Leela Palaces Hotels & Resorts Limited has disclosed that its material subsidiary Tulsi Palace Resort Private Limited (TPRPL) has received multiple Order-in-Original documents from GST authorities in Jaipur. The orders present a mixed outcome, with one case being dropped entirely while three others confirm tax demands with applicable interest and penalties.

GST Orders Summary

TPRPL received four separate orders from various GST authorities in Jaipur on December 31, 2025. The orders address different alleged violations ranging from wrong tax adjustments to short payment of taxes on customer advances.

Nature of Alleged Violations

The GST authorities identified four distinct areas of concern in TPRPL's tax compliance. The first case involved wrong adjustment of tax liability in Table 5O of Form GSTR-9C, which was completely dismissed by the authorities. Two separate cases related to short payment of tax with respect to advances received from customers, while the fourth case concerned non-payment of tax under reverse charge on import of services.

Financial Impact Assessment

Leela Palaces Hotels & Resorts has confirmed that these orders do not have any material impact on the company's financial position, operations, or business activities. For the three cases where demands have been confirmed, TPRPL is evaluating appropriate legal remedies available under applicable laws, including filing appeals against the respective orders.

Regulatory Compliance

The disclosure was made pursuant to Regulation 30 of SEBI Listing Obligations and Disclosure Requirements Regulations, 2015. The company provided comprehensive details in accordance with SEBI Circular No. SEBI/HO/CFD/PoD2/CIR/P/0155 dated November 11, 2024, ensuring full transparency regarding these material developments at its subsidiary level. All order details have been made available on the company's investor website at www.theleela.com/investors .

Leela Palaces Hotels & Resorts stock has demonstrated a notable recovery over recent trading sessions, gaining nearly 8% in the past 10 trading sessions up to December 24. This uptick follows a challenging six-month period ending December 10, during which the stock declined over 4%. The hospitality sector has shown mixed performance, with the ET Hospitality Index gaining 2% in recent sessions while losing 6% over the six-month period.

Strong Financial Performance

The company's September quarter results showcase robust operational performance across key metrics:

The company's EBITDA margin expansion of 246 basis points year-on-year to 48.2% demonstrates improved operational efficiency and pricing power in the luxury hospitality segment.

Strategic Expansion Through Acquisitions

In November, the company made significant strategic moves to expand its presence both domestically and internationally. Leela Palaces Hotels & Resorts acquired 25% stake in the 546-key Sofitel The Palm located in Dubai's Palm Jumeirah, marking its first international foray. The equity investment for this Dubai project is estimated at approximately $49.00 million (₹437.00 crore).

Additionally, the company plans to co-invest ₹800.00 crore for a 50% stake in Leela Palace BKC Mumbai, which features 250 keys.

Domestic Growth Pipeline

The company operates 14 properties with 4,090 keys domestically and has established a robust expansion pipeline. The development plans include six owned hotels with 763 keys and three managed hotels with 283 keys, targeting leisure, wildlife, and spiritual destinations including Agra, Ayodhya, Ranthambore, and Srinagar.

Balance Sheet Strengthening

The company has significantly improved its financial position following its IPO in June. The net debt-equity ratio dropped substantially to 0.20 as of September from 1.10 in March after repaying ₹2,300.00 crore of debt through IPO proceeds. Analysts anticipate this ratio to remain around 0.10 despite the aggressive expansion plans.

Analyst Outlook and Market Dynamics

Analysts expect over 40% upside potential from the stock's Wednesday closing price of ₹420.30. ICICI Securities has initiated a 'BUY' rating with a target price of ₹600.00, projecting revenue and EBITDA growth of 16-17% annually over the next few years. Anarock projects favorable market conditions with demand in India's luxury hospitality segment growing at 13.7% annually through the coming years, compared to 8.8% growth in room supply, creating a widening demand-supply gap that supports the company's expansion strategy.