Buy Imagicaaworld Entertainment; target of Rs 77: Prabhudas Lilladher

Prabhudas Lilladher's research report on Imagicaaworld Entertainment

We cut our EBITDA estimates by 33%/9% for FY26E/FY27E as we fine tune our footfalls assumptions given early monsoon in Western India during peak summer resulted in a 22.4% YoY decline in footfalls to 0.95mn (PLe 1.24mn). IMAGICAA IN reported weak set of results as revenues declined 19.5% YoY to Rs1,481mn with EBITDA margin of 49.0% driven by early monsoon in the western region and postponement of school vacations. Given 1Q is a seasonally strong quarter for water parks, we believe recovery in ensuing quarters will be difficult and thus FY26E might turn-out to be a challenging year for IMAGICAA IN. Nonetheless, with recent inauguration of a water park in Indore, expected ground breaking at Sabarmati Park in 2HCY25E and plans to create a pan-India park network provides comfort from a long-term standpoint.

Outlook

We expect sales/EBITDA CAGR of 7%/12% over FY25-FY27E and retain BUY with a SoTP based TP of Rs77 valuing both the park/hotel business at EV/EBITDA multiple of 21x.