UFO MOVIEZ INDIA LIMITED- IPO Note April 24, 2015

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1 UFO MOVIEZ INDIA LIMITED- IPO te April 24, 2015 Company Overview UFO Moviez is India s largest digital cinema distribution network and in-cinema advertising platform (in terms of numbers of screens). It operates India s largest satellite-based, digital cinema distribution network. In fiscal year 2014, UFO digitally delivered more than 1,500 movies in 22 languages to 4,703 screens with aggregate seating capacity of approximately 2.15 million viewers spread across India. Since the beginning of its operations, it has digitally delivered more than 8,800 movies in India until February 28, As at February 28, 2015, UFO s global network spans 6,626 screens worldwide, including 4,911 screens across India and 1,715 screens across Nepal, the Middle East, Israel, Mexico and the USA. UFO has an overall 54% market share in India s digital cinema exhibition industry in terms of screens that use digital cinema distribution network. The in-cinema advertising platform of UFO offers a number of key advantages over traditional advertising methods, including: (i) high levels of transparency such as logging of actual advertisements played, which enhances advertiser confidence in the medium (ii) remote capability (in approximately 3,328 screens), which allows for last minute scheduling and content changes (iii) advanced technology, such as multilingual support Objects of the Issue Issue Highlights Issue Open : April 28, 2015 Issue Close : April 30, 2015 Issue Price : Rs 615- Rs 625 Issue Size : Rs 600 cr Face Value : Rs 10 QIB Category : 50% of Net issue n-institutional : 15% of Net issue Retail category : 35% of Net issue Issue Type : 100% Book Building Market Lot : 24 Equity Shares Global Co-ordinators & Book Running Lead Manag- Axis Capital Limited Citigroup Global Markets India Private Limited Registrar To The Issue The objects of the issue are: To achieve the benefits of listing the Equity Shares on the Stock Exchanges Karvy Computershare Private Limited Sale of Equity Shares by the Selling Shareholders

2 UFO MOVIEZ INDIA LIMITED- IPO te Key Strengths UFO is a leading player in the digital cinema space in India. UFO s end-to-end, high-quality digital cinema solution has made it an essential partner for movie producers, distributors and exhibitors in India. UFO s business model is focused on creating value for all stakeholders in the cinema industry, from movie producers and distributors to exhibitors, the cinema-going audience and advertisers. UFO s in-cinema advertising platform can offer advertisers value through being a pan-india, high impact platform that enables them to reach a targeted, captive audience with high flexibility and control over the advertising process, along with high levels of transparency. UFO has built an advanced end-to-end technology platform with high uptime levels in India backed by a dedicated workforce, with in-house teams for software development, advertisement sales and repairs & maintenance. Key Business strategy The company intends to grow the revenue from advertising business through deepening advertiser engagement, attracting new advertisers to its platform, expanding on-screen advertising offerings, growing advertising spot rates and monetizing below-the-line advertising opportunities. The company plans to deepen its relationships with existing advertising clients and increase their usage of in-cinema advertising by making it an integral part of their overall advertising activities. The company believes the opportunity to leverage its technology platform and its relationships with distributors and advertisers to expand the movie exhibition market in India through innovative models. The company also believes that India is an under-penetrated movie exhibition market relative to developed and other emerging markets. By providing a complete digital cinema solution it will be able to reach an untapped and niche segment of Indian exhibition sector.

