INOX Leisure Limited - Rating outlook revised to 'Stable', Ratings Reaffirmed

CRISIL Ratings has revised its rating outlook on the long-term bank facilities of INOX Leisure Ltd (ILL) to 'Stable' from 'Negative' and has reaffirmed its 'CRISIL A+' rating. The short-term rating has been reaffirmed at 'CRISIL A1'.

The revision in outlook reflects strong rebound in the operating performance of ILL during the third quarter of fiscal 2022. While the third wave of the Covid-19 pandemic did marginally impact operations in January 2022, recovery began from February onwards. Besides improvement in occupancy, average ticket prices (ATP) and spend per head (SPH) on food & beverages have sustained at levels higher that those prior to the pandemic. Moreover, movies released since last week of February reported strong performance at the box office. Business should continue to boost in the coming quarters, supported by uplifting of pandemic-related restrictions and strong content line up ready to be released over the next few months. The operating margin may also benefit from some of the cost-control measures undertaken over the last two years, which are expected to sustain longer.

The company's liquidity benefitted significantly from equity raise undertaken over the past two years, which has resulted in net cash position of ~Rs 73 crore as on January 31, 2022, against net debt of around Rs 27 crore as on March 31, 2021. Cash and bank balance, undrawn committed bank lines and other liquid investments stood at ~Rs 281 crore as on January 31, 2022, which should sufficiently cover the debt obligation and capital expenditure (capex) in fiscal 2023.

Sustained improvement in revenue and operating margin, along with maintenance of healthy liquidity, will remain key monitorables.

The ratings reflect the company's established market position in the film exhibition business, improving operating efficiency, strong financial risk profile and high financial flexibility, being part of the INOX group. These strengths are partially offset by exposure to risks inherent in the film exhibition business.

Shares of INOX Leisure Limited was last trading in BSE at Rs. 449.05 as compared to the previous close of Rs. 442.40. The total number of shares traded during the day was 16168 in over 703 trades.

The stock hit an intraday high of Rs. 452.50 and intraday low of 443.75. The net turnover during the day was Rs. 7233197.00.

Source : Equity Bulls

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INOXLeisure INE312H01016 RatingUpdate OutlookRevision