Inox Leisure Has High Margins & Blockbuster Movie Releases: Parag Thakkar, HDFC Securities

This is not a research or triggered stock. I feel there is no other clear alternative for entertainment for family and multiplex is clearly the choice. Plus, most importantly, it is a consolidated sector. So only four companies -- I do not know about the Mukta Arts announcement -- PVR, Inox, Carnival and Big Cimenas are the four companies which are having 80 per cent market share. So it is a growing and consolidated market and within that, I like Inox.

That is why I always look at operating cash flow yields. If there is a significant investment opportunity in the business at incrementally higher ROEs, then free cash flows does not matter. You should have operating cash flows.

So Inox last year generated around Rs 150 crore operating cash flow and there is no big inventory, there is no debtor. It is a cash business. So Rs 150 crore operating cash flow and market cap is around Rs 2300 crore.

So that gives me 7 per cent operating cash flow yield which is a good starting point and it is a growing business with pricing power and food and beverages as well.

It is a very high gross margin -- 77 per cent -- business and that is going to grow. And plus the movie pipeline in July, August, September is going to be blockbuster movies. Sultan has come. On 12th August, we are going to see three big releases. So I think July, August, September is going to be best quarter for them in my view.

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