Leela Palaces Hotels & Resorts Limited — Q1 FY26 earnings call

Call held 22 Jul 2025

Management summary

Schloss Bangalore (The Leela) delivered a record-breaking Q1 FY26, characterized by significant margin expansion and a successful turnaround to profitability. The company is capitalizing on the underserved Indian luxury market, outpacing industry RevPAR growth by 2x. With a de-leveraged balance sheet post-IPO and a robust pipeline of 21 hotels, management is pivoting toward high-margin verticals like private clubs and luxury residences.

Highlights

  • Highest ever Q1 revenue of ₹301 crores, representing a 25% YoY increase.

  • EBITDA grew 63% YoY to ₹128 crores, with margins expanding 980 bps to 42.5%.

  • Turnaround to PAT positive at ₹8.7 crores, compared to a loss of ₹75 crores in Q1 FY25.

  • RevPAR increased by 20% YoY, significantly outperforming the industry average growth of 10%.

  • Net debt reduced to ₹227 crores (0.3x Net Debt/EBITDA) following a successful IPO on June 2, 2025.

  • Expansion pipeline signed for 21 luxury hotels (4,500+ keys), up from the current 13 hotels.

  • F&B segment contributed 39% of total revenue, growing at a healthy 16% YoY.

  • Direct website revenue witnessed a 72% increase following the launch of a new digital platform.

Key financials

  1. Revenue ₹301 Cr +25%YoY
  2. EBITDA ₹128 Cr +63%YoY
  3. EBITDA Margin 42.5%
  4. PAT ₹8.7 Cr
  5. RevPAR Growth 20%
  6. Net Debt to EBITDA 0.3×

What they filed

Q1 FY27: revenue up 9.7%, net profit up 74.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue87 99 112 93 102 +17%124 +25%119 +6%102 +10%
EBITDA43 45 54 43 53 +23%61 +36%63 +17%50 +16%
Net profit-2 10 36 35 73 +3750%77 +670%91 +153%61 +74%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

SegmentGrowthRevenue Contribution
Retail17%55%
Food & Beverage (F&B)16%39%
Hotel Management Agreement (HMA) Fees20%—

Guidance & targets

Profitability

  • EBITDA Target Profitability · by FY30 · Medium confidence ₹2,000 crores
    we are targeting to reach INR 2,000 crores EBITDA by FY30.

    — Anuraag Bhatnagar, MD and CEO

  • EBITDA Growth Profitability · FY26 · High confidence mid-to-high teens
    We are looking at closing towards mid-to-high teens in terms of overall growth for FY26.

    — Anuraag Bhatnagar, MD and CEO

Capex

  • Same-store Growth Capex Capex · FY26 · High confidence ₹400 crores
    this year we'll be investing around INR 400 crores of capex in the same store growth.

    — Ravi Shankar, CFO

  • Contracted Pipeline Capex Capex · next 2.5 years · High confidence ₹1,130 crores
    Rest, INR 1,130 crores is on the contracted pipeline for the five hotels, which will be spent in the next two and a half years.

    — Ravi Shankar, CFO

Debt

  • Net Debt to EBITDA Ratio Debt · next few years · Medium confidence 2.5x
    our net debt to EBITDA in the next few years will be an average of 2.5X, a little up or down, and will taper down as we move forward.

    — Ravi Shankar, CFO

Volume

  • Occupancy Rate Volume · by end of FY26 · Medium confidence 70-73%
    we definitely believe that our occupancies will be hovering closer to 70, early 70s towards the end of this year.

    — Anuraag Bhatnagar, MD and CEO

Risks & concerns

  • Geopolitical Tensions and 'Operation Sindoor'

    medium

    Caused a two-week 'blip' in May 2025, though management notes luxury demand is relatively inelastic and bounced back quickly.

    Both acknowledged

  • High Cost of Greenfield Expansion

    medium

    Analysts questioned the feasibility of BKC construction given high land costs; management cited 25% lower-than-market acquisition cost and Brookfield sponsorship as mitigants.

