'Buy' Fame India (SHRINGAR CINEMA), Target Rs 105

Religare puts 'buy' on Fame India, target Rs 105
28 Feb, 2008, 1725 hrs IST, INDIATIMES NEWS NETWORK

MUMBAI: Religare Securities has downgraded the target price of Fame India (formerly Shringar Cinema) to Rs 105 from Rs 147 and has maintained ‘buy’ rating on the stock.

Fame India has tied up with HDIL through its subsidiary Shringar Films, for programming content for the realty major's upcoming multiplexes. Shringar Films has also signed up four more properties in Pune for programming.

Fame has opened a 4-screen property in Bangalore with 993-seats. It plans to launch three more properties in Kolkata, Mumbai and Bangalore by March 2008 with a total of eight screens and 2,058 seats. Fame also proposes to foray into film production with an investment of Rs 10 crore, says Religare.

The company has posted a 41 per cent year on year growth in revenue during October-December 2007-08 with a flat net profit of Rs 3.6 crore, mainly due to higher operating costs. The occupancy level for the quarter has been below Religare’s expectations and the company has rescheduled or cancelled some property launches. Consequently, the brokerage has reduced their estimate for 2007-08 and 2008-09.

The brokerage expects Fame to register 53 per cent CAGR in its consolidated revenue over FY07-FY09. Also, as the number of multiplexes rise, fixed overheads will be diluted, giving rise to higher operating margins, says Religare.

Religare have not considered the theatre programming ventures through Fame's subsidiary and the planned film venture in their projections due to lack of clarity.