Jefferies has retained ‘Buy’ ratings on six travel and hospitality stocks even as it cut earnings estimates across aviation, airports and hotels sectors due to disruption linked to the Middle East, higher fuel costs and softer international traffic.
The international brokerage has revised price targets but continues to see upside across names, with potential gains ranging from about 25% to 48% based on its target prices and reference levels in the report.
Airlines see near-term pressure
Airlines face the steepest near-term pressure, with IndiGo seeing sharp earnings downgrades, while airports and hotels are relatively better supported by domestic travel demand. The report notes that international traffic weakness, cancellations and rerouting are weighing on volumes, though some of the impact is partly offset by higher fares and local travel substitution.
Despite these headwinds, Jefferies has retained its preference order within the sector, favouring airports over airlines and hotels, while continuing to back select stocks where valuations and earnings visibility over the medium term still justify ‘Buy’ ratings.
Jefferies on GMR Airports: ‘Buy’
Jefferies has a ‘Buy’ rating on GMR Airports with a target price of Rs125, implying an upside of about 34%.
The brokerage expects EBITDA to rise 51% year on year to Rs1,530 crore in the March quarter, supported by higher tariffs at Delhi airport, growth in non-aero spend per passenger and contributions from duty free and cargo operations. These drivers continue to support earnings even as traffic trends remain mixed.
At the same time, passenger growth is expected to stay largely flat in the near term due to weakness in international travel. Exposure to Middle East routes remains a key factor, with a meaningful share of traffic linked to affected corridors, which is weighing on overall throughput.
“Airspace disruptions, flight cancellations and rerouting across key Gulf hubs lead to intermittent suspension and scaling back of international services, impacting transfer and long haul traffic flows into India,” Jefferies says.
Jefferies on IndiGo: ‘Buy’
Jefferies maintains a ‘Buy’ rating on InterGlobe Aviation with a revised target price of Rs5,500, implying an upside of about 31%.
The brokerage expects a weak March quarter, with capacity growth at about 4% compared with earlier guidance of 10%. Unit revenues are also under pressure, with PRASK expected to decline, reflecting a combination of softer demand and operational disruption.
Jefferies builds in a forex loss of around Rs4,000 crore for the quarter, resulting in an estimated net loss of about Rs2,500 crore. Higher fuel costs and lower utilisation are further compressing spreads, prompting sharp earnings cuts for FY27 and FY28.
“Elevated airfares weigh on demand elasticity and result in some pressure on load factors even as fuel costs are passed through,” Jefferies says.
Jefferies on Indian Hotels Company: ‘Buy’
Jefferies retains a ‘Buy’ rating on Indian Hotels Company with a target price of Rs800, implying an upside of about 37%.
The brokerage expects steady performance in the March quarter, with revenue, EBITDA and profit seen growing 12% to 13% year on year. RevPAR growth of about 6% reflects continued strength in pricing and occupancy in domestic markets.
While foreign tourist arrivals are seeing some softness due to geopolitical factors, domestic travel demand and corporate bookings are helping offset the decline. This trend is particularly visible in city hotels and short haul leisure destinations.
“City hotels and drive to leisure destinations benefit as high airfares curb long haul travel and support shorter lead domestic demand,” Jefferies says.
Jefferies on ITC Hotels: ‘Buy’
Jefferies has a ‘Buy’ rating on ITC Hotels with a target price of Rs210, implying an upside of about 40%.
The brokerage expects strong March quarter growth, with revenue, EBITDA and profit projected to rise 19% to 22% year on year. This is driven by steady RevPAR growth in domestic operations and incremental income from international assets.
The company’s portfolio mix allows it to benefit from domestic demand even as inbound travel remains under pressure. Additional revenue streams, including overseas properties, are also contributing to growth momentum.
“Foreign tourist arrivals form a meaningful share of business and are higher spending guests, implying pressure in gateway markets, partly offset by domestic travel,” Jefferies says.
Jefferies on Chalet Hotels: ‘Buy’
Jefferies maintains a ‘Buy’ rating on Chalet Hotels with a target price of Rs910, implying an upside of about 25%.
The brokerage expects a softer quarter, with RevPAR declining about 4% year on year. Revenue and profit growth are likely to remain in the low single digits, reflecting weaker occupancy trends.
The pressure is largely due to reduced international travel and lower contribution from high spending foreign guests. This is weighing on performance across key hospitality assets in the portfolio.
“We lower EBITDA estimates across hotel peers and cut price targets, reflecting reductions in valuation multiples,” Jefferies says.
Jefferies on TBO Tek: ‘Buy’
Jefferies has a ‘Buy’ rating on TBO Tek with a target price of Rs1,615, implying an upside of about 48%.
The brokerage highlights the company’s exposure to the Middle East, which accounts for about 25% of hotel gross transaction value. This makes near term performance sensitive to cancellations and booking disruptions.
Despite this, strong growth is expected in the March quarter, with revenue projected to rise about 76% year on year, supported by acquisitions and a favourable base. Profit growth, however, is likely to remain more modest.
“Ongoing disruption impacts near term performance given upfront cancellation from travellers and delays the margin turnaround guided by the company,” Jefferies says.
Conclusion
Jefferies’ latest report shows a sector adjusting to external shocks, with airlines facing the sharpest earnings pressure while airports and hotels remain relatively resilient. Even after lowering estimates and trimming price targets, the brokerage continues to back select stocks where demand visibility and valuations support upside, with potential gains ranging between about 25% and 48%.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.
