Anand Rathi recommended hold rating on Inox Leisure with a target price of Rs 292 in its research report dated July 13, 2020.
Anand Rathi 's research report on Inox Leisure
While movie exhibitors will suffer in the short term and the pace of recovery will be slower, we believe they will rebound and gain from pent-up demand as home-sheltering subsides and people seek a communal experience on return of normalcy. We are structurally positive on multiplexes, though wary of their re-opening. With that in mind, we assume a lockdown in H1 FY21 and subdued H2 occupancy. Hence, we initiate coverage on Inox Leisure with a Buy rating, at a TP of `292 (valuing it at 9x FY22e EBITDA). With significantly reduced fixed costs (monthly `150m-170m cash-burn; pre-Covid-19: `700m-750m) and capital spending needed, Inox’ cash balance `720m and credit available (`750m) would suffice for nearly 8-10 months without any revenue coming in. Also, it had Treasury shares of `1bn market value, which could be liquidated for exigencies and to acquire attractive distressed assets.
Outlook
We initiate coverage on Inox Leisure with a Buy rating, at a TP of `292.
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