Cinemax India

For multiplex operators such as Cinemax, a reviving economy has meant higher footfalls, increase in ticket prices and higher spending by the cinema audience on food and beverages, all aiding the company's earnings. Investors with a one-two year horizon can buy the shares of Cinemax India.



The company is scaling up its operations by steadily increasing its presence in both Tier-1 and Tier-2 cities. A bunch of high-profile releases too should set the box office counters ringing.

At Rs 53, the share trades at 13 times its likely FY12 per share earnings. This is at a discount to Fame India, despite Cinemax's bigger scale of operations.

In FY-10, the company saw its revenues increase by 16.3 per cent over the previous fiscal to Rs 168.1 crore, while net profits expanded by 53.6 per cent to Rs 16.9 crore, of which Rs 10.5 crore is accounted for by taxes written back and deferred.

The first half of 2009-10 was a challenging one, with the stand-off with distributors over quantum of revenue-sharing delaying fresh releases and affecting the revenues for several multiplex operators. But from the second half of last fiscal, there has been a strong revival with box-office hits such as 3 Idiots, having the audience flock to multiplex screens.

In the first half of FY-11, Cinemax has witnessed a 51 per cent rise in revenues to Rs 96.6 crore compared with the same period last year, while net profits increased by 92.9 per cent to Rs 3.55 crore.

Better operating metrics

Over the last couple of quarters, movies such as Dabangg(a blockbuster), Once Upon A Time In Mumbai and Peepli Live, which were hits, helped collections for Cinemax. Its occupancy has risen from sub-20 per cent levels to 23 per cent on the back of films such as those mentioned earlier. The average ticket price has risen from Rs 128 last year to Rs 138 levels currently, while spending per head on food and beverages has risen to Rs 38, up 12.9 per cent. This has helped the company expand its operating margins by about 3 percentage points to 17 percent levels in the first half of this year.

With the festive season concentrated in the current quarter, Cinemax may see further improvement in realisations compared to the last couple of quarters. It hopes to manage 18-19 percent margin levels this fiscal.

A slew of releases such as Tees Maar Khan, Saat Khoon Maaf and Dil To Bacha Hai Ji make the viewers flock to multiplex halls as these feature a heavy-duty star cast — the likes of Akshay Kumar, Priyanka Chopra and Ajay Devgan.

Scaling operations

Cinemax is also steadily increasing its scale of operations by getting into new locations, which gives it an enhanced number of screens. The company now operates in 29 locations and has 94 screens under its fold. Much of this is concentrated in Mumbai, a lucrative market, and the rest of Maharashtra. It also has presence in Kolkata and smaller towns such as Kanpur and Cochin.

Cinemax has increased its footprint in recent times by getting into high-potential States such as Gujarat, by making its presence felt in Ahmedabad and Vadodara.