praveen
17-12-2007, 06:12 AM
The shares of the entertainment industry are on an upswing. The shares of multiplex companies, too, have been attracting investors and the share of Adlab Films recently touched a 52-week high of Rs.1030. Within this segment, the scrip of Shringar Cinema Ltd. (SCL) is recommended for decent gains with a price target of Rs.150 in the long-term.
SCL is promoted by South Yara Holdings and India Value Fund, a venture capital fund. It has a major presence in the western region and is headed by Shravan Shroff. It operates multiplexes under the brand name ‘Fame’. To fund its expansion plans, SCL came out with an IPO of Rs.43 cr. comprising 81,50,000 equity shares of Rs.10 each at a price of Rs.53 per share in April 2005. Big Pictures and Shringar Films Pvt. Ltd. are two subsidiaries of SCL.
In total, SCL has 13 properties, 44 screens and 14,292 seats. The average occupancy at its theatres is stable at 33% whereas average ticket price has risen to Rs.131 in Q2FY08 from Rs.126 in Q2FY07. SCL has plans to scale up its multiplexes to 115 screens from the present 44 with a pan India presence. During FY08, SCL’s total number of properties would increase to 21 with 75 screens.
Going forward, the Fame multiplex chain would build 175 screens across 20 cities over the next 3-5 years at a total investment of around Rs.230 cr. to be completed by March 2011. The number of screens will increase to 227 spread across 50 sites.
During FY07, SCL posted an income of Rs.51.6 cr. and earned a net profit of Rs.9.8 cr. Its EPS was Rs.3.1. During H1FY08, SCL registered 67% increased revenue of Rs.38.6 cr. and recorded 135% higher net profit of Rs.9.2 cr. Its H1FY08 EPS alone works out to Rs.2.9.
The financials of SCL are very strong. Last year, SCL raised $20 million through an FCCB with a tenure of five years with a coupon rate in the range of 0-0.5% and an yield to maturity (YTM) of 6.5-7.5%. The conversion of the bonds has been structured such that 60% of the proceeds get converted into equity shares at Rs.90 per share and the balance $8 million at a premium of Rs.107 per share. Its consolidated gross block has gone up to Rs.106 cr. in FY07 from Rs.75 cr. in FY06. It had cash of Rs.68 cr. as on 31st March 2007, which is being utilized for further expansion.
Its equity capital is Rs.31.6 cr. and with reserves of Rs.23 cr., the book value of the share works out to Rs.17.3. The promoters hold 48% in its equity capital while foreign holding is 21%, institutions hold 4%, PCBs 7% leaving 20% with the investing public.
SCL is focused towards achieving dominant growth in the large metros. Its main focus will be on Mumbai, Pune, Bangalore, Chennai and Kolkata as its growth drivers that are located in IT/ITES/SEZ zones.
The future of multiplex companies appears highly promising in view of the fast changing lifestyle of Indian consumers, favourable demographics, low multiplex penetration, increased organised retail consumption, production of quality movies and rising disposable incomes.
SCL is likely to end FY08 with a revenue of Rs.85 cr. on a stand-alone basis and a net profit of Rs.22 cr., which would give an EPS of Rs.6.9. Its revenue is expected to move up to Rs.125 cr. with a net profit increasing to Rs.30 cr. in FY09 when the EPS would go up to Rs.9.5.
The shares of SCL are currently traded at a P/E of 12 on FY08 EPS of Rs.6.9 and P/E of 8.6 on FY09 EPS of Rs.9.5. The P/E ratio of the entertainment industry currently rules firm at 43, which makes the investment in the SCL counter highly attractive. The share is recommended with a target price of Rs.150 at a forward P/E of 15 in the medium-to-long term.
SCL is promoted by South Yara Holdings and India Value Fund, a venture capital fund. It has a major presence in the western region and is headed by Shravan Shroff. It operates multiplexes under the brand name ‘Fame’. To fund its expansion plans, SCL came out with an IPO of Rs.43 cr. comprising 81,50,000 equity shares of Rs.10 each at a price of Rs.53 per share in April 2005. Big Pictures and Shringar Films Pvt. Ltd. are two subsidiaries of SCL.
In total, SCL has 13 properties, 44 screens and 14,292 seats. The average occupancy at its theatres is stable at 33% whereas average ticket price has risen to Rs.131 in Q2FY08 from Rs.126 in Q2FY07. SCL has plans to scale up its multiplexes to 115 screens from the present 44 with a pan India presence. During FY08, SCL’s total number of properties would increase to 21 with 75 screens.
Going forward, the Fame multiplex chain would build 175 screens across 20 cities over the next 3-5 years at a total investment of around Rs.230 cr. to be completed by March 2011. The number of screens will increase to 227 spread across 50 sites.
During FY07, SCL posted an income of Rs.51.6 cr. and earned a net profit of Rs.9.8 cr. Its EPS was Rs.3.1. During H1FY08, SCL registered 67% increased revenue of Rs.38.6 cr. and recorded 135% higher net profit of Rs.9.2 cr. Its H1FY08 EPS alone works out to Rs.2.9.
The financials of SCL are very strong. Last year, SCL raised $20 million through an FCCB with a tenure of five years with a coupon rate in the range of 0-0.5% and an yield to maturity (YTM) of 6.5-7.5%. The conversion of the bonds has been structured such that 60% of the proceeds get converted into equity shares at Rs.90 per share and the balance $8 million at a premium of Rs.107 per share. Its consolidated gross block has gone up to Rs.106 cr. in FY07 from Rs.75 cr. in FY06. It had cash of Rs.68 cr. as on 31st March 2007, which is being utilized for further expansion.
Its equity capital is Rs.31.6 cr. and with reserves of Rs.23 cr., the book value of the share works out to Rs.17.3. The promoters hold 48% in its equity capital while foreign holding is 21%, institutions hold 4%, PCBs 7% leaving 20% with the investing public.
SCL is focused towards achieving dominant growth in the large metros. Its main focus will be on Mumbai, Pune, Bangalore, Chennai and Kolkata as its growth drivers that are located in IT/ITES/SEZ zones.
The future of multiplex companies appears highly promising in view of the fast changing lifestyle of Indian consumers, favourable demographics, low multiplex penetration, increased organised retail consumption, production of quality movies and rising disposable incomes.
SCL is likely to end FY08 with a revenue of Rs.85 cr. on a stand-alone basis and a net profit of Rs.22 cr., which would give an EPS of Rs.6.9. Its revenue is expected to move up to Rs.125 cr. with a net profit increasing to Rs.30 cr. in FY09 when the EPS would go up to Rs.9.5.
The shares of SCL are currently traded at a P/E of 12 on FY08 EPS of Rs.6.9 and P/E of 8.6 on FY09 EPS of Rs.9.5. The P/E ratio of the entertainment industry currently rules firm at 43, which makes the investment in the SCL counter highly attractive. The share is recommended with a target price of Rs.150 at a forward P/E of 15 in the medium-to-long term.