Prabhudas Lilladher has given Buy recommendation for Inox Leisure with a target price of Rs. 652 in its research report issued on Oct 19, 2022

Prabhudas Lilladher’s research report on Inox Leisure

In-line with our expectations, INOL reported weak performance and managed pre IND-AS EBITDA break-even with losses of Rs214mn (PLe Rs242mn) at bottom-line level due to weak content. Except for Thor and Brahmastra, no movie was able to breach the Rs1bn NBOC barrier in 2QFY23. Despite subdued performance, as content slate for near term is healthy with releases like Ram Setu, Thank God, Drishyam-2, Avatar and Black Panther in pipeline we anticipate strong back-ended recovery and expect footfalls in FY23E to be at par over pre-pandemic base. We increase our FY24E/FY25E EBITDA estimates by ~4% odd as we re-align our cost assumptions given strong fixed cost control post COVID. Except for rental obligations which were up 3% on per screen basis as escalations kicked in, employee cost, power & fuel and other overheads have declined by 27%/3%/21% respectively over pre-pandemic base in 2QFY23.


We expect sales/EBITDA CAGR of 21%/25% over FY23-FY25 and retain BUY on the stock with a TP of Rs652 (arrived from swap ratio of 3:10 with PVR) after assigning EV/EBITDA multiple of 15.5x (no change) to the merged entity.

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