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Last Updated : Nov 18, 2016 06:11 PM IST | Source: Moneycontrol.com

Buy Adlabs Entertainment; target of Rs 160: SPA Financial

SPA Financial is bullish on Adlabs Entertainment has recommended buy rating on the stock with a target price of Rs 160 in its research report dated November 09, 2016.

 
 
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SPA Financial's research report on Adlabs Entertainment


AEL reported mixed set of numbers with lower than expected footfalls but better cost control and signing of LoI for development of surplus land. Adjusted for Snow Park, footfalls were down by 30% YoY. However, due to rationalization of ticket prices, blended realization was up by 26% YoY which helped in revenue growth of 6.5% to INR 369 mn. EBIDTA increased by 116% YoY to INR 11 mn on back of better cost control. Commissioning of remaining 170 hotel rooms is getting delayed and now will be commissioned at the end of Q4FY17. We maintain our BUY recommendation, with SOTP target price to INR 160.


AEL continues to falter on footfalls while delivering on most parameters like EBIDTA margin, traction in hotel business and clarity on land monetization. While some loss in footfalls can be explained by long monsoon in its key region of Mumbai, Pune & Gujarat, 20% YoY fall was disappointing given that Q2FY16 was also a soft quarter due to Mumbai-Pune highway disruption. On the positive side, management has been delivering on its timeline for land monetization and guidance of turning cash positive in FY17E. By Q3FY17 we should have details of cash flows that would accrue to the company from land monetization and increased ARPU coupled with cost reduction should help it become cash positive in 2HFY17E. We maintain our BUY recommendation with SOTP target price to INR 160.

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First Published on Nov 18, 2016 06:11 pm
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