Buy Imagicaaworld Entertainment Ltd For Target Rs.62 by Prabhudas Liladhar Capital Ltd
Strong growth on a low base
We cut our EBITDA estimates by 3% for FY27E/FY28E as footfalls were ~5% lower than 1QFY25 despite addition of Indore Park. Nonetheless, addition of Shanku’s water Park (existing operational asset) in FY27E and Sabarmati Park in FY28E is likely to boost footfall growth over the next 2 years. Further, strategic collaboration with Hello Park (LoI’s signed to open indoor parks in Surat and Hyderabad) marks an entry into the indoor entertainment business. The phygital family entertainment business model is scalable, synergistic to the existing outdoor park business and asset light in nature. IMAGICAA IN reported a 21.9% YoY growth in footfalls to 1.15mn aided by low base (1QFY26 was marred by early monsoons) with an EBITDA margin of 50.7% (PLe 59.0%). We expect sales CAGR of 21% over the next 2 years with EBITDA margin of 43.5%/45.9% in FY27E/FY28E led by addition of 2 parks. Retain BUY with a SoTP based TP of INR64 valuing the park/hotel business at 15x FY28E EBITDA (no change in target multiple).
Revenue increases 19.9% YoY:
Revenue increased 19.9% YoY to INR1,776mn (PLe INR1,817mn). Revenue from Parks/Hotels division was up/down 22.9%/2.7% YoY to INR1,610mn/INR166mn (PLe INR1,672mn/INR145mn) respectively. Footfalls increased 21.9% YoY to 1.15mn (PLe 1.20mn) driven prolonged summers and steady demand across parks. Blended ARPU remained flat YoY to INR1,395
EBITDA margin stood at 50.7%:
EBITDA increased 24.1% YoY to INR901mn (PLe INR1,072mn) with a margin of 50.7% (PLe 59.0%) as compared to EBITDA margin of 49.0% in 1QFY26. Miss at the EBITDA level was due to higher-than-expected other expenses which came in at INR584mn (PLe INR445mn).
Adjusted PAT margin improves 157bps to 32.2%:
PAT for the quarter stood at INR576mn. After adjusting for gain on fair value change in NCRPS of INR4mn, adjusted PAT stood at INR571mn (PLe PAT of INR609mn) with a margin of 32.2% (PLe 33.5%) as compared to an adjusted PAT margin of 30.6% in 1QFY26.
Please refer disclaimer at https://www.plindia.com/disclaimer/
SEBI Registration No. INH000000271
