Buy Inox Leisure; target of Rs 340: Anand Rathi

Anand Rathi's research report on Inox Leisure

After trailing PVR for several years, we find Inox best suited to make the most of the situation as it has a strong balance sheet with Rs1.3bn net cash(vs. PVR’sRs11.3bn net debt), less cash burn/month till normalcy returns (Rs0.4bn vs. PVR’s Rs0.6bn) and has grown faster over FY17-FY20 on several key operating parameters: ATP (4%, vs. PVR’s 1% CAGR), spend/ head (9% vs. 7%) and ad revenue/screen (12% vs. 4%). All these factors enable Inox to expand faster in the next phase of the growth cycle and reduce the gap in the footprint with PVR (~643 screens, vs. PVR’s ~844).

Outlook

We introduce our FY23e and maintain our Buy rating with a new target price of Rs340 (earlier Rs292, valuing it at 10x FY23e EBITDA).

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