INOX Leisure

Visit us at www.sharekhan.com
September 28, 2015
INOX Leisure
Reco: Buy
Poised to script a blockbuster
Key points
Company details
Price target:
Rs307
Market cap:
Rs2,112 cr
52-week high/low:
Rs270/145
NSE volume:
(No of shares)
CMP: Rs219
2.4 lakh
BSE code:
532706
NSE code:
INOXLEISUR
Sharekhan code:
INOXLEISUR
Free float:
(No of shares)
5.0 cr
Shareholding pattern
 Making of a mega show: INOX Leisure Ltd (ILL), India’s second largest multiplex
operator with 101 properties and 393 screens across 55 cities accounting for about
23% of the multiplex screens in India, is scripting a blockbuster growth story through
a mix of inorganic (acquisition of Satyam Cineplexes that provides it a foothold in
the lucrative northern market) and aggressive organic expansion plan to scale up
the total screen count to 565-570 screens over the next 24-30 months. In addition
to its aggressive push in the northern region (where it aims to challenge the
dominance of PVR Cinemas), ILL is leveraging on its strong brand and balance sheet
to increase its presence in tier-II and tier-III towns where the multiplex phenomenon
is gradually catching the mindshare, in line with India’s inclusive growth story.
 Top-class casting and script in place: The ILL mega show is supported by an improving
content quality in the Indian mainstream and regional cinema with its movies regularly
hitting the Rs100-crore or Rs200-crore box-office collection mark. The acceptance of
Hollywood movies has also provided another source of quality saleable content for
multiplexes not just in metros but across cities in the country. The economic conditions
are also turning favourable to support a robust uptick in urban discretionary spending,
given the sharp moderation in inflation and a steady job market. The urban leisure
consumption would also get a boost from the expected 25-30% hike in salaries of the
central and state government employees with the implementation of the Seventh
Pay Commission’s recommendation.
 Recommend Buy with price target of Rs307: ILL’s revenues and net income are
expected to grow at a CAGR of 19% and 35.5% respectively over FY2016-18 led by
strong box-office revenues (at a 19% CAGR), higher F&B revenues (at a 23% CAGR)
and advertising revenues (at a 20% CAGR) over FY2016-18. Further, a healthy balance
sheet with a 0.3 debt/equity ratio and treasury shares of 4.3 crore shares provide
strength to drive the inorganic growth activities in the coming years. At the current
market price of Rs219, the stock trades at EV/EBITDA of 11x, 9x and 7.4x FY2016E,
FY2017E and FY2018E earnings respectively. We believe ILL with its strong brand and
extended reach is well poised to leverage the opportunity in India’s under-penetrated
multiplex sector. We initiate coverage on ILL with a price target of Rs307, based on
9x FY2018E EV/EBITDA.
Price chart
 Key risk: (1) ILL has accelerated its expansion plan over the next two to three
years and any delay in the execution of the plan is a risk; and (2) any pause in the
inflow of quality movie content will affect the earnings of the company.
Valuation
Particulars
Price performance
(%)
1m
3m
6m 12m
Absolute
2.1
23.8
35.7
22.0
Relative
1.5
to Sensex
32.1
46.2
24.4
Total revenues (Rs cr)
EBITDA margin (%)
Net profit (Rs cr)
EPS (Rs)
PER (x)
P/BV (x)
EV/EBITDA (x)
RoE (%)
RoCE (%)
FY2015*
FY2016E
FY2017E
FY2018E
1,016.8
12.1
20.0
2.2
100.3
3.0
18.7
3.0
6.9
1,374.3
14.7
73.7
8.0
27.3
2.7
11.3
9.8
13.3
1,665.2
15.1
104.5
11.4
19.2
2.4
9.0
12.2
15.7
1,947.3
15.4
135.4
14.8
14.8
2.0
7.4
13.7
17.6
*FY2015 includes consolidation of Satyam Cineplexes, which will affect the overall profitability Source: Company and Sharekhan Research
stock idea
INOX Leisure
Investment arguments
Making of a mega show: ILL, India’s second largest multiplex operator with 101 properties and 393 screens across 55
cities accounting for about 23% of the multiplex screens in India, is scripting a blockbuster growth story through a mix
of inorganic (the acquisition of Satyam Cineplexes that provides it a foothold in the lucrative northern market) and
aggressive organic expansion plan to scale up the total screen count to 565-570 screens over the next 24-30 months.
