Equirus Securities

Inox Lesiure (Add)

Target: ₹268

CMP: ₹233

Inox Leisure’s Q1-FY21 revenues tanked to ₹30 lakh while EBITDA losses came in at ₹35.9 crore, below our estimates of ₹51.2 crore on stringent cost-control measures.

Employee expenses declined 31 per cent y-o-y/26 per cent q-o-q to ₹24.3 crore vs. our estimates of ₹30.5 crore. Other expenses slid 92 per cent yoy/89 per cent q-o-q to ₹11.80 crore, lower than Equirus estimates of ₹20.6 crore.

Inox Leisure has still not received any written agreement for ₹86 crore from landlords relating to rentals and CAM charges; however, verbal agreements are in place.

With ₹36 crore in cash and an option to raise ₹250 crore, liquidity is comfortable.

We cut FY21/FY22 revenue estimates by 32 per cent/4 per cent as cinemas have not yet opened in August (as per our earlier expectations) and revise our March 22 target price to ₹268 (₹292 earlier).

In our view, exhibitors will remain an important part of the movie value chain and current fears on OTT releases are overdone. However, we also note that the road to normalcy will be long and hard as it may take a while before people start feeling safe inside a cinema hall.

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