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.
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.
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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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