In addition to its aggressive push in the northern region (where it aims to challenge the dominance of PVR Cinemas),
ILL is leveraging on its strong brand and balance sheet to increase its presence in the tier-II and tier-III towns where
the multiplex phenomenon is gradually catching the mindshare, in line with India’s inclusive growth story.
Exhibit 1: ILL has presence across the country, the second largest multiplex operator
Exhibit 2: Accelerated screen addition over the next couple of years, to reach 557 screens by FY2018
Source: Company
Source: Company
Sharekhan
2
September 2015
stock idea
INOX Leisure
Multiplex phenomenon is gradually catching the mindshare and wallet share of tier-II and tier-III towns
Exhibit 3: Retail attractiveness of tier-II and tier-III cities
Exhibit 4: Retail attractiveness of tier-I cities
Source: Industry reports
Source: Industry reports
Exhibit 5: Screen additions by major multiplex chains in 2014
Cinema
Number of
properties
Number of
screens
Locations
Inox Leisure
9
31
Udupi, Jalgaon, Bhilwara, Vizag, Faridabad, Gurgaon, Noida, Delhi, Kolkata
PVR Cinemas
5
22
Hubli, Ahmedabad, Mangalore, Bhopal, Jalandhar
Cinepolis
3
26
Carnival Cinemas
1
3
Delhi
K Sera Sera Miniplex
3
6
Abohar, Nawanshahr, Hoshiarpur
Mukta Arts
4
11
Priya Entertainment
1
3
26
102
Total
Vijayawada, Vadodara, Thane
Sangli, Aurangabad, Bhopal, Hyderabad
Haldia
Source: Industry reports
Top-class casting and script in place: ILL’s mega show is supported by an improving content quality in the Indian
mainstream and regional cinema with movies regularly hitting the Rs100-crore or Rs200-crore box-office collection
mark. The acceptance of Hollywood movies has also provided another source of quality saleable content for multiplexes
not just in metros but across cities in the country.
Growing acceptance of quality content across markets
•
From one movie in 2008, “Ghajini”, which crossed the Rs100-crore mark in 18 days, there were nine movies
in 2014 that made it to +Rs100-crore club.
•
It took “Bajrangi Bhaijaan” just three days to reach the Rs100-crore mark as compared with the 18 days
taken by “Ghajini” in 2008.
•
Even regional movies like “Baahubali” (a Telugu movie dubbed in Hindi) crossed the Rs100-crore mark in
2015.
•
Hollywood movie “Furious 7” garnered Rs104 crore in the domestic box office while other Hollywood movies
like “Avatar” (2009; Rs145 crore), “2012” (2009; Rs94 crore) and “Life of Pi” (2012; Rs80 crore) were also
widely accepted in the domestic box office.
•
A higher number of screen releases from 1,600 screen releases of “Dabaang” in 2010 to more than 4,500
screen releases for “Bajrangi Bhaijaan” in 2015 also helped the latter to reach the Rs100-crore mark in just
three days, the fastest in Indian film history.
Sharekhan
3
September 2015
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INOX Leisure
Exhibit 6: Rs100-crore break-up year-wise
Exhibit 10: Upcoming Hollywood movies in 2015
Year
No. of movies
Highest (cr)
2008
1
114.0
2009
1
202.5
2010
2
138.9
2011
5
148.9
2012
9
198.8
2013
8
284.3
2014
9
340.8
2015
4
Release date
25-Sep-15
2-Oct-15
2-Oct-15
9-Oct-15
16-Oct-15
16-Oct-15
23-Oct-15
6-Nov-15
20-Nov-15
25-Nov-15
18-Dec-15
320.3
Source: Industry reports
A strong content pipeline
Film name
The Intern
The Martian
Legend
Pan
Crimson Peak
Bridge of Spies
The Last Witch Hunter
Spectre
The Hunger Games: Mockingjay - Part 2
The Good Dinosaur
