Buy Inox Leisure; target of Rs 610: Emkay Global Financial

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Emkay Global Financial's research report on Inox Leisure

Inox reported 38% QoQ revenue growth on a low base of Q2FY23, as box office collections improved – courtesy of select movies performing well. The company reported all-time records for both ATP and SPH, aided by a higher number of blockbuster movies and the company’s own initiatives in F&B. Advertising revenue also improved but is likely to take another couple of quarters to reach pre-Covid levels. The company reported net loss due to an exceptional team pertaining to the merger and deferred tax assets write-off. While Q4 is off to a strong start and the pipeline remains strong, audience acceptance and content quality remain key parameters. Like PVR, we have also cut our footfalls estimates for Inox by 8-9% for FY24/FY25 to factor in a more stringent filtration process by audiences.

Outlook

We have arrived at a revised TP of Rs610 (11.5x Dec-24E pro-forma EBITDA, removing the merger uncertainty discount).

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Inox Leisure - 31 -01-2023 - emkay