Buy Inox Leisure target of Rs 368: Prabhudas Lilladher

Prabhudas Lilladher's research report on Inox Leisure

INOL’s 4QFY21 performance was broadly in-line with our estimates. Emergence of 2nd wave has delayed the recovery process (only 17% screens are currently operational) and footfall stabilization is expected in 2HFY22 given rising instances of localized lockdowns prompting us to cut our FY22E EBITDA estimates by ~40% odd. Nonetheless, we keep our FY23E estimates broadly intact and remain constructive over the long term as content pipeline is strong which is expected to result in bunching up of releases post reopening.

Outlook

We maintain BUY with a revised TP of Rs368 (earlier Rs390), EV/EBITDA multiple of 10x (no change) FY23E. INOL’s low gearing (net D/E of 0.05x as of April 2021), the ongoing vaccination drive (eliminates fear psychosis which was present in 1st wave), encouraging ATP (higher/similar to pre-COVID levels for fresh content) / SPH (flat on YoY basis) trends and stringent cost control gives us additional comfort until normalcy resumes.