Star Wars: The Force Awakens
Source: Industry reports
Exhibit 7: Upcoming Bollywood movies in 2015
Release date
2-Oct-15
9-Oct-15
22-Oct-15
12-Nov-15
27-Nov-15
4-Dec-15
18-Dec-15
18-Dec-15
Film name
Singh is Bling
Jazbaa
Shaandaar
Prem Ratan Dhan Payo
Tamasha
Wazir
Dilwale
Bajirao Mastani
Star cast
Akshay Kumar, Kareena Kapoor Khan, Amy Jackson
Aishwarya Rai Bachchan, Irrfan Khan
Shahid Kapoor, Alia Bhatt
Salman Khan, Sonam Kapoor, Neil Nitin Mukesh
Ranbir Kapoor, Deepika Padukone
Amitabh Bachchan, Farhan Akhtar
Shah Rukh Khan, Kajol, Varun Dhawan, Kriti Sanon
Ranveer Singh, Priyanka Chopra, Deepika Padukone
Source: Industry reports
Exhibit 8: Upcoming Bollywood movies in 2016
Release date
22-Jan-16
5-Feb-16
12-Feb-16
4-Mar-16
18-Mar-16
15-Apr-16
29-Apr-16
13-May-16
3-Jun-16
3-Jun-16
12-Aug-16
12-Aug-16
12-Aug-16
Film name
Airlift
Rocky Handsome
Fitoor
Jai GangaaJal
Kapoor & Sons
Fan
Baaghi
Azhar
Jagga Jassos
Housefull 3
Mohenjo Daro
Rustom
Baadshaho
Star cast
Akshay Kumar
John Abraham
Katrina Kaif, Aditya Roy Kapur
Priyanka Chopra
Sidharth Malhotra, Alia Bhatt
Shah Rukh Khan
Tiger Shroff, Shraddha Kapoor
Emraan Hashmi
Ranbir Kapoor, Katrina Kaif and Govinda
Akshay Kumar, Abhishek Bachchan, Riteish Deshmukh
Hrithik Roshan
Akshay Kumar
Ajay Devgan
Source: Industry reports
Exhibit 9: Bollywood movies released in Q2FY2015
Release date
3-Jul-15
10-Jul-15
17-Jul-15
31-Jul-15
7-Aug-15
14-Aug-15
21-Aug-15
21-Aug-15
28-Aug-15
28-Aug-15
4-Sep-15
11-Sep-15
18-Sep-15
Film name
Guddu Rangeela
Baahubali
Bajrangi Bhaijaan
Drishyam
Bangistan
Brothers
All Is Well
Manjhi The Mountain Man
Phantom
Baankey Ki Crazy Baraat
Welcome Back
Hero
Katti Batti
Star cast
Arshad Warsi, Amit Sadh
Prabhas, Rana Daggubati, Tamannaah
Salman Khan, Kareena Kapoor Khan
Ajay Devgn, Tabu, Shriya Saran
Riteish Deshmukh, Pulkit Samrat
Akshay Kumar, Sidharth Malhotra
Abhishek Bachchan, Asin
Nawazuddin Siddiqui, Radhika Apte
Saif Ali Khan, Katrina Kaif
Sanjay Mishra, Rajpal Yadav
John Abraham, Shruti Haasan
Sooraj Pancholi, Athiya Shetty
Imran Khan, Kangna Ranaut
Source: Industry reports
Sharekhan
4
September 2015
stock idea
INOX Leisure
Overall consumption capacity set to improve, led by lower inflation and Seventh Pay Commission hike:
The economic conditions are also turning favourable to support a robust uptick in urban discretionary spending, given
the sharp moderation in inflation and steady job market. The urban leisure consumption would also get a boost from
the expected 25-30% hike in the salaries of the central and state government employees with the implementation of
the Seventh Pay Commission’s recommendation.
Seventh Pay Commission hike will help improve the wallet of Indian government employees
•
The Seventh Pay Commission was set up by the government to revise the remuneration of about 2.5 crore
central and state government employees.
•
The pay/allowances could rise by 25-30% following the implementation of the Seventh Pay Commission’s
recommendation.
•
The increase in bonus payments and pay/allowances would cumulatively imply spending of Rs2,60,000
crore, which is to the tune of 1.5-1.7% of the gross domestic product in FY2017.
Exhibit 11: Around 2.5 crore people from central and state government will benefit from the implementation of the recommendation
of the Seventh Pay Commission which will lead to an inflow of around Rs2,600 billion by FY2017 and drive the discretionary spending.
