CM RATING | 42/100 |
The companys digitization and delivery model has been a key driver of extensive digitization of Indian cinemas and has enabled wide-spread, same-day release of movies across India. Prior to the advent of digital cinema exhibition, movies were exhibited using analogue celluloid prints, which involved high upfront production cost and required distributors to physically deliver the prints to cinemas. The company creates value to movie producers and distributors by reducing distribution costs, providing reach to a network of over 4,911 screens across India, which is a faster method of delivery of content, and reducing piracy through encryption and other security measures. According to CRISIL, the company has an overall 54% market share in Indias digital cinema exhibition industry in terms of screens that use digital cinema distribution networks.
The company works directly with movie producers and distributors for the secured, satellite-based delivery of Bollywood and other India-sourced movies as well as movies from outside of India (excluding movies from major Hollywood studios that have created the D-Cinema standard format) across cinemas in India. It enters into arrangements with movie producers and distributors and charges for content delivery (VPF E-Cinema) to provide their movies a broad exhibitor client base through its network. The company also provides movie producers and distributors a licensing process for the screening of their movies. A movie producer or distributor provides an authorization to it that sets out the number of times a specific exhibitor can screen the movie within a defined timeframe. The company then transmits this information via satellite network to the Cine Blaster server at each cinema. The license is stored on a secure FIPS certified token. After a movie is screened for the pre-set amount of times by the license, the license expires and the Cine Blaster server does not allow any further screenings of the stored movie unless the company provides the exhibitor a new license based on authorization by the movie producer or distributor.
Upon receipt of license for exhibition of the encrypted movie file, the exhibitor can schedule screenings of the movie using the companys Cine Blaster server. The encrypted and encoded UFO-M4 movie file is decrypted and decoded by the Cine Blaster server and projected on to a screen at the scheduled time using digital projectors. Every such screening automatically leaves behind a technical log, which is then retrieved by the companys central billing server for billing purposes
Exhibitors rent a UFO-M4 digital cinema system from the company, which includes a Cine Blaster server, digital projector, uninterruptable power supply (UPS) and very small aperture terminal (VSAT) antenna for a fixed periodic fee, typically over a contractual period of 10 years with an option to terminate for convenience only after a period of approximately four years. From time to time, the company also sells to exhibitors digital cinema equipment as well as related consumables such as lamps. The company also provides installation services for the initial installation of digital cinema equipment that is provided by it.
The company delivers movie content through its satellite-based cinema distribution network using UFO-M4 platform and D-Cinema network.
Revenue Sources
The company receives revenue primarily from (i) advertisers for in-cinema advertising, (ii) movie producers and distributors for the secured delivery and screening of their movies and (iii) exhibitors who are the owners of screens, through equipment rental and sales of digital cinema equipment. It also receives other revenues from distributors for digitization and exhibitors in the form of registration fees from exhibitors using its network, as well as other miscellaneous income.
Acquisition of Valuable Digital Screens Private Limited (VDSPL)
On December 18, 2014, the company entered into an investment agreement with Valuable Technologies (VTL), one of the promoters, VDSPL and other parties foracquisition of the entire equity shares of VDSPL. The company has acquired 80% of equity. Further, as per the terms of the investment agreement, by no later than August 31, 2018, the company will acquire the remaining 20% equity of VDSPL from VTL for a further consideration to be calculated in accordance with the terms of the investment agreement
VDSPL is an India-based business that has two primary operations:-
Other Initiatives
Under an exclusive arrangement with Impact Media Exchange, the company is marketing an electronic ticketing platform, known as the Integrated Media Pact, or Impact, to improve transparency, efficiency and accountability in movie screening industry. The transactions on Impact are captured on a real time basis as it is connected via satellite to a centralized Network Operation Centre.
Financial Performance
The consolidated net sales for 9M FY2015 stood at Rs 354.74 crore . The revenue from advertisement was at Rs 86.62 crore, VPF was at Rs 177.69 crore and lease rental was at Rs 37.9 crore. OPM stood at 33.4%. The net profit stood at Rs 36.86 crore
The consolidated net sales for FY2014 have increased by 25% to Rs 420.34 crore, driven by increase in VPS D-cinema by 74%, lease rental income in D-cinema by 67% and advertisement revenue by 44%. The OPM declined by 20 bps to 31.2%. The net profit hncreased by 39% to Rs 46.54 crore due to top-line growth.
Issue Size and Purpose
The company is coming out with an initial public offering (IPO) amounting to Rs 600 crore at an price band of Rs 615 - 625 per share of face value Rs 10 each. The objects of the offer are to achieve the benefits of listing the equity shares on the stock exchanges and for the sale of equity shares by the selling shareholders. The public issue is offer for sale by PE investors - 3i Research Mauritius and P5 Asia, holding Investments and partly by the promoters.
Strengths
Weaknesses
Valuation
At the lower price band of Rs 615 per equity share of Rs 10 face value, the P/E works out to 32.4 times the annualized EPS of Rs 19 (on post-IPO equity) for the nine months ended December 2014. At the upper band of Rs 625, P/E works out to 32.9 times the annualized EPS of Rs 19 (on post-IPO equity) for the nine months ended December 2014.
