>ADLABS FILMS LIMITED (SBICAP SECURITIES)

We met the management of Adlabs. Following are the key takeaways

Re-crafting of business verticals
Adlabs has re-crafted its business segments, by demerging its radio business and discontinuing its film production business. The re-crafting of the business verticals is expected to add significantly to EBITDA and PAT margins, as operational losses and amortization of radio segment will not reduce, overall profitability.

Aggressive expansion plans
Adlabs is aggressively expanding both its domestic as well as international operations. The company is expected to add around ~123 screens and ~ 49 screensin FY10 and FY11 respectively from the current 473 screens. Around 70% of the currently operational theatres are in the form of multiplexes, which provides significant operating efficiencies as some costs are semi-fixed in nature, which enables the company to spread costs, over a higher revenue base and add to the profitability.

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