Source: Industry reports
Exhibit 13: India’s personal disposable income (PDI) growth
comparison with other emerging markets
Exhibit 12: The India consumption story
*
Source: Industry reports
Source: Industry reports
*Middle class segment expected to
grow much faster and form around 59%
of the total consumption
Sharekhan
India is well placed to have higher
disposal income growth as compared
with other emerging markets
5
September 2015
stock idea
INOX Leisure
Financial positives
ILL financials
Revenues (FY2015)*
Box-office collection
revenues
1. Gross box-office
collection (GBOC) is
66.2% of total
revenues
2. Entertainment tax
as % of GBOC is
18.0%
3. Net box-office
collection is 62%
(including
distributers’ share)
Expenses (FY2015)*
Advertisement
revenues
F&B revenues
1. F&B revenues are
18.8% of total
revenues
1. Advertisement
revenues are 8.0%
of total revenues
2. No. of patrons
spending on F&B
was 3.5 crore
FY2015
2. As of FY2015 total
no. of screens is
372
3. Spend per head is
Rs55
Exhibition Cost
Cost of F&B
1. Exhibition cost as %
of GBOC is 37%
1. Cost of F&B as % of
F&B revenues is
23%
2. Distributor’s share
as % of exhibition
cost is 97%
3. Distributor’s share
as % of GBOC is
35.9%
3. Advertisement
revenue per screen
is Rs2.3 million
Others
1. Rent expenses is
17% as % of total
revenues and 25%
as % of total
expenses
2. Cost per head is
Rs55
2. Employee cost is 6%
as % of total
revenues and 11%
as % total expenses
3. F&B margin is 77%
3. Others expenses is
23% as % of total
revenues and 36%
as % of total
expenses
Total revenue is Rs1,016.8 crore
Total cost Rs644.7 crore
OPM 12.1%
Source: Company and Sharekhan Research
* FY2015 includes consolidation of Satyam Cineplexes, which will affect the overall profitability
Exhibit 14: Revenues to grow by 24% CAGR over FY2015-18
Key segmental revenues
FY10
FY11
FY12
FY13
FY14
FY15
FY16E
FY17E
FY18E
CAGR
FY15-18E
188
254
313
559
597
673
928
1,124
1,306
24.7
Food and beverages
42
54
71
142
162
191
282
351
424
30.4
Advertising revenues
13
14
18
32
50
81
105
126
151
23.0
253.6
337.3
418.7
765.3
868.8
1,016.8
1,374.3
1,665.2
1,947.3
24.2
Gross box-office collection
Total revenues
Source: Company and Sharekhan Research
Exhibit 15: Gross box-office revenue trend
Gross box-office collection to deliver 24.7% CAGR over
FY2015-18
Factors to drive growth
• We expect strong screen addition over the next 24-30
months, with the screen count reaching 577 screens by
2018 (management targets). We estimate the company
would have 528 screens by FY2018 versus the current
screen count of 393 screens. Footfalls are expected to
increase at a 21% compounded annual growth rate (CAGR)
over FY2015-18 to reach 7.2 crore footfalls by FY2018.
• We have built a 3.9% CAGR in ATP, reaching Rs184 by
FY2018, led by an increasing contribution of the
Hollywood movies (accounting for around 15% of the
total revenues) coupled with a higher number of 3D
movie releases, which command a 15-20% premium
over the regular movies.
Sharekhan
Source: Company and Sharekhan Research
Food and beverages to grow at a CAGR of 30.4% over
FY2015-2018
Factors to drive growth
• We expect the food and beverage (F&B) business to grow
at a 30.4% CAGR over FY2015-18, led by the company’s
6
September 2015
stock idea
INOX Leisure
Exhibit 17: Advertising revenue trend
increasing thrust on stepping up growth in the segment.
The management has taken initiatives like changing the
menu based on a movie, keeping in mind the taste buds
of guests; serving a larger menu spread; and providing
on-seat delivery. The spending per head (SPH) has
increased to Rs55 in FY2015 from Rs41 in FY2011.
• The company also provides a choice of international,
Indian and city-centric special cuisines. In order to drive
growth in the F&B business and to speed up the
transaction time to serve more guests, ILL has invested
in technology in concession counters (REFUEL). Guests
standing in long queues can place their orders with INOX
representatives who carry the menu on their tablets.
These tablets are used as Queue Busters for taking orders
from guests standing in long queues. This initiative speeds
up the transaction time, thereby serving more guests.
Source: Company and Sharekhan Research
Exhibit 18: OPM to improve by 340BPS over FY2015-18E
Exhibit 16: Food and beverage revenue trend
Source: Company and Sharekhan Research
Exhibit 19: Return ratios set to improve
Source: Company and Sharekhan Research
Advertising revenues to grow at a CAGR of 23% over
FY2015-18
Factors to drive growth
• As per a FICCI-KPMG report on the Indian media and
entertainment industry in 2015, cinema advertising is a
Rs490-crore market, projected to reach Rs1,382 crore by
2019. ILL’s advertisement revenue per screen has improved
from Rs0.8 million in FY2011 to Rs2.3 million in FY2015.
