Morgan Stanley starts coverage on The Leela show 'obese' rating, Rs 549 target; stock up 5%

INSUBCONTINENT EXCLUSIVE:
pure-play luxury hotel operators in India, with a portfolio of iconic heritage-style hotels infused with modern architecture.The company
owns five operational properties, which account for 93% of its revenue, and has international awards and industry-leading revenue per
available room (RevPAR) and EBITDA margins to its credit.Morgan Stanley highlighted that these operational metrics reflect the premium
even as incremental supply additions are moderate due to high capital expenditure requirements.Also read: Jane Street probe: Sebi chief
Tuhin Kanta Pandey rules out weekly expiry ban, signals tighter derivatives watchThis demand-supply mismatch supports a sustained uptrend in
RevPAR
The brokerage expects annual EBITDA growth of 12% through FY27, driven by rising room rates and healthy occupancy levels
Net income is expected to grow ninefold, supported by limited increase in interest costs.Morgan Stanley also stated that the company is
nearly net-debt-free, with sufficient free cash flows to fund its upcoming capital expenditure cycle
Schloss Bangalore plans to open five new hotels comprising 475 rooms, including one under a joint venture, with all properties expected to
capital employed (ROCE) at around 10% by FY25, up from a reported 7.3%.In terms of valuation, the brokerage sees room for further upside
The stock currently trades at 18.5x EV/EBITDA on FY27 estimates, compared to an average of 29x for listed luxury hotel peers such as IHCL
and owners of asset-light models like Chalet and Juniper, which trade at around 20x
top three properties, indicating a notable concentration risk
nature.Around noon today, the shares of Schloss Bangalore were trading 4.12% higher at Rs 423.40 on the BSE.(Disclaimer: Recommendations,
suggestions, views and opinions given by the experts are their own
These do not represent the views of the Economic Times)