JM Financial Sees Up to 79% Upside in Indian Hotel Stocks Amid Demand Growth

New Delhi, April 17, 2026: JM Financial has issued a positive outlook on India’s hotel sector, highlighting potential upside of up to 79% in select hospitality stocks, supported by strong domestic demand and stable occupancy levels despite recent short-term fluctuations in travel trends.

The brokerage noted that while the sector experienced some moderation in recent months, the broader structural growth story remains intact. Domestic travel demand continues to underpin occupancy levels, even as disruptions in international travel and geopolitical developments have impacted near-term performance.

Occupancy and ARR Growth Support Sector Fundamentals

According to the report, the March quarter reflected mixed momentum, with strong demand recorded in February following a softer January. Occupancy levels improved to 70–72%, marking a year-on-year increase of approximately 200 basis points.

Average room rates (ARRs) also showed healthy growth, rising by 8–10% year-on-year. These trends indicate that pricing power remains intact across the sector, supported by sustained domestic travel activity.

However, the report highlighted that March performance was impacted by global factors, leading to a high-to-mid single-digit decline in revenue per available room (RevPAR). This reflects sensitivity to international travel disruptions and reduced large-scale events.

Stock Picks Show Strong Upside Potential

JM Financial has maintained a ‘Buy’ rating across multiple hotel sector stocks, with significant upside projections. Juniper Hotels leads the list with a target price of Rs 390, indicating a potential upside of 79%.

Chalet Hotels has been assigned a target of Rs 1,110, suggesting a 44% upside, while Ventive Hospitality is projected to rise by 51% to Rs 920. Brigade Hotel also received a ‘Buy’ rating with a target price of Rs 95, implying a similar 51% upside.

Among larger players, Indian Hotels Company (IHCL) has a target price of Rs 850, reflecting a 33% upside. Lemon Tree Hotels is expected to deliver a 44% gain with a target of Rs 165, while ITC Hotels has been assigned a target of Rs 235, indicating a 52% upside potential.

Leela Hotels also features in the brokerage’s coverage with a target price of Rs 600, translating into a 40% upside. The report identified Leela and Chalet Hotels as preferred medium-term picks, citing stronger visibility and growth potential.

Growth Drivers Include Expansion and Same-Store Performance

The brokerage expects continued growth across its coverage universe, driven by both same-store performance and expansion strategies. Lemon Tree Hotels is projected to lead same-store RevPAR growth at 9%, followed by Ventive, Leela, and Juniper at approximately 7%.

On the revenue front, companies under coverage are expected to deliver around 11% year-on-year growth in core revenue. Ventive Hospitality is anticipated to lead with 15% growth, supported by new acquisitions, while IHCL and Leela are both projected to grow at around 11%.

IHCL’s growth is expected to be driven by an 8% increase in room inventory alongside expansion in its fee-based business. These factors underline the importance of both capacity addition and operational leverage in sustaining revenue growth.

Margin Stability with Select Pressures

Margins across the sector are expected to remain broadly stable on a year-on-year basis. However, certain companies may face pressure due to cost factors and operational adjustments.

Lemon Tree Hotels, for instance, could experience margin compression due to ongoing renovation costs and tax-related impacts. Similarly, IHCL and Chalet Hotels may face some pressure from lower operating leverage during periods of demand moderation.

Additionally, companies with higher exposure to international travel or specific urban markets could face near-term challenges, particularly in light of recent geopolitical developments affecting travel flows.

RevPAR Growth Moderation and Near-Term Outlook

The report projects a moderation in industry-wide RevPAR growth to 5–6%, compared to 12–13% recorded in the previous quarter. A similar growth trajectory is expected in the first quarter of FY27.

Despite this slowdown, the brokerage remains cautiously optimistic, noting that domestic demand continues to provide a stable foundation for the sector. Companies with lower dependence on foreign tourist arrivals are expected to outperform in the near term.

The report also highlighted potential risks, including a slowdown in ARR growth, which has already risen by around 45% compared to pre-pandemic levels, and broader macroeconomic uncertainties that could impact travel demand.

Overall, JM Financial’s outlook underscores a sector in transition, balancing strong domestic fundamentals with external headwinds, while maintaining long-term growth potential supported by expansion strategies and evolving demand patterns.