Prabhudas Lilladher believes INOX's 'premiumisation' approach and strategy to focus on metro and Tier-1 markets is yielding rich dividends.
INOX Leisure gained 2.8 percent intraday on December 9 after global brokerage house CLSA remained bullish on the stock, having a buy call with a target price of Rs 450, implying a 23.55 percent potential upside from current levels.
"The company's focus remains on organic growth as it will continue with strong organic screen expansion, though it will be cautious in its approach towards inorganic growth," the brokerage said.
The management dismissed an immediate threat from OTTs (over-the-top streaming platforms), CLSA said. "We continue to believe OTTs are complimentary for multiplexes," it added.
Prabhudas Lilladher also retained its bullish stance on the stock after the company's interaction with the analysts at the Inox Megaplex in Mumbai.
While maintaining a buy call with a target of Rs 416, implying a 14 percent potential upside from current levels, the brokerage said Inox's “premiumisation” approach and strategy to focus on metro/tier-1 markets is yielding rich dividends.
A negligible debt and strong screen pipeline visibility-- around 900 new screens are in fray backed by signed agreements-- gives additional comfort, it added.
In a chat, Inox Director Siddharth Jain talked about how the strategy of penetrating metro/tier-1 markets with constrained aggression had helped improved ATP/SPH/Ad revenue per screen, the brokerage said.
"In order to penetrate deeper into the North, lot of screens have been signed in Gurgaon and Noida. However, Delhi continues to remain a challenge, given the 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 around 9 percent of screen mix). The emphasis is on improving margins by increasing the share of non-ticketing revenue (41 percent of sales mix in Q2FY20) while keeping the pricing (ATP) affordable," it added.
INOX unveiled its 11 screen megaplex at In-Orbit Mall, Malad. It is built over 60,000 square feet with 1,600 seats and can host around 6,000 patrons daily. The megaplex has 6 viewing formats viz; Insignia, Kiddles, ScreenX, MX4D, IMAX, and ONYX LED. A similar megaplex is to be launched in Lucknow as well.
A loyalty program was launched to get repeat footfalls. It has three variants viz; INOX blue, INOX gold and INOX black and the eligibility criteria is based on yearly spends on tickets and food and beverage.
The stock has rallied 29 percent in the last three months and 64 percent in the last one year. It was quoting at Rs 365.35, up Rs 1.15, or 0.32 percent, on the BSE at 1226 hours.Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.