Prabhudas Lilladher has given Buy recommendation for Inox Leisure with a target price of Rs. 486 in its research report issued on Jan 22, 2022
Prabhudas Lilladher’s research report on Inox Leisure
INOL’s operational performance was ahead of our estimates with Ind-AS adjusted EBITDA margin of 16.8% (PLe of 13.4%) aided by strong content (5 movies crossed Rs1bn mark in 3QFY22). ATP/SPH at Rs226/Rs97 was 11%/20% higher than 3QFY20 (comparable pre-COVID quarter) indicating that recovery has been sharp. While onset of 3rd wave has delayed the recovery process and prompted us to cut our FY22 EBITDA estimates by 36% (Jan has been a washout so far) we keep our FY23/FY24 EBITDA estimates broadly intact amid 1) less severe nature of the virus and 2) pick up vaccination drive (~70% adult population is fully vaccinated). Further, in 3rd wave we have seen occupancy restrictions being re-imposed rather than outright closures (Delhi and Haryana are exceptions) indicating that recovery to pre-COVID levels will be faster this time around leading to sharp revival in box office revenues due to bunching up of releases.
Consequently, we expect INOL’s FY23 sales/EBITDA to be higher by 14%/18% over the FY20 base. Maintain BUY with a TP of Rs486 (earlier Rs490) valuing the stock at 11x (no change) Sep23 EBITDA.