Imagicaaworld Entertainment Receives Buy Rating from Prabhudas Lilladher with a Target Price of Rs 64

Prabhudas Lilladher Raises EPS Estimates for Imagicaaworld Entertainment

Prabhudas Lilladher's research report on Imagicaaworld Entertainment has led to an increase in the financial institution's earnings per share (EPS) estimates by 3% for the fiscal year 2027 (FY27E). This upward revision is a result of the consolidation of Shanku's water park from 2QFY27E. By opting for the investment in Shanku's existing operational asset, the company is expected to reduce its capital expenditure (capex) to revenue ratio significantly without overstretching its balance sheet (BS).

The decision to pursue this investment has also led to the shelving of plans for a greenfield exposure in Ahmedabad. Additionally, the upcoming Sabarmati park is expected to face a delay, with its inauguration now anticipated in 2HFY28E. Imagicaaworld Entertainment reported a weak operational performance in the recent period, with an EBITDA margin of 33.0%, falling short of Prabhudas Lilladher's estimates of 43.0%. This underperformance was largely attributed to higher-than-expected other expenses.

Outlook and Recommendations

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Looking ahead, Prabhudas Lilladher forecasts a sales and EBITDA compound annual growth rate (CAGR) of 14% and 30%, respectively, over the period of FY26 to FY28E. This growth is expected to be driven by the base effect and the addition of two new parks in Sabarmati and Mehsana. In light of these projections, the financial institution has chosen to retain its BUY rating for Imagicaaworld Entertainment, with a stock price target (SoTP) of INR64. This valuation is based on the park and hotel business being valued at 15x FY28E EBITDA, a reduction from the earlier estimate of 17x.

Note: The table above presents a comparison of the sales and EBITDA CAGR for Imagicaaworld Entertainment over the period of FY26 to FY28E.