Shares of Inox Leisure rose more than 3% to hit their all-time high of ₹622.30 in intraday trade on BSE on August 4 but soon erased all gains and fell more than 3% to touch the intraday low of ₹583.15. The stock finally closed 2.65% lower at ₹586.65.
Shares of the multiplex player turned volatile a day after its June quarter earnings in which it said "Q1FY23 witnessed the best-ever quarterly performance in the history of the company on the back of robust content line-up and rising footfalls."
The company's revenue for Q1FY23 stood at ₹589 crore which was up almost 19% from the revenue of ₹496 crore earned in Q1FY20. PAT jumped 80% to ₹74 crore in Q1FY23 against ₹41 crore in Q1FY20 and footfall for the quarter under review stood at 1.84 crore, up 6% against 1.73 crore in Q1FY20.
The company compared its Q1FY23 numbers with those of Q1FY20 as FY21 and FY22 were impacted by the coronavirus pandemic.
More steam left?
Shares of Inox have jumped 66% this year so far and brokerages believe the stock can rise even more from the current levels.
Brokerage firm Prabhudas Lilladher maintained a 'buy' call on the stock while raising the target price to ₹699 from ₹668 earlier.
The brokerage firm underscored that Inox reported exceptional performance with a top-line beat of 8% and a pre-IND-AS EBITDA margin of 21.2% buoyed by strong content.
"This was the best ever quarter for Inox and we maintain our positive bias given (1) healthy content pipeline (minor blip in July) (2) encouraging commentary on ad-revenue recovery (3) strong screen opening outlook (4) noteworthy improvement in KPIs (ATP/SPH was 16%/19% above pre-COVID base) and (5) healthy BS (gross debt of ₹81 crore; only national chain to be net debt free)," said Prabhudas Lilladher.
Brokerage firm Nirmal Bang also has a buy call on the stock with a target price of ₹760.
Nirmal Bang is bullish on the stock after the strong performance in Q1FY23. It has a buy call on the stock with an upwardly revised target price of ₹760, valuing it at an EV/EBITDA multiple of 14 times (up from 12 times previously) on FY24E EBITDA.
"We have upped our estimates for FY23 and FY24 due to better margins. With the proposed PVR-Inox merger, we believe that the valuation multiple of Inox and PVR should converge," Nirmal Bang said.
Brokerage firm Emkay Global also has a buy call on the stock with a target price of ₹695. The brokerage firm highlighted that Inox’s performance was largely in line with that of PVR, with both exhibitors reporting record results during the quarter.
Enkay said while both companies reported record financials, footfalls are still slightly short of pre-Covid levels which may be largely due to the underperformance of Bollywood movies, where the content appears to be lacking.
"While Hollywood and regional content have made up in the past couple of quarters, Bollywood needs to fire for sustaining these box office collections. The decision to revert to eight weeks for content windowing should also augur well for the industry. We remain confident of the business over the long term, with multiplexes continuing to remain one of the most preferred entertainment avenues," said Emkay.
Resurgence in Covid-19 cases leading to the closure of theatres, OTTs grabbing high-quality content, delayed recovery in ad revenue, regulatory push-back to the merger, and continued sub-par performance of Bollywood content are among the key risks for the company, Emkay said.
According to a MintGenie poll, an average of 19 analysts have a ‘strong buy’ call on the stock.
Disclaimer: The views and recommendations in this article are those of individual analysts or broking firms and notMintGenie.