Source: Company and Sharekhan Research
Exhibit 20: Comfortable debt/equity ratio augurs well for growth
acceleration
• The company is taking several steps to improve its
advertising revenues including focusing on high-value
and long-term deals, innovative transaction structures,
expansion of the breadth and depth of marketing
teams, and optimisation of the advertisement rates.
• An increased screen presence gives multiplexes higher
bargaining power with advertisers and drives higher
advertisement and other operating revenues per
screen. With the screen count reaching close to 530
screens by FY2018, we expect further acceleration in
the advertising growth and estimate that ILL’s
advertising revenue per screen will increase to Rs2.9
million by FY2018 from Rs2.3 million in FY2015.
Sharekhan
Source: Company and Sharekhan Research
7
September 2015
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INOX Leisure
Exhibit 21: Number of screens added during the year
Exhibit 23: Total footfalls for INOX (in mn)
(no. of screen)
(in mn)
Operating metric charts
Source: Company and Sharekhan Research
Exhibit 22: Average ticket price for INOX
Exhibit 24: Spend per head for INOX
(in Rs)
(in Rs)
Source: Company and Sharekhan Research
Source: Company and Sharekhan Research
Source: Company and Sharekhan Research
Exhibit 25: Strong brand partnerships
Source: Company
Sharekhan
8
September 2015
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INOX Leisure
Exhibit 29: Trends in SPH in PVR Cinemas and ILL
PVR Cinemas vs ILL
Cities
Screens
Seats
Occupancy
Admits (mn)
ATP (INR)
SPH (INR)
SPH/ATP
Ad revenues/screen (Rs cr)
Gross revenues (Rs cr)
EBIDTA (Rs cr)
EBIDTA margin
PAT (Rs)
PAT margin
EBIDTA/seat (Rs)
EBIDTA/footfall (Rs)
PVR Cinemas
ILL
106
474
111,278
38%
19.0
183
74
40%
0.36
486
113
23.1%
61.7
12.7%
10,110
59.2
52
377
99,429
33%
14.5
165
59
36%
0.05
349
66
18.8%
25.26
7.24%
6,594
45.2
Source: Company and Sharekhan Research
Exhibit 30: Advertising revenues per screen (Rs mn)
(in mn)
Operating metrics
(in Rs)
Exhibit 26: Metric comparison at the end of Q1FY2016
Source: Company & Sharekhan Research
(no. of screen added)
Exhibit 27: Screen addition trend PVR Cinemas vs ILL
Source: Company and Sharekhan Research
Exhibit 31: Geographical mix of seats for PVR Cinemas and ILL in Q1FY16
Source: Company and Sharekhan Research
(in Rs)
Exhibit 28: Trends in ATP in PVR Cinemas and ILL
Source: Company and Sharekhan Research
Exhibit 32: Trend in debt/equity in PVR Cinemas and ILL
Source: Company and Sharekhan Research
Source: Company and Sharekhan Research
Sharekhan
9
September 2015
stock idea
INOX Leisure
Valuation
Recommend Buy with a price target of Rs307: ILL’s revenues and net income are expected to grow at a CAGR of 19%
and 35.5% respectively over FY2016-18 led by strong box-office revenues (at a 19% CAGR), higher F&B revenues (at
a 23% CAGR) and advertising revenues (at a 20% CAGR) over FY2016-18. Further, a healthy balance sheet with a 0.3
debt/equity ratio and treasury shares of 4.3 crore shares provide strength to drive inorganic growth activities in the
coming years. At the current market price of Rs219, the stock trades at enterprise value (EV)/earnings before
interest, tax, depreciation and amortisation (EBITDA) of 11x, 9x and 7.4x FY2016E, FY2017E and FY2018E earnings
respectively. We believe ILL with its strong brand and extended reach is well placed to leverage the opportunity in
India’s under-penetrated multiplex sector. We initiate coverage on ILL with a price target of Rs307, based on 9x
FY2018E EV/EBITDA.
