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, 2015. 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
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.
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 12.22 15.75 3.43 29.98 3.66 0.23
UFO MOVIEZ INDIA LIMITED- IPO te Financial Performance Balance Sheet-Consolidated (` Crore) FY 12 FY13 FY14 31-Dec-14 Share Capital 25.9 25.9 25.9 25.9 Reserve & Surplus 283.8 320.6 374.3 416.0 Shareholders' Fund 309.7 346.5 400.2 441.9 Share Application Money 0.0 0.0 0.0 0.0 Minority Interest 14.4 11.0 14.8 6.5 Total Debt (ST+LT) 57.5 85.2 100.8 99.5 Total Provisions 2.8 3.8 5.5 4.7 Other Liability 101.9 147.1 162.2 193.3 Trade Payables 20.1 35.1 59.1 66.7 Total Liability 506.4 628.6 742.6 812.7 Net Fixed Assets 248.1 298.7 366.0 332.9 Goodwill on consolidation 116.8 130.9 136.6 167.6 Total Investments 2.8 13.5 10.6 15.4 Deferred Tax Assets (Net) 1.3 2.2 13.1 18.7 Loans & Advances (ST+LT) 35.0 46.2 52.9 61.0 Inventories 10.3 10.6 9.7 9.0 Other Assets 1.1 8.7 10.6 20.8 Cash and Bank Balance 51.8 42.1 51.8 53.8 Trade Receivables 39.2 75.8 91.3 133.6 Total Assets 506.4 628.6 742.6 812.7 Source: Company Data, RHP
UFO MOVIEZ INDIA LIMITED- IPO te Financial Performance Profit & Loss Account-Consolidated (` Crore) FY12 FY13 FY14 31-Dec-14 Income : Total Revenue 206.7 336.2 420.4 354.7 Other Income 1.0 1.3 0.7 2.5 Total Income 207.7 337.5 421.1 357.2 Expenditure : Operating Expenses 73.1 128.1 166.5 139.6 Employee Benefits Expense 33.3 44.8 55.3 43.1 Other expenses 49.0 57.6 67.6 53.5 Total Expenditure 155.3 230.5 289.4 236.2 Operating Profit 52.3 107.0 131.7 121.0 Finance Cost 11.3 15.2 19.9 15.7 Finance Income -6.6-3.1-3.4-3.7 Gross Profit 47.6 94.9 115.3 109.0 Depreciation 39.0 53.6 65.5 56.9 Profit Before Tax 8.7 41.2 49.8 52.1 Total Tax 2.4 2.4-1.1 12.7 Reported Net Profit 6.3 38.8 50.9 39.4 Sahre of profit / (loss) from associates -0.1 0.3-0.8 1.2 Reported Net Profit before Minority Intesest 6.2 39.1 50.1 40.6 Attributable to : Equity share holder of parent company 4.4 33.4 46.5 36.9 Minority Interest 1.8 5.7 3.6 3.8 Profit for the period / year 6.2 39.1 50.1 40.6 Source: Company Data, RHP
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