MOSL: INOX LEISURE (Sell)-Meaningful improvement yet to be seen-Maintain Sell

​Inox Leisure: Meaningful improvement yet to be seen; Maintain Sell

(INOL IN, Mkt Cap USD0.4b, CMP INR290, TP INR240, 18% Downside, Sell)

• Results beat estimates: INOL's revenues grew 14.3% YoY to INR2,885m in 4QFY17 (est. of INR2,729m). EBITDA margin expanded 290bp to 8.7% (est. of 6.5%) from 5.8% in the year-ago period. EBITDA thus increased 72% to INR251m (est. of INR177m) from INR146m in 4QFY16. The company recognized tax credit of INR15.9m and INR238.8m for FY17 and FY16, respectively, on account of assessments and appellate orders received. Consequently, PAT declined 98% from INR174m in 4QFY16 to INR3m in 4QFY17. However, adjusted for tax credit, the company reported net profit of INR8m (est. of loss of INR76m) v/s net loss of INR110m in 4QFY16. For FY17, revenue grew 5% to INR12.2b, with EBITDA margin contracting 430bp to 12% and adj. PAT declining 62% to INR306m.
  
• 8% LTL footfall growth drove revenue growth: Inox added 22 new screens in 4QFY17, with ticket sales increasing 18% YoY and F&B/advertisement revenue growing 15%/8% YoY. Footfall increased 13% YoY to 13m (8% on comparable basis), driven by strong content - top 5 films contributed 51% of gross box office collection v/s 42% in 4QFY16. ATP grew 4% YoY to INR174, while SPH increased 2% YoY to INR59. Occupancy increased to 27% from 23% in 4QFY16.