Leela margin rebounds 4.84 points as revenue growth outpaces costs
Consolidated Q2FY27 operating margin recovered to 45.58%, while a lower 14.31% tax rate helped net profit rise 93.99% sequentially.
Filed 14 Oct 2026, 14:46 IST · Leela Palaces Hotels & Resorts Ltd (THELEELA)
Key takeaways
- Consolidated operating margin recovered 4.84 percentage points sequentially as revenue grew 17.02% while expenses rose 7.47%.
- Net profit increased 26.59% year on year despite negative other income, with the tax rate falling 5.56 percentage points to 14.31%.
- The 45.58% operating margin was 36.23 percentage points above the 9.35% median for five reported Consumer Discretionary peers.
Price around the results
Revenue rebound restores operating leverage
Revenue grew 32.58% year on year and 17.02% sequentially, while expenses increased 29.77% and 7.47%, respectively. That cost discipline lifted operating profit growth to 36.10% year on year and widened the operating margin by 1.18 percentage points. Management said it expects to capture recovering international MICE and F&B demand, and reported a five-point market-share gain against the India luxury segment.
Lower tax rate supported profit conversion
The year-on-year increase in operating profit did not flow through fully to pre-tax profit, which grew 18.38%, as other income was negative and depreciation rose 24.49%; interest was broadly unchanged, increasing 0.89%. Other income reduced pre-tax profit by 4.81%, making the quarter's earnings primarily operating-led rather than other-income-led. The tax rate fell 5.56 percentage points year on year and 9.91 percentage points sequentially, supporting net profit growth of 26.59% year on year and 93.99% sequentially.
Margin recovery follows a sharp FY26 peak
Operating margin rose from 40.74% in Q1FY27 to 45.58% in Q2FY27, reversing the drop from 54.84% in Q4FY26. It remains below the 51.99% recorded in Q3FY26 and the 54.84% Q4FY26 peak, but is well above the 36.91% level in Q1FY26. The company was 36.23 percentage points above the 9.35% median margin of the five Consumer Discretionary peers that had reported.
Management points to expansion and space monetisation
Management said the development pipeline comprises 10 hotels with 1,095 keys and that it targets EBITDA of Rs 8,133 million with a 51% EBITDA margin by FY30. The company said it converted idle Bengaluru parking space into a MICE centre and unused space into a Speakeasy Bar, while Azulian House was launched at The Leela Palace Bengaluru in Q1FY27. Management also said The Leela ranked first by RGI, with a 1.5x RGI index for April-August 2026.
Q2FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q2FY27 | Q1FY27 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹412 cr | ₹352 cr | +17.02% | +32.58% |
| Other income | ₹-5 cr | ₹-7 cr | +24.89% | — |
| Expenses | ₹224 cr | ₹209 cr | +7.47% | +29.77% |
| Operating profit | ₹188 cr | ₹143 cr | +30.92% | +36.10% |
| Operating margin (%) | 45.58% | 40.74% | — | — |
| Interest | ₹38 cr | ₹39 cr | -2.24% | +0.89% |
| Depreciation | ₹34 cr | ₹33 cr | +2.85% | +24.49% |
| Profit before tax | ₹110 cr | ₹64 cr | +71.57% | +18.38% |
| Tax | ₹16 cr | ₹16 cr | +1.28% | -14.79% |
| Net profit | ₹95 cr | ₹49 cr | +93.99% | +26.59% |
| EPS (₹) | ₹2.83 | ₹1.46 | +93.84% | +20.43% |
Operating margin of 45.58% compares with a Consumer Discretionary sector median of 9.35% across 5 peers that have reported Q2FY27.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
Guidance & outlook
- The company targets EBITDA of ₹8,133 million and a 51% EBITDA margin by FY30.
- The company expects to capture international MICE and F&B demand recovery.
Expansion
- The pipeline comprises 10 hotels with 1,095 keys.
New products
- Azulian House was launched at The Leela Palace Bengaluru in Q1 FY27.
New initiatives
- The company converted idle parking space at Bengaluru into a MICE centre and unutilized space into a Speakeasy Bar.
Competition
- The Leela delivered a five-point market share gain versus the India luxury segment.
- The Leela ranked number one by RGI, with a 1.5x RGI index for April-August 2026.
Problems & risks
- Q4 FY26 RevPAR was impacted by the West Asia conflict.
What to watch
- Whether operating margin holds above 45.58% after the sequential recovery.
- Whether revenue growth continues to exceed the 7.47% sequential expense growth rate.
- Progress on the 10-hotel, 1,095-key pipeline and the contribution from the Bengaluru MICE centre and Speakeasy Bar.