ICICI Direct recommended hold rating on Inox Leisure with a target price of Rs 250 in its research report dated August 06, 2020.
ICICI Direct's research report on Inox Leisure
Inox Leisure reported a washout Q1FY21 as expected. Nationwide lockdown following Covid-19 outbreak resulted in complete suspension of business activities for multiplexes. It registered zero footfalls leading to almost nil revenues. Other operating income of just Rs 30 lakh was reported. EBITDA (ex-Ind-AS 116) loss was at Rs 35.9 crore, against EBITDA of Rs 89.1 crore in Q1FY20. Losses were lower than expectations on account of cost reduction on power & fuel, R&M and other overheads fronts. Inox recognised Rs 69.3 crore towards reduction of rental expenses following the invocation of Force majeure clause. Consequently, the company reported a net loss (ex- Ind-AS 116) at Rs 52 crore. On a reported basis, net loss was at Rs 73.6 crore.
Outlook
We maintain HOLD rating and value the stock at 8x FY22E (ex-Ind-AS) EV/EBITDA with a target price of Rs 250/share.
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