correction even if revenue continues to grow.
Dependence on premium travel demand: Luxury hotels are exposed to changes in discretionary spending, corporate travel budgets and event demand. A slowdown in these segments could affect room rates and occupancy.
Execution risks: The expansion pipeline creates growth opportunities but also introduces construction, financing and operational challenges. New properties may take time to achieve targeted occupancy and profitability.
Interest and capital expenditure requirements: Maintaining a pipeline of luxury hotels and residences can require significant investment. The company's leverage, cash flow generation and returns on new projects will remain important measures of financial strength.
Market Outlook
Leela Palaces Hotels & Resorts has delivered a strong Q2 FY27 performance, supported by higher room rates, healthy domestic travel demand and substantial growth in management fees. The 27% rise in profit after tax, 33% revenue growth and 36% increase in EBITDA strengthen the operating case for the luxury hospitality business.
The revised price targets of ₹735 from Jefferies and ₹750 from JM Financial reflect expectations of continued earnings growth and expansion. However, the stock's sharp recent rally means investors should assess the current valuation against future earnings, cash flows and the execution of the development pipeline.
For existing shareholders, the next indicators to monitor are RevPAR and ADR trends, occupancy levels, second-half EBITDA delivery, project progress and debt levels. Fresh investors should evaluate the stock's valuation and downside risks rather than relying only on the record high or brokerage targets.
The key question for the market is whether Leela can sustain its strong pricing power and earnings growth long enough to justify the expectations now reflected in its share price.