Buy Inox Leisure; target of Rs 700: Sharekhan

Sharekhan is bullish on Inox Leisure has recommended buy rating on the stock with a target price of Rs 700 in its research report dated August 03, 2022.

Broker Research

August 05, 2022 / 22:23 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.

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Sharekhan's research report on Inox Leisure

Q1FYF23 headline numbers were strong led by a sharp recovery in footfalls; EBITDA remained 40% higher compared to Q1FY20 levels, given 6% growth in admissions, 16%/19% growth in ATP/SPH, and sharp decline in employee costs per screen. Inox Leisure plans to add 60 screens in the remaining period of FY2023 even after adding 17 screens in Q1FY23 and capex would be funded through internal accruals. With a healthy movie pipeline, aggressive screen expansion, and success of dubbed southern movies across the country, revenue growth of Inox Leisure would be strong in FY2023E. We expect slight savings in fixed costs per screen, which could lead to higher profitability as compared to pre-pandemic levels.

Outlook

We maintain Buy on Inox Leisure with a revised PT of Rs. 700, given significant synergies across revenue (from merger with PVR), strong movie pipeline, and sustainable premium pricing.

For all recommendations report, click here