February, 04, 2021, By Karan Taurani, VP, Elara Capital

• INOX reported Q3FY21 revenue of INR 148.8mn v/s our estimate of INR 100mn impacted by the COVID-19 lockdown restrictions as cinemas were allowed to reopen from Oct 15th, 2020 onwards with 50% occupancy restrictions, however, Tenet & Wonder-woman collections provided some respite kickstarting the BO collections with an upbeat showing some encouraging signs of collections from theatres.

• Inox reported an EBITDA loss of INR 645mn(including Ind AS 116 impact)(Elara E : Loss of INR 750mn) vs EBITDA of INR 1690mn in Q3FY20 largely since the theatres resumed only post October 15th & that too with dismal occupancy levels & multiple operating restrictions due to which revenue recovery was unable to offset the fixed costs where company has judiciously rationalized with employee costs(down 43% YoY), electricity, power & fuel included in other expenses(down 51% YoY). However excluding the Ind AS-116 impact, Inox reported an operating loss of INR 790mn during the quarter. Current monthly cash burn stands at INR 250-300mn for Inox.

• Amongst the operating metrics, footfalls stood at 0.5mn at 3% overall occupancy levels. ATP stood at INR 153 as against INR 204 in Q3FY20 on the back of various offers, discounting measures opted to attract footfalls. F&B SPH stood at INR 73 v/s INR 81 in Q3FY20 which has been temporary impact amidst the COVID-19 pandemic. F&B margins were down 870bp YoY to 66.6% due to low off-take and higher wastages, while film distributor share was down 140bp YoY to 43.9% during the quarter.

• Inox reported a Loss After Tax of INR 1025mn (including impact of Ind AS 116) vs PAT of INR 350mn largely due to prevailing weakness on operating performance, surge in depreciation & finance costs by 9% & 13% YoY respectively, however it was supported to some extent by the surge in other income accounting for rent concessions amounting to INR 540.7mn.

• The company has not added any screens during the quarter, however has added 15 new screens across 4 properties in Jan’21 in light of the visible comeback for Cinemas. Management has guided for the plans to launch 12 more screen which are in advanced stages of completion to be launched in Q4FY21/Q1FY22.

• As per Ministry of Home Affairs Notification dated 31st Jan’21, cinemas are allowed to operate at 100% capacity.

• During the quarter company completed QIP of INR 2500mn at INR 255/share. Company is net debt free as on Jan’21, while has enough liquidity of more than INR 2300mn (including undrawn limits of INR 930mn)