Inox Leisure rallies 8%, hits 52-week high on improved business outlook

Shares of Inox Leisure hit a 52-week high of Rs 479.45, surging 8 per cent on the BSE in Friday’s intra-day trade, supported by heavy volumes. The stock has been able to hold its ground as pandemic-related restrictions eased and strong content line-up, ready to be released over the next few months, improved business outlook.

The stock of the multiplex operator surpassed its previous high of Rs 466.10 touched on November 8, 2021. The stock had hit a record high of Rs 510.80 on February 25, 2020. At 10:02 AM, Inox Leisure traded 6 per cent higher at Rs 469, as against a 0.09 per cent rise on the S&P BSE Sensex. Trading volumes at the counter more-than-doubled with a combined 2.1 million equity shares having changed hands on the NSE and BSE in the first hour of trading.

Recently, CRISIL Ratings has revised its rating outlook on the long-term bank facilities of INOX Leisure 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 Inox Leisure during the third quarter of fiscal 2022 (Q3FY22). While the third wave of the Covid-19 pandemic did marginally impact operations in January 2022, recovery began from February onwards," CRISIL said in its rating rationale dated March 22, 2022.

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, CRISIL added.

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

Technical View 

Bias: Positive

Target: Rs 490

Upside: 5%

Inox Leisure looks farily strong on the daily charts. The stock has been trading with a positive bias since early February 2022. Off late, the stock has been treading along its higher-end of the Bollinger Band on the daily charts, farily above its key moving averages.

The stock is also on the verge of closing above the higher-end of the Bollinger Bands on both the weekly and monthly charts. A strong close above Rs 455 for the week and month, could indicate further strength at the counter with newer highs in the near term. On the upside, the stock could spurt to Rs 490 soon.

On the downside, below Rs 453-odd levels, the stock is likely to get considerable support around Rs 440-odd levels, its previous high area.

The key momentum oscillators on the daily charts like the 14-day RSI (Relative Strength Index), the DI (Directional Index), the MACD (Moving Average Convergence Divergence) and the Slow Stohastic are also in favour of the bulls.

(With inputs from Rex Cano)