    Analyst downplayed

  • International Competition

    low

    Analyst raised concerns about Marriott and Accor's aggressive India plans; management argued their 'pure play luxury' focus and local brand strength are unique differentiators.

    Analyst deflected

Areas of evasion (1)

  • Specific international target regions were kept vague.

Q&A highlights

3 direct
Sustainability of RevPAR Growth in Leisure Markets Direct
Leela has always been growing high double digit over the last five years on RevPAR. And we have a 40% premium on the index when it comes to RevPAR.

Confirms the company's significant pricing power and 'moat' in the luxury segment compared to broader industry indices.

Asked by Aditya Mathur, Bank of America

Economics of the BKC Mumbai Project Direct
the land that we have acquired, it's already at a very attractive basis of 20% to 25% less than the deals that are in the market... BKC has 39 keys per million square feet of space versus 230 in Delhi.

Management justifies the high-cost Mumbai entry by highlighting a massive supply-demand gap and favorable land acquisition costs.

Asked by Achal Kumar, HSBC

Drop in Depreciation Costs Direct
the brand was in the Schloss HMA... This brand got amortised over a period of five years, with the last year being FY ‘25. That's the main reason for the decrease in the depreciation.

Explains a key accounting driver for the margin improvement, clarifying it is a structural change rather than a one-time deferral.

Asked by Murtuza Arsiwalla, Kotak Securities

2 min read 5 chapters

Detailed narrative

Record-Breaking Financial Performance and Turnaround

Schloss Bangalore reported its highest-ever Q1 revenue of ₹301 crores, a 25% YoY increase. The company achieved a significant turnaround, posting a PAT of ₹8.7 crores against a loss of ₹75 crores in the previous year. This was driven by a ₹49 crore boost from business momentum and a ₹33 crore reduction in finance costs following the IPO-led de-leveraging. EBITDA margins expanded by 980 bps to 42.5%, reflecting strong operating leverage and asset management focus.

Outpacing Industry Benchmarks in Luxury Segment

The company's RevPAR grew by 20%, doubling the industry's luxury segment growth of 10% as reported by STR. Management highlighted a 40% RevPAR premium over the index and a best-in-class Net Promoter Score (NPS) of 86. Occupancy improved from 59.7% to 64%, while ADR increased by 13%. Management expects occupancy to reach the early 70s by the end of FY26, supported by a pivot toward FIT-led (Free Independent Traveler) consumer growth.

Strategic Expansion and Pipeline Execution

The Leela platform is set to expand from 13 to 21 hotels, with a signed pipeline of over 4,500 keys. Key projects include a 250-key luxury hotel in Mumbai's BKC (a 50-50 JV with Brookfield) and a 33-key expansion in Udaipur. The BKC project is particularly strategic, targeting a micro-market with only 39 keys per million square feet of office space. Management committed ₹1,130 crores in capex for the contracted pipeline over the next 2.5 years.

New High-Margin Verticals: ARQ and Residences

To supplement same-store growth, the company is launching 'The ARQ', an invite-only membership club, and 'Leela Luxury Residences'. The ARQ is expected to have 2,000+ paying members upon stabilization across five locations (Bengaluru, Chennai, Delhi, Mumbai). These verticals leverage existing infrastructure to deliver high-margin growth. The first luxury residence project in Mumbai is expected to launch in FY27, featuring 60+ ultra-luxury service apartments.

Long-term EBITDA Target of ₹2,000 Crores

Management set an ambitious target to reach ₹2,000 crores in EBITDA by FY30. This growth is predicated on two pillars: doubling EBITDA from existing stores through 15% same-store growth and value drivers (clubs, spas, retail), and adding ₹500 crores from the active pipeline, including the Leela BKC. The company intends to maintain a healthy balance sheet with an average Net Debt to EBITDA of 2.5x during this aggressive expansion phase.

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