SPA is bullish on Adlabs Entertainment and has recommended buy rating on the stock with a target price of Rs 184 in its research report dated December 21, 2015.
SPA's reserach report on Adlabs Entertainment
Adlabs Entertainment Ltd (AEL) operates India's first theme park - Imagica, spread across 132 acres and 25 rides. It also operates water park - Aquamagica with 14 rides and 5-star hotel with 287 rooms (116 operational, rest to be operational by March 2016). Since its opening in April 2013, >2.8mn people have visited the park. To attract additional footfalls, AEL has entered into revenue sharing agreement to develop a Snow park and an Adventure park. It also plans to develop an integrated township spread across 170 acres of surplus land. We initiate coverage on the stock with SOTP valuation of INR 184 per share.
We believe that AEL, with its wholesome offering has positioned itself as a complete holiday and entertainment destination for all age groups and is trying to plug a significant gap in the premium outdoor entertainment market in the country comparable with the best in the world. AEL has not compromised on the quality and roped in international designer and the rides and equipments have been supplied by global OEMs who have been associated with various large format theme parks across the globe. If initial footfalls and feedback are any indication, the park has witnessed good response from the customers turning EBIDTA positive from very first year of operation. Secondly, entertainment has always been at the core of promoter's previous ventures. We believe that promoter has displayed ability to successfully scale up ventures and exit at right valuations (see Third Innings. pg 4). Given 100% FDI in theme parks, we assign high probability of either sale or induction of strategic investors at a later point of time. We initiate coverage on the stock with SOTP valuation of INR 184 per share.
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