Exhibit 33: Peer comparison
Domestic
P/E (x)
P/BV (x)
FY16E
FY17E
EV/EBITDA (x)
FY18E
FY16E
FY17E
RoE (%)
Peer
FY16E
FY17E
FY18E
FY18E
FY16E
FY17E
FY18E
INOX
27.3
19.2
14.8
2.7
2.4
2.0
11.3
9.0
7.4
9.8
12.2
13.7
PVR
30.2
23.1
18.4
5.5
4.7
3.8
13.1
11.0
9.3
20.3
20.4
20.1
Source: Bloomberg and Sharekhan Research
International
Peer
P/E (x)
CY15E
CY16E
P/BV (x)
CY17E
CY15E
CY16E
EV/EBITDA (x)
CY17E
CY15E
CY16E
RoE (%)
CY17E
CY15E
CY16E
CY17E
Regal Entertainment Group
16.5
15.2
13.4
NM
NM
NM
8.1
7.7
6.9
NM
NM
NM
Major Cineplex Group PCL
22.3
19.3
16.8
4.3
4.1
3.9
12.0
10.7
9.9
20.3
22.4
23.8
Cineworld Group PLC
19.8
18.0
16.3
2.7
2.5
2.2
11.5
10.6
9.7
13.8
14.2
14.7
Source: Bloomberg
Exhibit 35: EV/EBITDA band
Exhibit 34: PER band
50 x
13 x
40 x
10 x
30 x
7x
20 x
5x
10 x
3x
Source: Bloomberg
Sharekhan
Source: Bloomberg
10
September 2015
stock idea
INOX Leisure
Financials
Profit & Loss account (consolidated)
Particulars
FY14
Cash flow statement (consolidated)
Rs cr
FY15
FY16E
FY17E
Particulars
FY18E
Total operating income 868.8 1,016.8 1,374.3 1,665.2 1,947.3
% Growth
Total expenses
13.5
17.0
35.2
523.4
644.7
830.8
14.4
23.2
28.9
19.7
16.6
121.9
122.8
202.0
251.3
300.3
24.4
0.7
64.6
24.4
19.5
% Growth
Operating profit
% Growth
Other income
21.2
16.9
994.6 1,160.0
9.0
8.3
9.5
9.5
9.5
Interest
27.6
38.6
29.6
23.0
19.8
Depreciation
50.7
75.8
83.6
94.6
104.5
FY14
Rs cr
FY15 FY16E
FY17E FY18E
PAT
36.9
20.0
73.7
104.5
135.4
Depreciation
50.7
75.8
83.6
94.6
104.5
Change in WC
1.8
(54.7)
(16.5)
(57.3)
(68.2)
89.4
41.2
140.9
141.9
171.8
Operating CF
Capex
Investing CF
(90.3) (274.5) (128.8)
(115.0) (124.2)
(124.9) (274.5) (128.8) (115.0) (124.2)
Dividends
-
-
-
-
-
(38.8)
(27.0)
25.0
(20.0)
-
64.0
265.2
0.0
0.0
-
6.2
(4.7)
-
-
-
Investments
(2.6)
(3.4)
-
-
-
Financing CF
28.7
230.2
25.0
(20.0)
-
Debt
Equity
Deferred tax liabilities
Expectional item
0.4
0.6
-
-
-
Profit before tax
52.2
16.0
98.3
143.2
185.5
Net change
(6.8)
(3.1)
37.1
6.9
47.6
% Growth
77.7
(69.3)
514.5
45.6
29.6
Opening cash
23.3
16.6
13.4
50.5
57.4
Tax
15.3
(4.1)
24.6
38.7
50.1
Closing cash
16.6
13.4
50.5
57.4
104.9
Net profit
36.9
20.0
73.7
104.5
135.4
% Growth
100.2
(45.7)
267.8
41.7
29.6
FY14
FY15 FY16E
Balance sheet (consolidated)
Key ratios (consolidated)
Particulars
FY17E FY18E
Margin ratio (%)
Rs cr
14.0
12.1
14.7
15.1
15.4
Particulars
FY14
FY15
FY16E
FY17E
FY18E
PBIT margin
9.2
5.4
9.3
10.0
10.5
Equity cap
96.1
96.2
96.2
96.2
96.2
PBT margin
6.0
1.6
7.2
8.6
9.5
444.4
612.7
686.4
791.0
926.4
PAT margin
4.3
2.0
5.4
6.3
7.0
16.9
Reserves
Interest in Inox Benefit
Trust, at cost
Growth ratio (%)
(149.7)
Net worth
Borrowings
390.9
(32.7)
676.2
(32.7)
749.9
(32.7)
854.4
(32.7)
Revenues
13.5
17.0
35.2
21.2
989.9
Operating profit
24.4
0.7
64.6
24.4
19.5
Net profit
100.2
(45.7)
267.8
41.7
29.6
242.2
215.2
240.2
220.2
220.2
29.0
24.3
24.3
24.3
24.3
Deffered tax liab
12.4
6.9
13.3
15.7
17.6
RoNW
9.4
3.0
9.8
12.2
13.7
Total debt/equity
0.6
0.3
0.3
0.3
0.2
Average collection period (days) 15
17
16
16
16
Average stock velocity (days)
54
59
58
58
58
17.7
Average payment period (days) 50
50
50
45
40
Per share (Rs)
662.1
915.7 1,014.5 1,099.0 1,234.4
Net block
634.7
668.1
713.3
733.6
753.4
3.7
7.1
7.1
7.1
7.1
Goodwill on consolidated
-
165.2
165.2
165.2
165.2
Other Non current assets
2.3
4.0
4.0
4.0
4.0
Inventories
8.6
7.6
11.8
14.7
Investments
Sundry debtors
33.4
62.3
61.1
74.0
86.5
Cash and bank balance
16.6
13.4
50.5
57.4
104.9
