Yes Anand, Inox is a great concept. Come to think of it with increasing disposable income and changing lifestyles with favorable demographics these companies have very stable business models They act as anchor tenants and drive traffic into a mall so they enjoy the benefits of lower rentals also. Inox has tied up with Pantaloon Retail for opening up centers in all the new malls that the latter develops. A friend of mine recently visited Darjeeling and he conveyed that the shows were going House Full!  Inox is expanding its multiplex chain. Very soon Inox shall merge its operations with Calcutta Cinema Pvt Ltd (popularly known as Cinema 89.) This will give Inox a substantial presence in eatern India.. India is underscreened with only 12 screens per million populations. (CII-KPMG Report).There is scope for a ten times growth to this number. It is estimated that Inox shall increase the number of screens  from the current 41screens across 11 multiplexes to a total of 100 screens across 24 multiplexes.Revenues could grow at more then 60% for the next 2 years from Rs.102 crores in FY06 to Rs 162cr in FY07 and Rs260 crores in FY08.Presently ticketing revenues account for about 70% of its total revenues while the other heads like food, beverages, car parking make up the other 30%. The company has been aggressive in increasing ticket prices so enjoys superb pricing power. All new properties to be set up by the company will be on a long term lease basis as against the 50:50 break up of leased and owned properties in FY06. While this could  increase rental expenses there would be a reduction in interest, depreciationand also increase the free cash flow potential of the company. Getting into a lease mode is always important because in case  a property does not work out the tenant can immediately vacate the area and start at a new place,. On the other hand if you own a property it makes it a bit more difficult for you to move around. Also in cae of owed properties the balance sheet will look more like a real estate company rather the entertainment business. In Fy7 Inox should do an Eps of Rs 6 which should further increase to Rs 9 by Fy 08. At a current market price of Rs125 the potential growth for long term investors is very high. Inox’s strategy to tie up with pantaloons shall give it huge power in terms of attracting traffic to their multiplexes. This is so because departmental stores and multiplexes are the two main areas that attract crowd to shopping malls.

 

Inox is also a great case for the Peter Lynch fan. Other Peter Lynch concepts can be accessed by clicking on the following link.

 

http://www.theequitydesk.com/forum/forum_posts.asp?TID=23

 

Edited by basant - 02/Oct/2006 at 8:21am

I think it has got good future for time to come . One should buy the stock imme. if   one is convinced about the story & getting the valuation right . I think multiplexes has changed the concept of seeing movies in India. Now what I feel now a days is that people do not want to go at cinema halls , they prefer multiplexes. On valuation front its looks cheap to me taking 2 year view considering huge expansion plan the company has....... once its fully operated .

Adlabs is surely the one big media conglomerate in the making. They are getting into films, Tv serials, FM Radio but the recent equity dilution that they did has made the stock appear over priced. Also a large number  of all their businesses are in the funding and implementation stages therefore any profits from the existing business might be offset from the losses in the newer ones. But for a person with a 3 year persepctive Adlabs is the show to watch out for.

While I agree that the multiplex business will do very well, one thought that nags me is that over the longer term this will become a commodity business as more multiplexes are built.