>CINEMAX (ICICI DIRECT)

Worst is over...

On a consolidated basis, Cinemax reported its results for Q1FY10, which were in line with our expectations. The topline was at Rs 23.51 crore against our estimates of Rs 22.7 crore. It recorded de-growth of 17.5% YoY and 29.6% QoQ. The decline in the topline was due to the 65-day strike between producers and multiplex owners. The EBITDA margin at 2.25%, declined by 1326 bps and 833 bps QoQ and YoY, respectively. During the quarter, the company reported a net loss of Rs 0.58 crore as compared to PAT of Rs 1.0 crore during the last quarter.

Highlight of the quarter
Q1FY10 has been the worst quarter ever for the multiplex industry due to the strike, resulting in a sequential de-growth of 29.6% in topline. During the quarter, the company also closed one of its properties at Faridabad and a food court at Ahmedabad due to legal issues. With this, the total number of properties and screens stood at 24 and 70, respectively. The company sold ~1 million units of windmill generated electricity to state electricity boards and GE. It generated Rs 0.33 crore by selling each unit at Rs 3.35.

Valuations
At the CMP of Rs 50.6, Cinemax is trading at 15.5x its FY10E EPS of Rs 3.3 and 11.1x its FY11E EPS of Rs 4.5. We value the stock at 12.5x FY10E EPS arriving at a target price of Rs 57. We have changed our rating on the stock from HOLD to PERFORMER.

To see full report: CINEMAX