157.1
192.0
249.6
312.0
374.4
1.8
1.8
1.8
1.8
1.8
Sundry creditors
72.0
89.3
114.9
124.3
128.9
Other current liabilities
98.8
94.9
109.9
116.6
116.8
Provisions
25.2
21.6
24.9
29.8
34.8
75.3
128.8
193.0
308.7
Loans and advances
Other current assets
Total Assets
23.7
662.1
Return ratio (%)
RoCE
Capital employed
NCA
Operating profit margin
Turnover ratio
Earning per share
4.0
2.2
8.0
11.4
14.8
Cash profit
9.5
10.4
17.1
21.7
26.1
Book value
42.6
73.7
81.7
93.1
107.8
P/E
54.4
100.3
27.3
19.2
14.8
EV/EBITDA
19.1
18.7
11.3
9.0
7.4
EV/Sales
2.7
2.3
1.7
1.4
1.1
Mkt cap/Sales
2.4
2.1
1.5
1.3
1.1
P/ BV
5.1
3.0
2.7
2.4
2.0
Valuation ratios (x)
915.7 1,014.4 1,099.0 1,234.4
Source: Company & Sharekhan Research
Sharekhan
11
September 2015
stock idea
INOX Leisure
Annexure
Company description
Inox Leisure Ltd (ILL) was incorporated as a public limited company on November 9, 1999. ILL is part of the INOX
group, which is diversified across industrial gases, engineering plastics, refrigerants, chemicals, cryogenic engineering,
renewable energy and entertainment sectors. The company is the second largest player in the multiplex space with a
multiplex screen market share of 23%. It is behind PVR Cinemas, which has about 463 screens in its portfolio and a
multiplex screen market share of about 27.2%.
Since the launch of its multiplex in Goa in CY2004, ILL is the venue for the prestigious International Film Festival of
India (IFFI) every year. Since its inception in CY1999, ILL has been active in exploring acquisitions and/or expansion
opportunities on a continuous basis, with a view to consolidating its position in the multiplex industry. In CY2007,
Calcutta Cinema Pvt Ltd, a multiplex cinema theatre company based in West Bengal, was merged with ILL.
In May CY2013, Fame India, another multiplex cinema theatre company having a nation-wide presence, was merged
with it. In August 2014, ILL acquired a third multiplex chain, Satyam Cineplexes, thereby strengthening its presence
to become a significant player in the Indian multiplex space and redefine the movie going experience in India.
ILL along with Satyam Cineplexes currently operates 101 multiplexes and 393 screens in 52 cities, making it a truly
pan-Indian multiplex chain. ILL will continue its expansion into cities like Jammu, Mangalore and Cuttack among
others. The management intends to increase the screen count to about 557 screens and the seat count to 138,281
seats across the country in FY2018.
Key management
Pavan Jain, chairman: Pavan Jain, chairman of the INOX group, is a chemical engineer from IIT, New Delhi and
industrialist with over 38 years of experience.
Vivek Jain, director: Vivek Jain has over 34 years of business experience. He is currently the managing director of
Gujarat Fluorochemicals and has grown the company making it the country's largest manufacturer and exporter of
refrigerant gases.
Deepak Asher, director: A commerce and law graduate, Deepak Asher is also a Fellow Member of the Institute of
Chartered Accountants of India and an Associate Member of the Institute of Cost and Works Accountants of India. He
has more than 25 years of experience in the fields of corporate finance and business strategy. Mr Asher is the president
of the Multiplex Association of India and a member of the FICCI Entertainment Committee. In 2002, he won the
Theatre World Newsmaker of the Year Award for his contribution to the multiplex sector.
