Agro Dutch Industries Ltd hits the buyer freeze. U should always buy these kinds of scrips, which are recommended by me when they fall to generate windfall gains: DMC International Ltd rose more than 11% before the declaration of bonus issue. I think today (09-11-07) will be the last day for the purchase of the shares of DMC International Ltd to get the bonus issue in the ratio of 1:1, hassle free. It is because both 10th and 11th November are holidays: Kamanwala Housing and Construction Ltd after the splendid resutls is all set to cross Rs.500 in the days to come--just wait and watch. Yesterday it rose with huge volume, uncharacteristic of the scrip. This indicates that buyers are running after this scrip even when the markets are down by more than 200 points: Keep accumulating my other multi-baggers like Pondy Oxides and Chemicals Ltd, Jai Parabolic Springs Ltd, Jamna Auto Industries Ltd and Ansal Buildwell Ltd. The recent revelations seems to prove that Ansal Buildwell Ltd has properties worth Rs.5000 Cr. Buy Cinemax Ltd at the CMP of Rs.116.3 to get some wonderful appreciation within 2 months. This is one of the most safest scrips in the Multiplex Space:

Cinemax India Ltd: Cinemax India is the leading multiplex operator in Mumbai, the most lucrative market for Indian cinema. Its EBIDTA margins are the best in the industry, and is expected to deliver a 63.9% CAGR in earnings over FY07-09E. This makes it one of the cheapest multiplex stocks in the space in which it performs. Thus the scrip is higly undervalued considering its peers, like Pyramid Symeria Theatres Ltd. Cinemax India is part of the Kanakia Group, which has a track record of 20 years in real estate development. The group has developed over 5 million sq ft of residential and commercial real estate. After a corporate restructuring, Cinemax controls all the movie exhibition business of the group. The company is one of the largest exhibition theatre chains in India operating 13 properties with 39 screens and 10982 seats. It is also has one of the largest number of owned multiplexes in India. The company has three wholly owned subsidiaries that operate its multiplexes at Versova and Kandivali, both suburbs in Mumbai. THE COMPANY ACCORDING TO SOURCES CLOSE TO ME WILL COMPLETE AT LEAST 62 SCREEN BY DECEMBER, 2007--just imagine what will be the revenues going forward if the number of screeens becomes almost double for the present 39. Some points which are worht noting are:

• Cinemax is the No. 1 multiplex player in Mumbai with a market share of 30.4% in seat count among multiplexes in the country’s financial capital, through its 10 properties. Bombay (Mumbai) is the hub of Indian cinema and accounts for more than 15% of the all-India box collections. Cinemax has 3 properties and 9 screens under development in this lucrative market. The multiplexes are located in the high catchments areas in Mumbai such as Bandra, Versova, Andheri, Sion, Goregaon and Thane. This gives the company the flexibility to rotate prints between theatres, and maximize profits. It also ensures strong revenues flows during the first two weeks of movie release. It's multiplxes in Guwahati and Himmatnagar are main revenue drivers of the company--in fact the Guwahati Multiplex is the best performing among the mutliplexes it owns or manages.
• The strong presence in Mumbai ensures strong revenues flows, and also gives the company an edge over competitors in accessing quality content at competitive rates.
• The company has lined up an aggressive expansion plan to ramp up its capacity and acquire a pan-India presence. The total number of screens will go up to 72 by end FY08, and further to 123 by end FY09. The number of seats will be increased by over 3x. This ramp up will be a key revenue driver for the company.
• The biggest hurdle for a multiplex operator is timely rollout. The Kanakia group’s real estate development background has enabled Cinemax reduce cost and time overruns in developing projects without compromising on quality and ambience. The rollout will ensure that Cinemax retains its position as one of the top multiplex operators in India. Post expansion, the company will be well diversified geographically, with theatres in most of the metros, Tier-I and Tier-II cities. Over 60% of the properties are expected to be in Maharashtra and Gujarat
• Cinemax’s revenues are expected to double from Rs 100.16 Cr in FY07 to Rs.250 Cr-plus in FY09E, largely driven by the increase in the number of multiplexes. This, coupled with margin expansion, would see PAT increasing at a CAGR of 63.9% over FY07, in FY08-09.
• The company’s leadership in Mumbai has it build strong relationships with Indian and foreign distributors. This gives it an edge over competitors in accessing quality content at competitive rates.
• Cinemax has a gaming business, which operates under the brand name, Giggles- The Gaming Zone, at Eternity Mall, Thane. It is spread over 13,000 square feet and offers around 50 state-of-the-art games. The company plans to expand its gaming business by opening seven new Giggles gaming zones at some of its multiplexes at different locations in India each at a cost of Rs.2 Cr. The company has a ready customer base and the gaming zones will be located adjacent to its theatres and offer patrons a complete family experience at a single location. This vertical is expected to generate good amount of revenues in FY08 and FY09. the income from sale of tickets is expected to contribute 75.9% to top line, with F&B contributing another 17% FY08E. Advertising and gaming will contribute 6%-10% of the revenues. The leasing rentals from the Nagpur and Thane malls will contribute the rest. Currently 82.1% of the seats are exempted from entertainment tax. Cinemax also enjoys the best margins in the industry. Other players such as Inox, Shringar, and PVR have operating margins in the range of 17%-24%. This is because Cinemax does not have to pay any lease for its theatres located in eight owned properties.
• Cinemax India has leveraged its promoters’ real estate background and successfully developed over 200,000 sq feet mall at Thane (Eternity Mall) with tenants including Cinemax Multiplex (along with the gaming zone), Globus, Proline, Planet M, Metro Shoes, Bon Bon Shoes, My Dollar Stores and Archies Gallery. The company is currently developing properties at Nagpur (over 100,000 sq feet) and Eternity Mall in Thane (additional 30,000 sq ft). The projects are expected to become operational by mid FY08 and early FY09 respectively. For the initial period, the company will lease this space to retailers and in future sell the area to fund the expansion of the exhibition business
• Cinemax is one of the most recognizable movie exhibition brands in areas where the company operates. Cinemax has a track record of innovation in the exhibition industry and were one of the first to introduce the concept of high comfort recliner seating arrangements with ‘The Red Lounge’ concept. The company introduced massage chairs, karaoke facilities at its multiplex, which helped it charge higher ticket price. It introduced a gaming zone at its multiplex at Thane that was a novelty in providing complete family entertainment and enhance the overall experience for the patrons. Such innovations would help the company increase footfalls and boost revenues due to repeat business.
• The return ratios are expected to improve over FY07-09 on the back of the company’s expansion and growth in margins. RoCE is expected to increase from 10.52% in FY07 to 19.5% in FY09E, while RoNW will grow from 8% to 16.85% during the same period.
• The gross block of the company is expected to increase to Rs.217 Cr in FY09 as against Rs.86 Cr in FY07. SImilarly the net profits are expected to more than double in FY09 from FY07. The net and operating profit margins are also expected to improve in the days to c0me. The sales are expected to more than double or triple in FY09 from FY07.

Thus considering all the factors mentioned above I think Cinemax Ltd is highly undervalued at the CMP of Rs.116.30 and is all set to cross Rs.200 within the next 12 months. The stock has the potential to become Rs.150--Rs.170 in the next 45 days to 2 ( two) months time frame. This is a safe pick with a limited downslide as it is near its 52-week low price. Buy this scrip in huge quantities to get good amount of money in the days to come.

THE RISK REWARD RATIO ARE SKEWED IN THE FAVOUR OF 5:95, IN FAVOUR OF REWARD, FROM THE CURRENT PRICE. [With inputs collected from various sources]