Hotel Stocks to Buy Before Diwali 2026? JM Financial Sees 12-13% RevPAR Growth and Backs Leela, Lemon Tree and ITC Hotels
- October 8, 2026
- Posted by: Ankit Jaiswal
- Category: News
Hotel RevPAR seen up 12-13% YoY in Q2 FY27 (JM Financial). Leela same-store growth 15-16%. Closing prices on 8 Oct 2026: Leela Rs 586.95, Lemon Tree Rs 110.05, ITC Hotels Rs 154.63.
Quick Answer
Hotel stocks are in focus because JM Financial expects sector RevPAR to grow 12-13% year-on-year in Q2 FY27 on leisure, corporate and event demand. The brokerage favors Leela, Lemon Tree and ITC Hotels, with Leela forecast to lead same-store growth at 15-16%. Elara Capital also sees RevPAR up 11-13% and rates all three Buy, with targets of Rs 669, Rs 165 and Rs 213. The leading hotel names closed 2.2% to 2.9% lower on 8 October as the Sensex fell 1.44%.
Hotel stocks to buy ahead of Diwali and the holiday season are back on brokerage radars, and JM Financial has named its preferences. The firm expects hotel-sector revenue per available room (RevPAR) to rise 12-13% year-on-year in the September quarter, Q2 FY27, supported by leisure, corporate and event demand. It favors Leela, Lemon Tree and ITC Hotels, and forecasts Leela to lead same-store growth at 15-16%.
The calls arrive on a weak day. The Sensex closed 1.44% lower on 8 October at 71,593.24, and every hotel name tracked here fell. This article lays out the demand drivers, compares valuations and the Elara Capital view, and flags the risks before the Q2 results.
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Why Are Hotel Stocks in Focus Before Diwali 2026?
Hotel stocks are in focus because Q2 FY27 demand was supported by leisure travel, corporate travel and events, and brokerages expect the festive, holiday-season quarter to stay strong. Elara Capital points to long weekends, Christmas and New Year as the next demand drivers, while foreign arrivals typically peak in Q3.
RevPAR is occupancy multiplied by the average room rate, and Elara expects Q2 FY27 growth of 11-13% from a 200-400 basis point occupancy gain and 6-7% growth in average room rate (ARR). Business locations led the rate growth, while leisure destinations added occupancy.
September was busy for event-linked hotel stocks. Delhi hosted the BRICS event, SEMICON India and the India-Afghanistan T20I series, and Mumbai held the Global FinTech Fest in September this year against October last year. Q2 FY27 also had five auspicious marriage days, compared with none in Q2 FY26, while dry days stayed at seven.
Hotel Stocks Comparison on 8 October 2026
| Stock | CMP (Rs) | Day change | Market cap (Rs crore) | P/E | ROE | Debt to equity | Elara target (Rs) | Upside vs CMP |
|---|---|---|---|---|---|---|---|---|
| Leela Palaces Hotels and Resorts | 586.95 | -2.57% | 20,124 | 45.41 | 6.30% | 0.28 | 669 (Buy) | 14.0% |
| Lemon Tree Hotels | 110.05 | -2.20% | 8,909 | 29.91 | 16.32% | 1.44 | 165 (Buy) | 49.9% |
| ITC Hotels | 154.63 | -2.85% | 33,183 | 38.20 | 7.01% | 0.01 | 213 (Buy) | 37.7% |
| The Indian Hotels Company | 711.65 | -2.69% | 1,03,975 | 45.03 | 15.97% | 0.22 | 786 (Accumulate) | 10.4% |
The industry P/E is 37.31. Elara’s own upside figures are measured from its assessed price, so the last column recalculates the gap to the 8 October close. Targets are brokerage estimates and not guaranteed outcomes.
JM Financial’s Hotel Stock Picks: Leela, Lemon Tree and ITC Hotels
JM Financial’s note leans on three drivers: leisure, corporate and event demand. The Indian Hotels Company is not among the three names JM Financial favors, and Elara rates it Accumulate with a target of Rs 786, about 10% above the close.
Leela Palaces: Same-Store Growth Leader
JM Financial forecasts Leela to lead the group with same-store growth of 15-16%. Elara names it a long-term pick, with a Buy rating and a Rs 669 target. At Rs 586.95 the stock is only 3.3% below its 52-week high of Rs 607.25, and its P/E of 45.41 is above the industry’s 37.31. Elara adds that the pace of foreign arrivals will shape room rates at luxury and upper-upscale hotels, a segment that includes Leela.
Lemon Tree Hotels: The Domestic Demand Play
Lemon Tree has the lowest earnings multiple in the group, with a P/E of 29.91 against 37.31 for the industry, and a return on equity of 16.32%. The stock is 35.8% below its 52-week high of Rs 171.48. Elara rates it Buy with a Rs 165 target and calls it a short-term preferred pick. The catch is debt: a debt-to-equity ratio of 1.44 is the highest in this group.
ITC Hotels: Debt-Light Name Well Off Its Highs
ITC Hotels closed at Rs 154.63, which is 31.8% below its 52-week high of Rs 226.63, and it carries almost no debt, with debt to equity of 0.01. Elara rates it Buy with a Rs 213 target and a short-term preferred pick. Return on equity is 7.01%, and the P/E of 38.20 is close to the industry level.
