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Buy Inox Leisure; target of Rs 416: Prabhudas Lilladher

December 09
16:25 2019

Prabhudas Lilladher’s research report on Inox Leisure

In a freewheeling chat with the analyst community at INOX Megaplex (recently renovated property in Mumbai), Siddharth Jain, Director, emphasized on how the strategy of penetrating in metro/tier-1 markets with constrained aggression has helped in improving ATP/SPH/Ad revenue per screen. In order to penetrate deeper into the North, lot of screens have been signed in Gurgaon & Noida. However, Delhi continues to remain a challenge given scarcity of new malls. In all, the target of adding 70 screens for FY20E remains intact. A new loyalty program was also unveiled with a clear focus on premiumisation (premium screens constitute ~9% of screen mix). The emphasis is on improving margins by increasing the share of non-ticketing revenue (41% of sales mix in 2QFY20) while keeping the pricing (ATP) affordable. We believe INOL’s premiumisation approach and strategy to focus on metro/tier-1 markets is yielding rich dividends. Negligible debt and strong screen pipeline visibility (~900 new screens are in fray backed by signed agreements) gives additional comfort.

Outlook

We thus maintain our BUY rating with a TP of Rs416, valuing the stock at an EV/EBITDA multiple of 8.7x on FY21 Ind-AS compliant earnings.

For all recommendations report, click here

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