Shares of UFO Moviez have surged over 45% in the past six months and analysts at Ventura see the stock going further up as cinema traffic picks up.
The UFO Moviez Analyst: Ventura analysts initiated coverage on the stock with a ‘buy’ rating and a 30-month price target of ₹185. The target indicates an over 65% upside from the stock’s last closing price of ₹112.10.
The UFO Moviez Thesis: UFO Moviez India operates in the film exhibition industry, offering various revenue streams such as digital content delivery, digitization services, in-cinema advertising, and equipment leasing.
The brokerage firm said that the company faced challenges due to the COVID-19 pandemic, competition from OTT platforms, and a slowdown in advertising revenues, resulting in a decline in performance. However, the analysts opine that the worst is behind the company, as evidenced by the resurgence in film exhibition attendance, driven by both mainstream and regional content.
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The domestic brokerage also highlighted the company’s recent joint venture with Qube Cinema which has created India’s largest in-cinema network, which should positively impact revenue growth, particularly through increased pricing power.
The brokerage projects revenue growth from ₹396 crore in FY23 to ₹493.6 crore in FY26, indicating a CAGR (compound annual growth rate) of 9.4%. Advertisement revenues will majorly support this growth, growing at a staggering 26% CAGR to ₹175 crore, while equipment sales will scale to ₹116 crore, achieving an 8.8% CAGR.
The brokerage also expects the company’s operational leverage to push EBITDA significantly by a CAGR of 45.7% to ₹99 crore. Net profit is expected to turn positive in FY24, reaching ₹15 crore from a loss of ₹21 crore in FY23.
In a bull case scenario, the brokerage sees the stock going up to ₹214, while in a bear case scenario, the firm estimates that the stock could go down to ₹92.
Price Action: UFO Moviez’s share price was up 0.71% to trade at ₹112.90 in the early hours of trading on Monday.
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