24 August 2011

Buy Cinemax; Target : Rs 36 ::ICICI Securities

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A f t e r   W o r l d   C u p ,   p a t ro n s   t u r n   t o   m o v i e s …
Cinemax reported its Q1FY12 numbers, which were marginally better
than our expectations. Recovering from the World Cup marred last
quarter, the topline for the company stood at | 60.2 crore against our
expectation of | 47.9 crore, growing 30.8% YoY and  65.2% QoQ. The
EBITDA for the company stood at | 8.2 crore against our estimate of | 7.8
crore, registering a growth of 23.7% YoY. The EBITDA margin for the
quarter stood at 13.6%, contracting by 78 bps YoY. PAT for the quarter
remained flat YoY at | 1.1 crore.
ƒ Highlights of the quarter
After witnessing one of the weakest quarters in Q4FY11 due to lack
of content owing to the World Cup, Cinemax reported significantly
better numbers in this quarter. The ATP for the company stood at |
132, declining sharply YoY from |  139 but improving significantly
QoQ from | 127. Occupancy levels picked up from 14% in the last
quarter to 26% in Q1FY12. After the World Cup, movie patrons
found themselves back at multiplexes as the footfalls for the quarter
stood at 3.7 million against 2.7 million in Q1FY11.
V a l u a t i o n
Q1FY12 was marked by the return of the patrons to multiplexes thanks to
relatively better quality of content. All the KPIs showed improvement from
the last quarter. Also, we expect a good movie pipeline in the subsequent
quarters. Apart from a couple of properties rolled out in Q1FY12, we
expect the company to roll out five more properties in FY12, out of which
it has already commissioned one property in Pune. We expect 19.8% and
62.4% CAGR in revenue  and PAT, respectively,  over FY11-13E. At the
CMP of | 32, the stock is trading at 5.8x FY12E EPS of | 5.5 and 6.2x
FY13E EPS of | 5.1. We have valued  the stock at 7.0x (30% discount to
PVR) FY13E and arrived at a target price of | 36, implying an upside of
12%. We have upgraded the stock from HOLD to BUY.

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