At the lower price band of Rs 615 per equity share of Rs 10 face value, the P/E works out to 34.2 times the EPS of Rs 18 (on post-IPO equity) for the year ended March 2014. At the upper band of Rs 625, P/E works out to 34.8 times the EPS of Rs 18 (on post-IPO equity) for the year ended March 2014.
There is no strictly comparable listed player.
UFO Moviez India: IPO Highlights
Sector | Entertainment |
No. of shares on offer at Rs 615 per share(lakh) | 97.56 |
No. of shares on offer at Rs 625 per share (lakh) | 96 |
Price Band (Rs) | 615-625 |
Post issue equity (Rs crore) | 25.9 |
Promoter and promoter group stake before IPO | 37.80%* |
Issue open date | 28th April 2015 |
For Anchor Investor issue open date | 27th April 2015 |
Issue close date | 30th April 2015 |
Listing | NSE & BSE |
Rating | 42/100 |
* promoters may sale part of this stake through the current offer |
UFO Moviez India: Consolidated Financials
Particulars | 1412(09) | 1403(12) | 1303(12) | 1203(12) | 1103(12) |
Net Sales | 354.74 | 420.43 | 336.23 | 206.71 | 108.80 |
OPM (%) | 33.4 | 31.2 | 31.4 | 24.8 | 10.7 |
OP | 118.55 | 131.04 | 105.68 | 51.36 | 11.68 |
Other Income | 2.49 | 0.66 | 1.27 | 0.95 | 1.17 |
PBDIT | 121.05 | 131.70 | 106.95 | 52.30 | 12.85 |
Interest | 12.04 | 16.43 | 12.11 | 4.67 | 3.26 |
PBDT | 109.01 | 115.27 | 94.84 | 47.63 | 9.59 |
Depreciation and Amortization | 56.92 | 65.47 | 53.62 | 38.96 | 25.42 |
PBT before EO | 52.09 | 49.80 | 41.23 | 8.67 | -15.83 |
EO | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
PBT after EO | 52.09 | 49.80 | 41.23 | 8.67 | -15.83 |
Tax | 12.70 | -1.08 | 2.41 | 2.39 | -0.01 |
Profit after tax before share from associate company | 39.39 | 50.88 | 38.82 | 6.28 | -15.82 |
Share of profit/loss in associate company | 1.23 | -0.78 | 0.25 | -0.12 | 0.00 |
Minority Interest | 3.76 | 3.55 | 5.68 | 1.79 | -6.16 |
Net Profit | 36.86 | 46.54 | 33.39 | 4.36 | -9.66 |
EPS (Rs)* | 19.0 | 18.0 | 12.9 | 1.7 | # |
* Annualised on post-issue Equity of Rs 25.9 crore; Face value Rs 10 # Not annualized due to loss at bottom-line Figures in crore Source-Capitaline corporate database |
UFO Moviez India: Consolidated Financials - Breakup of sales revenue
Particulars | 1412(09) | 1403(12) | 1303(12) | 1203(12) |
Sale of Services | ||||
Advertisement Revenue * | 86.62 | 99.86 | 69.5 | 37.04 |
Virtual Print Fees - Non-DCI (E-Cinema)* | 66.76 | 82.13 | 76.08 | 61.74 |
Virtual Print Fees - DCI (D-Cinema)* | 110.93 | 130.52 | 74.94 | 24.71 |
Lease rental income - Non-DCI (E-Cinema) | 26.76 | 28.23 | 25.22 | 23.81 |
Lease rental income - DCI (D-Cinema) | 11.14 | 13.73 | 8.21 | 2.47 |
Digitization income | 5.02 | 6.51 | 6.67 | 5.53 |
Registration fees income | 0.78 | 0.88 | 1.5 | 1.85 |
Other Services | 5.76 | 2.93 | 0.85 | 0.7 |
Total | 313.77 | 364.79 | 262.97 | 157.85 |
Sale of Products | ||||
Lamp Sale | 12.91 | 17.11 | 15.43 | 13.95 |
Sale of Digital cinema equipments | 28.05 | 38.53 | 57.83 | 34.9 |
Total | 40.96 | 55.64 | 73.26 | 48.85 |
Total Sale | 354.73 | 420.43 | 336.23 | 206.7 |
* The advertisement revenue and Virtual Print Fees - Non-DCI (E-Cinema) and Virtual Print Fees -DCI (DCinema) shown in the table above is the gross revenue company receive from advertisers and movie producers/distributors, respectively, and does not deduct the amount of revenue they share with exhibitors. That amount is reflected in their operating direct costs. Source-Capitaline corporate database |
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www.indiainfoline.com is part of the IIFL Group, a leading financial services player and a diversified NBFC. The site provides comprehensive and real time information on Indian corporates, sectors, financial markets and economy. On the site we feature industry and political leaders, entrepreneurs, and trend setters. The research, personal finance and market tutorial sections are widely followed by students, academia, corporates and investors among others.
Copyright © IIFL Securities Ltd. All rights Reserved.
Stock Broker SEBI Regn. No: INZ000164132, PMS SEBI Regn. No: INP000002213, IA SEBI Regn. No: INA000000623, SEBI RA Regn. No: INH000000248
This certificate demonstrates that IIFL as an organization has defined and put in place best-practice information security processes.