Prabhudas Lilladher is Bullish on INOX Leisure, has recommended buy rating on the stock with a target price of Rs 652 in its research report dated October 19, 2022.
Research report by Prabhudas Lilladher on INOX Leisure
In line with our expectations, INOL reported weak performance and managed an ex-Ind-AS EBITDA break-even with a loss of Rs 214 million (PLE 242 million) at the lower level due to weak material. Barring Thor and Brahmastra, none of the films were able to break the Rs 1bn NBOC barrier in 2QFY23. Despite the weak performance, the content slate is healthy for the near term with releases like Ram Setu, Thank God, Drishyam 2, Avatar and Black Panther, we expect a strong back-ended recovery and hopefully FY13E There will be footfall in comparison to before. Epidemic base. We increase our FY24E/FY25E EBITDA estimates by ~4% odd as we re-align our cost assumptions given strong fixed cost controls post COVID. Excluding rental obligations, which were up 3% on a per screen basis, as increased, employee costs, electricity and fuel and other overheads declined by 27% / 3% / 21% respectively in 2QFY23 on a pre-pandemic basis .
Outlook
We expect Sell / EBITDA CAGR of 21% / 25% in FY 2013-FY 2015 and Buy on stock with TP of Rs 652 after specifying EV / EBITDA multiplier of 15.5x (3 with PVR) Changes arrived at from a swap ratio of :10) for the merged entity.
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