Prabhudas Lilladher's research report on Inox Leisure
We increase our revenue/EBITDA estimates by 7%/5% for FY20 and 7%/4% for FY21 given strong beat during the quarter & healthy movie pipe-line for 2HFY20 amid upcoming festivities. However, we cut our PAT estimates by 2%/7% for FY20/21 as Inox has decided to pay tax at a higher tax rate of ~35% to 1) avail benefits of section 80IA and 2) utilize unabsorbed MAT credit of Rs210mn. The decision to migrate to the new tax regime will be taken by end of March 2020 depending upon which option in more profitable. This was an excellent quarter for Inox with top-line increasing 42.3% YoY to Rs5,199mn (PLe of Rs4,095mn) buoyed by strong content (4/5 movies crossed Rs1bn in box office collections). Ind-AS adjusted EBITDA margin expanded 750bps YoY to 19.8%. Given 1) strong number 2 position in film exhibition market (~21% screen market share) 2) renewed focus on premium format screens (~9% of screen mix; aim to take it to ~10-12%) and 3) aggressive screen addition plans (44 screens are expected to be opened in 2HFY20) we expect sales/Ind-AS adjusted EBITDA to grow at a CAGR of 19%/22% over FY19-21E.
We assign EV/EBITDA multiple of 8.7x (earlier 8.5x) to our FY21E EBITDA of Rs7.4bn and arrive at a TP of Rs416 (earlier Rs394). Retain BUY.
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.