Add The Leela Ltd for Target Rs. 490 by Choice Institutional Equities
Key Conference Call Highlights
Demand & Outlook:
* Domestic demand remains strong and continues to offset the temporary weakness in international travel caused by geopolitical tension
* While March saw an occupancy impact, trends normalised in April with high single-digit RevPAR growth and a strong rebound is expected in H2FY27E
* The company guides for FY27E occupancy in the early 70% range, with city hotels in the mid-70s and resorts in the mid-tohigh 60s
Industry & Positioning:
* Structural demand drivers remain intact, supported by rising wealth creation, premium consumption and limited new supply across key luxury markets
* The company continues to gain market share (up ~11pp) and maintains a strong pricing advantage, reflected in a RevPAR premium of ~INR 6,000 versus luxury peers
Growth Drivers:
* F&B remains a key growth engine, delivering ~15% YoY growth with an increasing contribution from non-resident customers (~54% mix)
* Growth will also be supported by upcoming openings, including Leela Jaisalmer and Mumbai luxury residences in FY27E, along with scaling up of ARQ membership-led luxury clubs across key cities
Operations & Trends:
* The March quarter saw disruption, primarily in international travel, leading to a temporary shift in mix towards domestic (~60%), which helped cushion overall demand
* MICE cancellations during the period were largely deferred with credit notes (6–9 months), indicating limited permanent demand loss, while wedding demand saw a shift from international to domestic venues
Expansion & Execution:
* The Coorg acquisition (71 villas, FY27E occupancy est. at 40%) has seen encouraging early traction with focus currently on brand integration and operational ramp-up
* Key pipeline projects (Ayodhya, Agra, Ranthambore) are delayed by 1–2 quarters, although cost remains unchanged and no cost overruns are expected
* Dubai expansion plans remain on track, with refurbishment and rebranding targeted for relaunch in FY28E
Financials & Balance Sheet:
* Net debt/EBITDA is expected to remain stable at ~1.6x in FY27E, supported by EBITDA growth
* Leverage is expected to improve to ~1.0x in FY28 as new assets ramp up, while cost discipline remains strong with no material overruns
For Detailed Report With Disclaimer Visit. https://choicebroking.in/disclaimer
SEBI Registration no.: INZ 000160131
