Fame India’s (FIL) standalone numbers for Q4FY08 are below expectations due to the poor performance of movies released during the quarter.
This led to lower-than-expected theatre occupancies as the number of shows per screen were slashed, while operating costs remained high.
However, the company’s consolidated numbers for FY08 are in line with our estimates. Revenues for the year have increased by 5% y-o-y to Rs926 million, while a sharp dip in interest and depreciation costs led to a 44% growth in net profit to Rs141 million.
We have revised our financial projections for FY09E and FY10E based on the rescheduling or cancellation of planned properties. We are also reducing our projected occupancy rate to 30% going forward.
As per revised estimates, consolidated revenues are expected to register a 52% CAGR over FY08-FY10 with a PAT CAGR of 18%. Consequently, we have revised our DCF-based price target for the stock from Rs105 to Rs75 and maintain a BUY on the stock.