Inox Leisure Ltd. share price target

FY2019 roundup: Footfalls grew by 17.5% y-o-y in FY2019 after muted growth for the last couple of years (0.6%/-0.9% y-o-y in FY2017/FY2018). ATP grew by 2.1% y-o-y after the impact of GST reduction, while SPH was up 10.9% y-o-y despite issues of taking outside food into the multiplexes. Ad revenue continued to report strong growth of 27% y-o-y. Revenue grew...

basis is expected to moderated in Q1FY2020E compared to both Q1FY2019 and Q4FY2019 despite Q1 being a seasonally strong quarter, owing to lower number of quality contents (Avenger End Game, Maharshi, Bharat) during the quarter and higher revenue base of Q1FY2019 (owing to movies like Avengers: Infinity War, Raazi, Race3, Baaghi 2, and Jurassic World:...

Q3FY19 revenue was at | 433 crore, up 32.9% YoY (vs. our estimate of | 418.6 crore), driven by healthy box office collections for the quarter (despite high base). Net box office collections for the quarter were up 29.3% YoY to | 242.9 crore, (vs. 25.5% YoY growth estimate) due to 26% YoY growth in footfalls (vs. 22% YoY expectations) while ATP grew 3.5% YoY to | 206 (vs. our expectation of 3.0% YoY growth to | 205). F&B; revenues grew 45.4% YoY to | 106.3 crore vs. our estimate of ~39.9% YoY growth while ad revenues grew 38.3% YoY to | 55.7...

GST cut on movie tickets likely to give impetus to industry: In the Goods and Services Tax (GST) Council meeting held on December 22, 2018, the government has reduced the GST rate on cinema tickets costing more than Rs. 100 to 18% from 28% and for tickets below Rs. 100 to 12% from 18%. The new GST rates are likely to be implemented from January 1, 2019. With...

GST cut on movie tickets likely to give impetus to industry: In the Goods and Services Tax (GST) Council meeting held on December 22, 2018, the government has reduced the GST rate on cinema tickets costing more than Rs. 100 to 18% from 28% and for tickets below Rs. 100 to 12% from 18%. The new GST rates are likely to be implemented from January 1, 2019. With...

We recently met INOX Leisure Limited's (ILL) CFO Mr. Kailash B Gupta to discuss the company's expansion strategy and the management outlook on F&B; and advertisement revenues going forward. We also discussed on the objective of recent fund raising (Rs. 160 crore) from its promoters. Screen addition set to accelerate further: INOX Leisure Limited's (ILL) new screen addition...

Q2FY19 revenues came in at | 365.3 crore vs. our estimate of | 346.5 crore, up 17.7% YoY, driven by healthy ad and F&B; revenues growth during the quarter. Footfalls for the quarter grew 7.2% YoY while ATP grew ~5% YoY to | 195. Spend per head (SPH) grew 12.3% YoY to | 73. Net box office collections came in at | 206.4 crore, up 11.2% YoY. F&B; revenues grew 41.4% YoY to at | 94.9 crore vs. our expectations of 34%YoY, aided by lower GST rates EBITDA came in at | 44.8 crore vs. estimate of | 41.9 crore owing to...

Inox reported healthy revenue growth YoY supported by better spend per head along with growth in BO and ad. revenue. EBITDA margin declined 180bps YoY at 12.3% due to higher direct cost and other expenses (higher F&B; input cost and legal expenses due to the F&B; case being contested); box office collection is expected to be strong led by release of big movies like Robot 2.0 and Thugs of Hindostan in Q3FY9. Inox is currently trading at valuations of 7.6x/6.7x based on our FY20/FY21 EV/EBITDA estimates....

We met the management of Inox Leisure to understand the current state of the F&B; issue and business strategy of the company ahead. The management indicated that F&B; issue seems to be fading away now due to favourable judgements on similar petitions in Madhya Pradesh, Telangana and Jammu & Kashmir. Major multiplex players have taken selective F&B; price moderation in Maharashtra to mitigate public outrage. The screen addition guidance has been revised upwards to 65+ screens in FY19 vs. earlier guidance of 59 screens on account of better visibility....

Inox Leisure's (INOL) Q1FY19 result was in-line with our forecast. Strong growth of 26.3% YoY in F&B; revenue and ~20% YoY growth in advertisement revenue resulted in EBITDA margin crossing the 20% mark after twelve quarters. We believe that like for the sector, INOL's valuation has headwind in the near term from the outcome of the PIL filed in the Mumbai High Court for allowing outside F&B; and risk of any government interference as regards the pricing of F&B.; We believe that in case of a court process being followed, multiplex players are on a strong footing. However, the timeliness of the outcome remains uncertain....