Imagicaaworld Q1 Results Review - Synergy Benefits Key To Re-Rating: Prabhudas Lilladher

Prabhudas Lilladher Report

Imagicaaworld Entertainment Ltd. reported strong operational performance with Ebitda margin of 59.3% (PLe 51.9%), while bottom-line was aided by a change in depreciation policy. We increase our Ebitda estimates by 4.4%/2.7% for FY25E/FY26E in the light of strong performance in Q1 FY25. However, our PAT estimates have undergone a major revision as new parks acquired via slump sale will be depreciated under the SLM policy.

Consolidation of parks at Lonavala and Shirdi not only acts as a growth kicker but is also expected to lend significant synergy benefits arising from food and beverage vendor consolidation and employee cost rationalization.

Launch magic pass, addition of another banquet at a hotel in Khopoli and introduction of retail products at Wet’nJoy parks are possible triggers that can result in earnings upgrade.

We expect sales/Ebitda compound annual growth rate of 31.8%/43.4% over FY24-FY27E and retain Buy on the stock with an SOTP-based target price of Rs 116 (earlier Rs 112) valuing the park/hotel business at enterprise value/Ebitda multiple of 23 times /21 times (no change in target multiple).

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