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Outlier in Focus : Movies, Masti and Magic – Inox Leisure


India’s first film, albeit Silent was Raja Harishchandra produced in 1913. A century later, India is today the most prolific maker of movies with nearly 2000 movies produced in a year. In other words, we release 5 movies every day of the year.

In addition to movies produced in India, India also dubs movies produced by International and in other languages. The large number of Cinema’s produced by India is a direct result of the Indian fascination for music and dance, narrative and spectacle. This also means a longer screen time versus movies produced elsewhere.

Outlier in Focus : Movies, Masti and Magic - Inox Leisure

For a very long time, Standalone Cinema theatres were the place to go for watching movies. This started to change when in 1997, Priya Exhibitors tied up with Australia based Village Roadshow and started operations of PVR Anupan in Sanket in New Delhi.

Suddenly, rather being limited to one screen and one movie at any point of time, Multiplex offered the ability to screen multiple movies and way more seats at a single place than what most cinema halls offered.

Today, PVR is the market leader when it comes to screens and in 2018, it further consolidated its lead by acquiring Satyam Cinema’s who at the time of acquisition had  76 screens in a stock plus cash deal  valued at 850 Crores.

Inox Leisure with 551 screens operational is the second largest multiplex operator in India. In the pipeline is launch of 575 screens over the coming years which should help it close the gap with PVR.

The third largest multiplex operator is privately held “Carnival Cinemas” which acquired Housing Development and Infrastructure Ltd’s multiplex, Big Cinemas of Reliance MediaWorks Ltd and Glitz Cinemas of Network 18 in the space of a year making it one of the fast growing multiplex operator in India.

The common thread across all the three major players in the market have been the role of acquisitions in their growth strategy. While there are different reasons for the sellers, one common reason cited for selling out is the fact that this is a business that requires continuous infusion of funds for building new facilities or buying out competitors.

Trivia: Did you know that the late Malayalam Actor, Prem Nazir holds two Guinness Records. One for playing the lead role in a record 720 films another for playing opposite the same heroine in 130 films.

While India is a major producer of movies, when it comes to screens, we are way below other countries such as US and China. India is still dominated by single screen cinema theatres with 61% of screens.

Cities are seeing a change with single screen theatres giving way to Malls which also house Multiplex with multiple screens.  In 2009, China had half the number of screens that India had.  Just 8 years later, China now houses 4x the number of screens that India has.

While India will take a very long time to reach the level of the Chinese, the potential for growth seems pretty evident. High cost of Real Estate has meant that many single screen theatres are bulldozing their existing cinema halls and in place have a Mall which contains Multiplexes.

The Company:

Inox Leisure belongs to the Inox group which also runs 2 other listed firms

Gujarat Fluorochemicals & Inox Wind

Inox Leisure came out with an Initial Public Offer in 2006 at a price of Rs.120 Rupees per share.  Since listing, the stock has for the holder of its equity generated a compounded return of just 5% which is lower than what even Savings Account offers these days.

What has changed now?

Growth for Inox Leisure has been spotty and the controversy around Maharashtra government’s announcement that moviegoers will be free to carry outside food inside the multiplex had spooked the market given how dependent Multiplex are when it comes to revenue from Food and Beverages.

Footfalls have been steadily increasing over time and Inox has tied up with upcoming Malls which will see it add 210 screens and 43,851 seats over time. Growth in footfall for Inox in the recent quarter was greater than PVR. This has come through via pricing better versus the competition which on the downside has meant a lower growth in earnings.

With increasing screens and consolidation that is been seen within the multiplex universe, the growth story seems intact for now.


Market cap: 3393 cr.

Price to Earnings (P/E) ratio: 23

10 year profit growth (Standalone, annualized): 19.50%

Debt to equity ratio: 0.44

Growth Trends

Outlier in Focus : Movies, Masti and Magic - Inox Leisure

Comparison with PVR

Outlier in Focus : Movies, Masti and Magic - Inox Leisure

Inox comes off poorly on most ratio’s when compared to PVR. Like in Real Estate, the advantage for PVR lies in its ability to locate its multiplexes at locations which have offered it a much higher occupancy ratio which in turn has also meant better financials.

Profit and Loss Account

Outlier in Focus : Movies, Masti and Magic - Inox Leisure

Inox has a debt of 290 crores and holds around 100 crores in cash reducing net debt to around 190 crores. In its conference call, the management has claimed that putting up a screen costs around 2.5 crore and 65% of this is funded by debt with rest coming from internal accurals.

Cash Flow and Net Profit

Outlier in Focus : Movies, Masti and Magic - Inox Leisure

Inox generates an impressive 28.61% Return on Invested Capital. Crisil has rated its long term debt as CRISIL AA-/Stable and short term debt as CRISIL A1+ indicating strong financials.

Key risk factor when it comes to Inox is the lower occupancy ratio compared to market leader PVR. This could also be seen as an opportunity for the future.

Price Chart

Outlier in Focus : Movies, Masti and Magic - Inox Leisure


Outlier in Focus : Movies, Masti and Magic - Inox Leisure

Note: This is not a recommendation to buy this stock and we just want to highlight the company as showing strong price performance.



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