See upside of 40% in Inox Leisure: Jigar Shah

Jigar Shah of Kim Eng Sec India told CNBC-TV18, "The cinema exhibition is undergoing a very exciting phase. We are seeing good amount of sector consolidation. There is already a under screening in India because India is a under screened market with just 9 screen per million which is significantly lower than in China or other developed markets. Clearly our movies are becoming bigger. We just saw the kind of scramble for screens yesterday between the two movies that have released today. So, there is a very interesting play also on the F&B and advertising that is happening in the cinema houses.""Inox Leisure is also doing very well in terms of the screen addition, acquisitions, they have a good balance sheet, they are improving in terms of each of the matrix in terms of ticket price, F&B and advertising. So, we think they have a long way. They will expand their margins going forward by 300-350 basis points over the next two years. It is trading at about 7.5 times EBITDA for FY'17 which we believe is at about 20-25 percent discount to the peers which includes PVR and some of the other regional companies. So, we believe there is a scope for that gap to narrow. We have valued the stock at 10 times EBITDA for our target price which is roughly 40 percent higher than the current price," he said."On Inox Wind, we are very bullish because of the government initiatives to expand the size of the industry from about 2.2 gigawatt to about 4-4.5 gigawatt over the next 2-3 years. Also Inox Wind's programme to launch new products with better utilisation or the plant load factor is going to push them bit ahead in terms of market share. We see the market share going to 25-30 percent over the next 1-1.5 years. They have done capacity addition and they have a very strong backlog. The stock is trading at about 12 times PE one year forward versus global companies trading at about 20 times. So, we see a very interesting play there with the increasing importance of wind energy."