Here are the brokerage Research Views on the
IPO of Adlabs Entertainment for Subscription or to Avoid
Motilal Oswal Analysts have the Following View - Recommendation: Avoid Although the outlook of the industry is promising, the company is still incurring losses due to initial debt funded expansion and has a limited operating history. Further, the management has only one year experience in managing parks. The ability of the company to improve margins along with successful geographic expansion over the years remains to be seen.
Although Adlabs Entertainment Limited will be able to increase its margins in coming years on account of increased footfalls and high operating leverage, we yet feel that at the IPO price of INR 230/share, the company is valued expensively at enterprise value/sales of 24.1x as against 10.1x for Wonderla Holidays and an average of 2.7x for international companies.
Emkay Global Share Research Analysts have the Following View,
Theme parks have high operating leverage and we believe that Adlabs stands to gain from integrated package of Imagica, Aquamagica and the hotel. Once all three properties are fully functional the increased footfall is likely to cause an expansion in the ROCEs. At an EV/CE of 1.7x we note that Adlabs demands a significant discount to its peers, both domestic and global. We assign a Subscribe rating to the stock.
Angel Broking Analyst Amarjeet S Maurya has the following Recommendation
Further, even at the lower end of the price band, the company looks expensive compared to its close peers like Wonderla Holidays which is already making profits and has a healthy balance sheet. On the EV/sales front, the company is valued at 13.6x (at the lower end of the price band) while its peer Wonderla Holidays is trading at 6.9x on the basis of 9MFY2015 annualized numbers. Hence, considering all the above factors, we recommend an Avoid on the issue