3 UFO MOVIEZ INDIA LIMITED- IPO te Risks and Concerns The company is dependent on its relationships and agreements with movie producers and distributors, exhibitors, advertisers and any failure to maintain these relationships or to establish and capitalize on new relationships, could have a material adverse effect on its business, prospects, financial condition and results of operations. Its advertisement revenue is dependent on a number of factors, including the number of screenings of movies, which is subject to factors outside of its control. Consequently, any negative downturn in these factors may directly affect advertisement revenue generation. Certain of its customers account for a large portion of its revenues. The loss or reduction in spending by any of these customers could have an adverse effect on revenues and results of operations. The company business relies heavily on technology systems and any failures or disruptions may materially and adversely affect its operations. Outlook and Valuation Unique business model, possible operating leverage through advertising revenue, good growth rates and healthy balance sheet augur well for continued uptick in return ratios. Lack of listed alternatives in the space will keep valuations high for this company. We recommend to invest in this issue for gains in the medium to long term basis. Key Financial Ratios (On Annualized FY15 and Post Issue Basis): Company Name ROE(%) ROCE(%) Mcap / Sales (x) P / E (x) P / B (x) Debt / Equity UFO Moviez

4 UFO MOVIEZ INDIA LIMITED- IPO te Financial Performance Balance Sheet-Consolidated (` Crore) FY 12 FY13 FY14 31-Dec-14 Share Capital Reserve & Surplus Shareholders' Fund Share Application Money Minority Interest Total Debt (ST+LT) Total Provisions Other Liability Trade Payables Total Liability Net Fixed Assets Goodwill on consolidation Total Investments Deferred Tax Assets (Net) Loans & Advances (ST+LT) Inventories Other Assets Cash and Bank Balance Trade Receivables Total Assets Source: Company Data, RHP

5 UFO MOVIEZ INDIA LIMITED- IPO te Financial Performance Profit & Loss Account-Consolidated (` Crore) FY12 FY13 FY14 31-Dec-14 Income : Total Revenue Other Income Total Income Expenditure : Operating Expenses Employee Benefits Expense Other expenses Total Expenditure Operating Profit Finance Cost Finance Income Gross Profit Depreciation Profit Before Tax Total Tax Reported Net Profit Sahre of profit / (loss) from associates Reported Net Profit before Minority Intesest Attributable to : Equity share holder of parent company Minority Interest Profit for the period / year Source: Company Data, RHP

6 Before you use this research report, please ensure to go through the disclosure inter-alia as required under Securities and Exchange Board of India (Research Analysts) Regulations, 2014 and Research Disclaimer at the following link: Specific analyst(s) specific disclosure(s) inter-alia as required under Securities and Exchange Board of India (Research Analysts) Regulations, 2014 is/are as under: Statements on ownership and material conflicts of interest, compensation Research Analyst (RA) [Please note that only in case of multiple RAs, if in the event answers differ inter-se between the RAs, then RA specific answer with respect to questions under F (a) to F(j) below, are given separately] S.. Statement Answer Tick appropriate I/we or any of my/our relative has any financial interest in the subject company? [If answer is yes, nature of Interest is given below this table] I/we or any of my/our relatives, have actual/beneficial ownership of one per cent. or more securities of the subject company, at the end of the month immediately preceding the date of publication of the research report or date of the public appearance? I / we or any of my/our relative, has any other material conflict of interest at the time of publication of the research report or at the time of public appearance? I/we have received any compensation from the subject company in the past twelve months? I/we have managed or co-managed public offering of securities for the subject company in the past twelve months? I/we have received any compensation for brokerage services from the subject company in the past twelve months? I/we have received any compensation for products or services other than brokerage services from the subject company in the past twelve months? I/we have received any compensation or other benefits from the subject company or third party in connection with the research report? I/we have served as an officer, director or employee of the subject company? I/we have been engaged in market making activity for the subject company? Nature of Interest ( if answer to F (a) above is Yes :... Name(s) with Signature(s) of RA(s). Yes [Please note that only in case of multiple RAs and if the answers differ inter-se between the RAs, then RA specific answer with respect to questions under F (a) to F(j) above, are given below] SS... Name (s) of RA. Signtures of RA Serial Question of question which the signing RA needs to make a separate declaration / answer Yes. Copyright in this document vests exclusively with RSL. This information should not be reproduced or redistributed or passed on directly or indirectly in any form to any other person or published, copied, in whole or in part, for any purpose, without prior written permission from RSL. We do not guarantee the integrity of any s or attached files and are not responsible for any changes made to them by any other person.