Company Background:
Established in 2012, the company operates in the cinema exhibition sector, with a presence in 15 states and over 40 cities across India, serving more than 15 million patrons annually.
Problem:
The company’s rating of BBB-, assigned in August 2023, faced potential downgrade pressure due to its underperformance in FY24 compared to the projected revenues and profitability outlined in the previous rating exercise.
Solution:
We conducted a comprehensive analysis of the company’s operational and financial metrics, including screen count, seating capacity, occupancy rates, footfalls, average ticket prices, and ancillary revenues. This analysis helped identify the key areas impacting revenue shortfalls. We then developed a conservative projection model for FY25-FY27 to present a more realistic financial outlook. Emphasizing the company’s improved performance in FY24 over FY23, we successfully mitigated concerns over the underperformance.
Impact:
The retention of the BBB- rating in October 2024 helped the company maintain investor confidence and ensured that its cost of borrowing remained stable. This stability supported ongoing operations and reduced client pressure from a funding perspective during challenging times.
