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Buy Inox Leisure; target of Rs 699: Prabhudas Lilladher

Prabhudas Lilladher is bullish on Inox Leisure has recommended buy rating on the stock with a target price of Rs 699 in its research report dated August 03, 2022.

August 06, 2022 / 08:36 AM IST
The research firm ICICI Securities believes earnings of apparel brands and retail companies under their coverage may surprise positively from Q3FY22E as the likely demand recovery may result in better than expected margin performance. Some of the costs savings achieved during pandemic may sustain and coupled with high operating leverage may lead to higher than pre-covid margins from Q3FY22E.  Stocks like Trent, V-Mart and Aditya Birla Fashion and Retail are the preferred picks backed by their strong and consistent track record of execution.

The research firm ICICI Securities believes earnings of apparel brands and retail companies under their coverage may surprise positively from Q3FY22E as the likely demand recovery may result in better than expected margin performance. Some of the costs savings achieved during pandemic may sustain and coupled with high operating leverage may lead to higher than pre-covid margins from Q3FY22E.  Stocks like Trent, V-Mart and Aditya Birla Fashion and Retail are the preferred picks backed by their strong and consistent track record of execution.

 
 
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Prabhudas Lilladher's research report on Inox Leisure


INOL reported exceptional performance with top-line beat of 8% and pre INDAS EBITDA margin of 21.2% (PLe of 17.6%) buoyed by strong content. Despite ATP being at an all-time high of Rs229, footfalls were 6% higher than preCOVID base evading concerns that unduly high pricing is acting as a hindrance to admissions. Nonetheless, ad-revenue performance is still lagging (36% lower than 1QFY20) and management is hopeful of a recovery in 2HFY23E. Overall, this was the best ever quarter for INOL and we maintain our positive bias given 1) healthy content pipeline (minor blip in July) 2) encouraging commentary on ad-revenue recovery 3) strong screen opening outlook 4) noteworthy improvement in KPIs (ATP/SPH was 16%/19% above pre-COVID base) and 5) healthy BS (gross debt of Rs810mn; only national chain to be net debt free) Further, the announced merger with PVR is progressing well and an application with NCLT has been filed.



Outlook


Retain BUY on the stock with a TP of Rs699 (arrived from swap ratio of 3:10 with PVR) after assigning EV/EBITDA multiple of 15.5x (no change) to the merged entity.

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Inox Leisure - 040822 - prabhu

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first published: Aug 6, 2022 08:36 am
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