Buy UFO Moviez; target of Rs 730: Axis Direct

Axis Direct's research report on UFO MoviezUFO Moviez’ (UFOM)Q1FY17ad revenue grew 10% YoY, driven byhealthy ad spends across government (up 43%), while private ad revenue dipped 15% YoY givena high base (grew 1.5xin Q1FY16). Ad revenue per screen grew 12% as ad volumes grew 4%, while realization grew ~7% YoY in Q1 (QoQ dip in ad screens). UFO’s new initiatives, UFO Framez (200 of targeted 600 DSAs appointed) and Caravan (91 vans) expected to scale up H2FY17 onwards; ad growth guidance of >30% maintained for FY17. We expect UFOM to be the major beneficiary of ramp-up in ‘in-screen’ ad spends given (a) its successful strategy to aggregate ad inventory of single screens and (b) advanced technology offering more transparency and comfort to advertisers. Maintain BUY with TP of Rs 730 (8x FY18E EV/EBITDA).