Alok Tandon, CEO: As the chief executive officer (CEO) of ILL Mr Tandon is at the helm of ILL's expansion plans and
concentrates on strengthening the INOX brand on a national scale, making it the first choice in the business of cinema
exhibition in India. An engineer by qualification, he has been with ILL since its inception and has more than 25 years
of varied work experience in companies such as Hoechst, ITC Welcome Group and the Oberoi group.
GST could be a big positive for the sector: The indirect tax structure for the entertainment sector is distorted. The overall
tax implication is as high as 40-50% in some states, such as Maharashtra, Uttar Pradesh and Bihar. Subsuming of the
entertainment tax with the Goods and Services Tax (GST) will help the industry spur growth. While the rate of the GST is not
yet clear, the input tax credit will be available for set-off against the output tax liability, which will help reduce costs. The
ILL management expects the margin to improve by 150-200 basis points (BPS) after the roll-out of the GST.
Sharekhan
12
September 2015
stock idea
INOX Leisure
Entertainment tax rates in India
State
Entertainment tax (as
percentage of ticket price)
Andhra Pradesh
Bihar
Delhi
20%
50%
40%
Gujarat
Haryana
Jharkhand
Karnataka
Kerala
Madhya Pradesh
Maharashtra
Odisha
Rajasthan
Tamil Nadu
Uttar Pradesh
West Bengal
20%
30%
110%
30%
30%
20%
45%
25%
30%
15%
30% - 40%
30%
Notes
15% for Telugu Flims
On July 16 2015, entertainment tax in Delhi was
increased to 40% from 20%
Jharkhand films are tax-free
Kannada films are tax-free
Marathi films are tax-free
Rajasthani Flims are Tax Free
Tamil Films are Tax Free
2% E.Tax for Bengali Flims
Source: Industry reports
Bollywood's Rs100-crore club
Sr. no.
Movie Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
PK
Bajrangi Bhaijaan
Dhoom 3
Krrish 3
Kick
Chennai Express
3 Idiots
Happy New Year
Ek Tha Tiger
Yeh Jawaani Hai Deewani
Bang Bang
Dabangg 2
Tanu Weds Manu Returns
Bodyguard
Singham Returns
Dabangg
Rowdy Rathore
Jab Tak Hai Jaan
Ready
Bahubali
Goliyon Ki Raasleela Ram-Leela
Jai Ho
Agneepath
RA.One
Ghajini
Holiday - A Soldier Is Never Off Duty
Barfi!
Bhaag Milkha Bhaag
Don 2
Golmaal 3
Housefull 2
ABCD - Any Body Can Dance – 2
Ek Villain
Son Of Sardaar
Bol Bachchan
2 States
Grand Masti
Race 2
Singham
Release
Lifetime (cr)
Days taken to
reach Rs100 cr
19-Dec-14
17-Jul-15
20-Dec-13
1-Nov-13
25-Jul-14
9-Aug-13
25-Dec-09
24-Oct-14
15-Aug-12
31-May-13
2-Oct-14
21-Dec-12
22-May-15
31-Aug-11
15-Aug-14
10-Sep-10
1-Jun-12
12-Nov-12
3-Jun-11
10-Jul-15
15-Nov-13
24-Jan-14
26-Jan-12
26-Oct-11
24-Dec-08
6-Jun-14
14-Sep-12
12-Jul-13
23-Dec-11
5-Nov-10
6-Apr-12
19-Jun-15
27-Jun-14
12-Nov-12
6-Jul-12
18-Apr-14
13-Sep-13
25-Jan-13
22-Jul-11
340.8
320.3
284.3
244.9
231.9
227.1
202.5
203.0
198.8
188.6
181.0
155.0
150.8
148.9
140.6
138.9
133.3
120.9
119.8
118.7
116.3
116.0
115.0
114.3
114.0
112.2
112.2
108.9
106.7
106.3
106.0
105.7
105.6
105.0
102.9
102.1
102.0
100.5
100.3
4
3
3
4
5
4
9
3
5
7
5
6
11
7
5
10
11
11
14
24
10
10
11
11
18
15
17
24
16
17
17
17
14
16
45
24
23
63
50
Source: Industry reports
Sharekhan
13
September 2015
stock idea
INOX Leisure
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