Inox - blockbuster?

PENNY WISE

FY06 Q1Q2Q1Q2 Number of patrons ('000)823.5876.71432.21693.5 Average Ticket price (Rs)109103116122 Food and Beverage (Rs)24242827 Spend per head (Rs)135129146151 Advertising (Rs crore)0.3260.5630.9360.896  Effectively the company plans to raise a net amount of Rs 120-144 crore from public as against its cost of expansion project of Rs 110 crore. At Rs 100-120, the company trades at a price to earnings multiple of about 31-37 times (post issue) for FY06E.  P Phani Sekhar of Angel Broking feels that the stock valuations are by no way cheap; however it is justified in view of the exponential growth of multiplex business in general and Inox in particular.  An analyst from a leading broking firm feels that the stock is attractively valued as it is cheaper than its peers namely PVR Cinemas and Shringar Cinemas.  Movies and multiplex
Inox, a three year old company, promoted by listed player-Gujarat Fluorochemicals Ltd (GFL), has grown phenomenally in shortest period of time and is the second largest multiplex operator after PVR cinemas.  Starting with one multiplex at Pune in 2003, the company today has presence across seven cities namely Pune, Baroda, Kolkata, Goa, Mumbai, Jaipur, and Bangalore with 8 operational units having 32 screens and 9290 seats.  The company plans to open additional 15 properties with 66 screens and 17739 seats spread across all over India not only in Tier I cities like Hyderabad, Chennai, Kolkata, Bangalore but also in Tier two cities like Lucknow, Vishakapatnam, Raipur, Darjeeling and Jaipur. Thus post expansion, it will have pan India presence.  It has also tied up with India's largest and fastest growing retail chain, Pantaloon Retail whereby the company holds first right to open a multiplex in Pantaloon's existing and future properties.  Thus the company has an additional access to about 84 current properties of Pantaloon including Food Bazar, Big bazar etc apart from its own. Recently Pantaloon has chalked out a massive investment plan of setting 51 malls out of which 37 would have a multiplex.  The company's strategy of targeting rich and consuming class in high traffic premium locations in commercial business districts or affluent residential areas like Inox multiplex in Mumbai at Nariman Point is expected to lead to higher growth of topline and margin expansion in future.  According to a report by Edelweiss securities, the total proportion of urban households in the affluent, middle and upper middle class is expected to grow from 57 per cent in 2005-06 to 74.4 per cent by 2009-10.  Inox