Buy Cinemax India; tgt Rs 134: Karvy

Karvy Stock Broking has recommended buy rating on Cinemax India, with price target of Rs 134, in its report dated August 18, 2008.

?Cinemax declared its 1Q FY09 results which were above our expectations. The topline grew by 16% YoY as against our expectations of a decline of 10%. However, the EBIDTA margins were slightly below our expectations and stood at 15% against expected levels of 16%, thanks to higher than expected expenses incurred on F&B and power & fuel and film distributors share increasing from 20% of sales in 4Q FY08 to 24% of sales in 1Q FY09. The net profit was however boosted by the MAT (Minimum Alternative Tax) credit booked by the company, and jumped by 8% YoY and 64% QoQ. As expected, the occupancy levels declined sharply to 26% in 1Q FY09 from 31% in 1Q FY08 due to weak movie line up. The ATP (Average Ticket Price) of its properties stood at Rs 124 as against Rs 131 a year ago, on account of the company opening its properties in Tier 2 & 3 cities like Panipat, Guwahati and Nagpur".

"The company has commenced operations on 2 new properties in 1Q FY09 which are at Dev Arc Mall, Ahmedabad having 4 screens and 1,037 seats and at Variety mall, Nagpur having 3 screens and 1,007 seats. Apart from this, the company recently launched its Faridabad property having 3 screens and 732 seats, with the release of Sing is King. Moving forward, the company plans to open 9 more new properties with 24 screens and 6,453 seats in the remaining FY2009. However, with the slow down in construction activity and the multiplex operators dependent on the developers as far as getting the property ready is concerned, we believe that this may be a difficult target. Hence we have taken a conservative and more realistic target of 13 screens with 3,782 seats in the rest of FY2009. As a result, we have revised our FY09E estimates. We have reduced our topline estimates for FY09E by 27% from Rs 2,048 million to Rs 1,492 million and bottom line estimates by 36% from Rs 308 million to Rs 197 millionhttp://www.moneycontrol.com/india/news/recommendations/buy-cinemax-india-tgt-rs-134-karvy/17/15/352277.

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