ICICI Securities - Hotel Leela

ICICI Securities feels that Hotel Leela is expensively valued and would continue to underperform the sector and advise clients to switch to better performing stocks in the sector. Given the delayed expansion plans and absence in major markets till 2010, they feel Leela’s current valuations have factored in the business growth till FY09.

At the current price of Rs 44, the stock trades at P/E of 16.2x FY08E EPS of Rs 2.7 and 16.8x FY09E EPS of Rs 2.6.

We rate the stock as HOLD with a price target of Rs 42, 16x FY09E.