Leela Palaces vs Chalet Hotels: Which Hotel Stock Has Better Earnings Visibility?
Synopsis: Nomura prefers Leela Palaces over Chalet Hotels due to stronger earnings visibility driven by luxury demand and expansion, while Chalet faces execution risks despite steady growth and a strong development pipeline.
The hospitality sector in India is seeing strong growth, supported by rising travel demand and improving business activity. With this positive outlook, investors are comparing top hotel stocks like Leela Palaces and Chalet Hotels to see which one offers stronger earnings visibility ahead. According to Nomura, both companies have solid growth plans, but differences in their business models, expansion pipelines, and revenue mix could impact future earnings stability.
This article looks at Nomura's view on both stocks and compares their growth outlook, helping investors understand which company may deliver more predictable and sustainable earnings in the coming years.
Leela Palaces Hotels & Resorts Limited (doing business as The Leela) is an Indian owner, operator, and developer of luxury hotels and resorts under the "The Leela" brand, combining owned luxury properties with long‑term management and franchise agreements to offer high‑end hospitality across major Indian cities and upcoming destinations.
With a market capitalization of Rs. 14,373.55 crore, the shares of Leela Palaces Hotels & Resorts Limited were currently trading at Rs. 430.40 per equity share, down nearly 1.31 percent from its previous day's close price of Rs. 436.10.
Nomura, a prominent brokerage firm, has recommended a "Buy" call on Leela Palaces Hotels & Resorts Limited with a target price of Rs. 510 per share, indicating an upside potential of 18.5 percent from its current price of Rs. 430.40 per share.
Nomura has given a Buy rating on Leela Palaces Hotels & Resorts Limited as it expects to benefit from rising demand for ultra-luxury hospitality, where affluent travelers are spending more on premium experiences. Nomura believes this trend will drive steady growth in room rates and occupancy, leading to strong RevPAR expansion over the next few years. The company's established brand and focus on high-end properties position it well to capture this demand.
Additionally, its expansion pipeline supports future growth, with plans to add around 580 owned keys by FY29. This will increase capacity while maintaining exclusivity. Strong revenue growth, along with better cost management and operating leverage, is expected to boost profitability, resulting in healthy EBITDA and net profit growth over the forecast period.
Leela Palaces, Hotels & Resorts Limited is a luxury hospitality company with a strong presence in India and abroad. It has 23 properties, including 14 operational hotels and 9 in the pipeline, with over 5,136 rooms (keys). Its hotels are located across key destinations such as Delhi NCR, Mumbai, Bengaluru, Chennai, Hyderabad, Jaipur, Udaipur, Srinagar, and even Dubai.
Coming into financial highlights, Leela Palaces Hotels & Resorts Limited's revenue has increased from Rs. 370 crore in Q3 FY25 to Rs. 457 crore in Q3 FY26, which has grown by 23.51 percent. The net profit has also grown by 164.29 percent from Rs. 56 crore in Q3 FY25 to Rs. 148 crore in Q3 FY26.
In terms of return ratios, the company's ROCE and ROE stand at 12.0 percent and 13.1 percent, respectively. Leela Palaces Hotels & Resorts Limited has an earnings per share (EPS) of Rs. 11.2, and its debt-to-equity ratio is 0.28x.
Chalet Hotels Limited is an owner, developer, asset manager, and operator of high‑end hotels and hotel‑led mixed‑use properties across key Indian metros such as Mumbai, NCR, Bengaluru, Hyderabad, Pune, and Rishikesh, focusing on premium brands and integrated hospitality‑plus‑real‑estate income models.
With a market capitalization of Rs. 17,311.49 crore, the shares of Chalet Hotels Limited were currently trading at Rs. 790.50 per equity share, rising nearly 0.23 percent from its previous day's close price of Rs. 788.65.
Nomura, a prominent brokerage firm, has recommended a "Neutral" call on Chalet Hotels Limited with a target price of Rs. 860 per share, indicating an upside potential of 9.05 percent from its previous day's close price of Rs. 788.65 per share.
Nomura has initiated a Neutral rating on Chalet Hotels due to a balanced risk-reward outlook. While the company has a strong pipeline of around 1,500 keys, the main concern is execution. Timely completion of projects and successful launch of the new brand "Athiva" will be critical. Additionally, occupancy ramp-up across new properties will be an important factor to track for sustained growth.
The company's portfolio is largely concentrated in Mumbai and corporate-driven demand, which may lead to a gradual stabilisation phase during FY27-28. Although Nomura expects steady revenue and EBITDA growth of around 15 percent, it believes much of this potential is already reflected, making near-term upside limited until execution improves.
Chalet Hotels Limited is a leading hospitality company in India with 11 hotels and about 3,389 rooms (keys) across 8 cities. These include Mumbai (1,517 keys), Hyderabad (595), Bengaluru (520), Goa (360), Pune (311), Faridabad (158), Uttarakhand (141), and Thiruvananthapuram (150). The company also has commercial real estate and residential projects, with properties in key business hubs, supporting steady growth and strong demand.
Coming into financial highlights, Chalet Hotels Limited's revenue has increased from Rs. 458 crore in Q3 FY25 to Rs. 582 crore in Q3 FY26, which has grown by 27.07 percent. The net profit has also grown by 27.84 percent from Rs. 97 crore in Q3 FY25 to Rs. 124 crore in Q3 FY26.
In terms of return ratios, the company's ROCE and ROE stand at 11.1 percent and 5.77 percent, respectively. Chalet Hotels Limited has an earnings per share (EPS) of Rs. 27.7, and its debt-to-equity ratio is 0.73x.
Key Insights
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