Emkay Global Financial recommended hold rating on Inox Leisure with a target price of Rs 235 in its research report dated June 09, 2020.
Emkay Global Financial's report on Inox Leisure
Inox reported better operating performance compared to PVR, with EBITDA rising 13% yoy, above our projections. Ticket sales also declined, but still better than PVR, owing to a 7% increase in ATP. F&B margins contracted 346bps sequentially, partially impacted by one-time inventory write-off. Management remains confident about rent waive-off during the lockdown and lower payout in subsequent quarters or till the business normalizes. Management plans to open 41 screens with a capex outlay of ~Rs300mn as 85% of the work has been completed for these screens. We estimate 30 screen additions in FY21. We expects footfalls to normalize from Q4FY20, starting with big-ticket releases from Q3.
Opening of cinemas in India and globally, with movie releases and occupancy, would be vital for the stock price. We maintain a Hold rating while ascribing 9x on FY22E EBITDA (IND-AS adj.) to arrive at a TP of Rs235. We remain EW in sector EAP.
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