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Adlabs Entertainment
Price band | 221-230
Issue Details
Issue Opens
Issue Closes
10-Mar-15
12-Mar-15
Rising footfall to drive valuation in long run...
Adlabs Entertainment (Adlabs) is one of the leading amusement park
Issue Size (| Crore) |442-|460
operators in India. The company’s theme park under the brand name
crore Price Band (|) |221-|230
Imagica became fully operational on November 2013. In addition, the
No of Shares on Offer (Crore) 2.0
company has also commissioned a water park in October 2014 and is also
QIB (%) 75.0
in the process of launching a hotel, which is expected to be operational in
Non-Institutional (%) 15.0
March 2015 with 116 rooms. In the process of this expansion the
Retail (%) 10.0
company leveraged its balance sheet to the tune of | 1,256 crore.
Retail Discount | 12 Through this IPO, Adlabs intends to de-leverage its balance sheet by
65 shares and in
| 330 crore, which is the objective of the IPO. In H1FY15, total revenues
Minimum lot multiple of and loss after tax were | 73.3 crore and | 53.5 crore, respectively. We
size thereof
expect revenues to increase at a CAGR of 42% over FY15E-18E.
Objects of the Issue (| Crore)
Investment Rationale
To reduce debt by Rs 330 Cr
Strategically located in attractive catchment area
Shareholding Pattern Adlabs is strategically located near the Mumbai – Pune Expressway, which
(%) Pre-Issue Post-Issue attracts guests from Mumbai, Pune, the rest of Maharashtra and Gujarat. It
Promoter & promoter group 77.0 56.8 can also attract pan-India guests and International tourists due to the
Institutional & Non- Institutional 23.0 40.6 proximity and connectivity of Adlabs Mumbai to Mumbai and Pune through
Public & Others 0.0 2.5
the Mumbai – Pune Expressway. The proximity to Lonavala and Khandala will
also help it to attract tourist.
Financial Summary
Competitive advantage through entry barriers
 | crore FY14 H1FY15 FY15E FY16E FY17E FY18E
Total Income 106.9 73.3 199.3 312.7 439.0 569.6
EBITDA 7.0 4.6 23.9 93.8 153.7 256.3
EBITDA (%) 6.5 6.2 12.0 30.0 35.0 45.0
Depreciation 30.5 36.8 73.5 77.7 80.8 84.0
Interest 42.5 54.0 100.5 74.1 74.1 74.1
Adjusted PAT -52.5 -53.5 -115.1 -26.0 -1.0 80.5

Valuation Summary (at | 230 ;upper price band)

FY14 FY15E FY16E FY17E FY18E
EV/EBITDA 422.4 114.8 29.3 17.9 10.7
P/E NA NA NA NA 22.8
P/S 17.2 9.2 5.9 4.2 3.2

Research Analyst

Rashesh Shah rashes.shah@icicisecurities.com

Devang Bhatt devang.bhatt@icicisecurities.com

Adlabs has first mover advantage in the business of theme and water parks as it is difficult
to replicate a project of similar scale and size in the company’s catchment area due to high
capex, scarcity of suitable land parcels on commercially viable terms and long gestation time.
Well integrated player
Apart from theme and water park, the company is launching a hotel (which will attract
guests for a longer stay) and a snow park. The company aims to take advantage of cross
selling opportunities by offering various cost promotion and combination packages of
admission tickets and stay at the hotel. In addition, the company also aims to boost
revenues by hosting wedding receptions, parties, conferences & meetings and other corporate
events.
Concerns
 Scalability issues due to highly leveraged balance sheet
 High fixed cost structure and debt restricts pat margin expansion
 Risk of accidents or mishaps at any of the parks
Exhibit 1: Financial Summary
| Crore FY13 FY14 H1FY15 FY15E FY16E FY17E FY18E
Net Sales 3.6 106.9 73.3 199.3 312.7 439.0 569.6
Growth YoY (%) NA 29.1 NA 86% 57% 40% 30%
EBITDA -2.5 7.0 4.6 23.9 93.8 153.7 256.3
EBITDA Margin (%) N.A 6.5 6.2 12.0 30.0 35.0 45.0
PBT -2.5 -66.1 -86.2 -150.1 -58.0 -1.2 98.2
Tax 0.7 13.6 32.7 35.0 32.0 -0.2 17.7
PAT -1.8 -52.5 -53.5 -115.1 -26.0 -1.0 80.5
EPS -0.3 -8.5 -8.7 -18.7 -4.2 -0.2 13.1
Post issue Diluted EPS -0.2 -6.6 -6.7 -14.4 -3.2 -0.1 10.1

Source: Company, ICICIdirect.com Research