Inox Leisure is the second largest player in terms of multiplex screen count in India. Currently, the company operates 692 screens in 163 cinemas in 73 cities in India with an aggregate seating capacity of ~1.55 lakhs seats.
Robust performance was led by strong box office recovery.
Inox’ share price has grown at 19% CAGR over the past five years (from ~₹ 249 in August, 2017 to ~₹ 603 levels in August, 2022).
We maintain BUY rating on the company
We value Inox at ₹ 720 i.e. 15x FY24E EV/EBITDA
Apart from Inox Leisure, we like PVR in the multiplex space.
(Year-end March) | FY19 | FY20 | FY21 | FY22E | 5 yr CAGR (FY17-22) | FY23E | FY24E | 4 yr CAGR (FY20-24E) |
---|---|---|---|---|---|---|---|---|
Total Operating Income (| crore) | 1,692.2 | 1,897.4 | 105.9 | 683.9 | -11.0 | 2,295.9 | 2,684.5 | 9.1 |
EBITDA (| crore) | 308.3 | 596.8 | -172.3 | 71.7 | -13.0 | 828.6 | 1,019.9 | 14.3 |
Net Profit (| crore) | 133.5 | 15.0 | -337.7 | -239.4 | ||||
EPS (|) | 13.0 | 1.5 | -30.0 | -19.6 | - | 16.4 | 24.9 | - |
P/E (x) | 46.3 | 413.0 | -20.1 | -30.8 | - | 36.7 | 24.2 | - |
Price / Book (x) | 6.4 | 9.9 | 10.7 | 10.6 | - | 8.5 | 6.5 | - |
EV/EBITDA (x) | 24.2 | 17.0 | -58.8 | 140.8 | - | 12.0 | 9.7 | - |
RoCE (%) | 19.6 | 9.9 | -11.7 | -5.4 | - | 14.2 | 16.9 | - |
RoE (%) | 14.2 | 2.4 | -62.5 | -50.6 | - | 23.2 | 26.7 | - |
- | - | - | - | - | - | - | - | - |
Notably, Q1 revenues were 18% higher than pre-Covid levels in Q1FY20. The company has witnessed a strong Q1, led by superlative performances by KGF 2, Bhool Bhulaiyaa 2, RRR (residual collection), Doctor Strange, Vikram (Tamil) etc. Consequently, the footfalls were up ~67% QoQ at 18.4 million (6% above pre Covid levels) and ATP at
| 229 was up ~5% QoQ owing to slate mix. We highlight that content pipeline is very strong and there is high probability of strong collections in the coming quarters too. We bake in 77, 80 screens addition in FY23E, FY24E, respectively. Consequently, we build in footfall growth of 5% CAGR in FY20-24E to 80 million coupled with 4.5% CAGR in ATP to lead to ~10% FY20-24E CAGR in net box office revenues to | 1602 crore. F&B revenue CAGR is estimated at 11.5% over FY20-24E leading to a total of | 768 crore. Ad revenue is expected to take longer to recover. We expect ad revenue of | 200 crore in FY24E (~12% higher than FY20). We expect strong recovery in FY23 with all variables (except advertisement back to pre-Covid levels for the full year.
As on date, the company has close to | 375 crore of gross liquidity, including undrawn limit of | 125 crore. Gross debt is | 81 crore. It also indicated that for the merger, they have filed for approval with NCLT and are now awaiting approvals (likely to take five to seven months). It also indicated that merger is on track to be completed in stipulated timelines.
We believe that that with strong content pipeline, the recovery trend will continue ahead. Inox with strong balance sheet is poised to grow at superior rate. We maintain BUY and assign FY24E EV/EBITDA multiple of 15x, with a target price of | 720/share.
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Pankaj Pandey |
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pankaj.pandey@icicisecurities.com |
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