Shares of multiplex stock Inox Leisure can surge over 23% from current levels, as per brokerage house Hem Securities. Despite volatility and covid impact on theatres, shares of Inox, which had recently announced merger with another multiplex giant PVR, have gained over 50% in the past one year as on June 6.  

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At CMP of Rs 487, the brokerage firm sees an upside of 23%. Hem Securities recommended a 'buy' with target price of Rs 600 per share.The upside translates into 25.5% over the Monday's low.

On Monday, shares of Inox fell nearly four per cent to Rs 478.35 per share. The correction in the share price came after the Maharashtra government made masks mandatory in public places amid a rise in Covid-19 cases.   

"Multiplex industry being a highly sensitive sector, the possibilities of such reactions are inevitable. The recent rally was on the anticipation of better business outlook on the back of subsiding covid cases," said Vinod Nair, Head of Research at Geojit Financial Services.

However, the current spike in cases and reinstatement of restrictions forced investors to rethink the pace of such recovery, he said. "These stocks will continue to move in tandem with these developments," the expert added
 

Meanwhile, the rationale behind bullishness of the brokerage finds root in growing footfall, expansion in properties and new cinema wallet launched by Inox Leisure.  

"4QFY22 performance was impacted by the third covid wave, with Jan’22 and first half of Feb’22 indicated as washout periods but March'22 boxoffice led footfall growth QoQ," it said. 

As per the Inox management, the company has signed an agreement of new properties of 117 properties and will accommodate 840 screens with 1.5 lakh seats. 

Starting FY23, complete normalcy is expected in the sector and hence, we continue to remain bullish on Inox Leisure, said Inox Leisure.  

"Given a healthy movie pipeline, robust consumer demand for good content and success of dubbed Southern movies across the country, we believe that the revenue recovery of Inox Leisure would be strong in FY2023 so we have maintained BUY rating on Inox Leisure with the TARGET PRICE of Rs 600," it said.  

Meanwhil, India’s Media & Entertainment industry is expected to grow to reach $100 bn by 2030 at 10-12% CAGR, led by OTT, Gaming, Animation and VFX, as per the brokerage. 

Earlier, Inox Leisure reported a strong revenue growth of 251.3% y-o-y at Rs 317.7 crore, led by sharp recovery in occupancy rate, healthy growth in ATP (up 26.7% YoY) and good content which is expected to continue in FY23.