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What Are the Risks to Hotel Stocks in Q2 and Q3 FY27?
The biggest risks to hotel stocks are weaker foreign demand and a softer domestic travel base. Elara flags that domestic travellers are replacing foreign leisure guests, which limits room-rate growth because domestic guests generally pay less.
Domestic Air Traffic Is Falling
Domestic air passenger traffic fell 6.3% year-on-year to 12.1 million in August 2026, from 12.9 million a year earlier. Fewer flyers can mean fewer leisure bookings, even if events and weddings support occupancy.
West Asia Tensions Weigh on International Bookings
Elara notes that the Middle East conflict is hurting international bookings, which has limited the RevPAR recovery for some hotel companies, including those tied to the Marriott Bonvoy network.
Valuation and Balance Sheets
Leela at 45.41 times earnings and The Indian Hotels Company at 45.03 times trade above the industry P/E of 37.31. Lemon Tree’s debt-to-equity ratio of 1.44 leaves it more exposed if demand softens. A market-wide fall, as on 8 October, can hit hotel stocks even when brokerages are positive.
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What Should Investors Watch in Hotel Stocks Next?
The next test is the Q2 FY27 results from these companies. Investors should compare reported RevPAR against the 12-13% JM Financial expects, check whether growth came from occupancy or room rates, and see whether Leela’s same-store growth lands near 15-16%.
For Q3, Elara expects leisure travel to lead, with concerts in Delhi-NCR, Mumbai, Bengaluru and Guwahati, the India Mobile Congress, the Bloomberg New Economy Forum, the India International Trade Fair, CPHI India and the Bengaluru Tech Summit supporting occupancy and room rates. The pace of foreign arrivals will matter most for luxury hotels.
Should You Buy Hotel Stocks Before Diwali?
The demand case is supported by two brokerages and a festive quarter, but hotel stocks are not low-valued on every measure, and a falling market can erase near-term gains. Lemon Tree offers the lowest P/E but the heaviest debt, ITC Hotels has almost no debt but a lower return on equity, and Leela has the strongest growth forecast at a premium valuation.
Time horizon and risk appetite matter more than any single target. This article is educational and is not a recommendation.
Conclusion
JM Financial expects hotel RevPAR to rise 12-13% in Q2 FY27 and favors Leela, Lemon Tree and ITC Hotels, while Elara Capital rates all three Buy with targets of Rs 669, Rs 165 and Rs 213. Prices fell 2.2% to 2.9% on 8 October, which leaves Lemon Tree and ITC Hotels well below their 52-week highs and Leela close to its peak. The Q2 results and the pace of foreign arrivals will show whether the festive demand is strong enough to justify the targets.
Disclaimer: Data and figures in this article are sourced from publicly available information. These may or may not be accurate. Please verify all data with the official NSE (nseindia.com) and BSE (bseindia.com) websites before making any investment decision. Investments in securities are subject to market risk. This content is for educational purposes only and is not investment advice by Univest (SEBI RA INH000013776).
Frequently Asked Questions on Hotel Stocks Before Diwali
Which hotel stocks does JM Financial prefer ahead of Diwali?
Ans. JM Financial favors Leela Palaces, Lemon Tree Hotels and ITC Hotels. It forecasts Leela to lead same-store growth at 15-16% in Q2 FY27.
What RevPAR growth do brokerages expect in Q2 FY27?
Ans. JM Financial expects hotel-sector RevPAR to grow 12-13% year-on-year in Q2 FY27, supported by leisure, corporate and event demand. Elara Capital expects 11-13%, driven by a 200-400 basis point occupancy gain and 6-7% growth in average room rates.
What is the Leela Palaces share price today?
Ans. Leela Palaces Hotels and Resorts closed at Rs 586.95 on the NSE on 8 October 2026, down 2.57%. The 52-week range is Rs 384.50 to Rs 607.25, and Elara Capital has a Buy rating with a target of Rs 669.
What is the Lemon Tree Hotels share price and target?
Ans. Lemon Tree Hotels closed at Rs 110.05 on the NSE on 8 October 2026, down 2.20%. Elara Capital has a Buy rating with a target of Rs 165, about 50% above the close, and names it a short-term preferred pick.
What is the ITC Hotels share price and target?
Ans. ITC Hotels closed at Rs 154.63 on the NSE on 8 October 2026, down 2.85%. Elara Capital has a Buy rating with a target of Rs 213, about 38% above the close, and names it a short-term preferred pick.
Why are hotel stocks in focus before Diwali?
Ans. Brokerages expect the festive and holiday-season quarter to stay firm on leisure travel, long weekends, Christmas and New Year demand. Wedding dates and corporate events also support occupancy and room rates.
What are the risks to hotel stocks right now?
Ans. The main risks are domestic travellers replacing higher-paying foreign guests, a 6.3% year-on-year fall in domestic air passenger traffic in August 2026, West Asia tensions hurting international bookings and premium valuations.
Are hotel stocks a good buy now?
Ans. Hotel stocks have supportive demand and brokerage Buy ratings, but the sector P/E of 37.31 and a weak market on 8 October call for caution. This is not investment advice, so consult a SEBI-registered advisor before investing.
