Sharekhan Suggests Buying This Stock For 24% Return, Amid Falling Equity Market In India

Brokerage firm Sharekhan suggests buying the stocks of Inox Leisure, for a 24% upside, in 12 months. Inox Leisure has reported a strong in-line revenue performance of Rs. 296.5 crore, led by strong admissions, higher average ticket price (ATP), and increased spending per head (SPH).

Target Price

The Current Market Price (CMP) of Inox Leisure, is Rs. 379. Sharekhan has estimated a Target Price for the stock at Rs. 470. The company is expected to offer a 24.01% upside, in 1 year.

Stock Outlook
Current Market Price (CMP)	Rs. 379
Target Price	Rs. 470
1 year return	24.01%

Company performance

In Q3FYF22, Inox Leisure's revenue growth was strong and in line with expectations, while EBITDA beat estimates. Net loss narrowed down to Rs. 0.3 crore and was ahead of Sharekhan's estimate, led by a strong beat in operating profitability. Inox Leisure Limited (Inox) reported strong revenue growth in Q3FY2022, as cinema halls were fully operational across the country since the end of October 2021. ATP and SPH grew 11% and 20% as compared to pre-pandemic levels of Q3FY2020. EBITDA stood at Rs. 131.8 crore, above ours and the street's estimates as well, aided by strong revenue growth and negotiation of common area maintenance (CAM) and rent up to Q3FY2022-end.

Comments by Sharekhan

About the stock's potential, Sharekhan said, "We expect multiplexes to resume full-fledged operations once Wave-3 subsides. Given a successful vaccination drive in India, a strong movie pipeline, pent-up demand, improving occupancy because of a rising fully vaccinated eligible population, and strong screen addition in FY2022, we believe that the revenue recovery of Inox leisure would be strong in FY2023E. The company added 13 screens in Q3FY2022, taking total addition of 41 screens in CY2021. The company has added 24 screens till date in FY2022. The company will add 17 screens in the remaining period of FY2022 as 80% of the work has been completed."

About the company

Incorporated in 1999, Inox Leisure is one of the largest multiplex operators in India. The company currently operates 158 properties (667 screens and over 1.50 lakhs seats) located in 70 cities across India. Inox Leisure is the only multiplex operator having a diverse presence across India. The company accounts for a 20% share of multiplex screens in India and ~11% share of domestic box office collections. The company would continue to add 80-100 screens per year going ahead once the situation normalizes.

(Also read: Sharekhan Recommends To Buy This Equipment Stock For 20% Upside, Check Portfolio)

 

 

Disclaimer

The above stock was picked from the brokerage report of Sharekhan. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.