Connplex Cinemas NSE SME IPO review

•    The company is engaged in development of theatres and related services under the brand name “Connplex”.
•    The company has 66 cinemas in operation as of the filing of this offer document.
•    It focuses on Tier-I, Tier-II and Tier-III cities for its operations.
•    The company marked growth in its top and bottom lines, but the boosted net profits for FY25 raise eyebrows and concern over its sustainability.
•    Based on its recent financial data, the issue appears fully priced.
•    Well-informed/cash surplus investors may park moderate funds for long term.

ABOUT COMPANY:
Connplex Cinemas Ltd. (CCL) is an entertainment company. The company is engaged in the business of development of theatres, entering into the franchise agreements specializing for exhibition and distribution of films, sharing revenue of screening of movies, sale of food & beverages and Sharing of Revenue from sale of Food & Beverages & advertisements at Various Franchised Cinema, and other related business under the Brand name “CONNPLEX” and other Brands registered under the name of Company. It operates a network of Cinema offering a diverse range of cinematic experiences that cater to various audience preferences. CCL’s business is built on three main pillars: A) Making / Developing of Cinema Theatres, B) film exhibition & film distribution (Including Event Hosting), and C) Revenue Sharing / Sale of Food and Beverages and Other Revenue incl. advertisement sharing.

Additionally, it collaborates with filmmakers and studios to distribute films across its theatres and digital platforms, focusing on strategic marketing to maximize audience reach. Beyond regular screenings, the company also provides event spaces for private screenings, corporate events, and community gatherings, creating additional revenue streams and engaging local communities. The Company was originally formed as “Fohatron Power Limited” vide registration no. 284745 under the provisions of Companies Act 2013 pursuant to Certificate of Incorporation dated September 1, 2015 issued by Registrar of Companies, Delhi. Further, the name of Company was changed to VCS Industries Limited pursuant to fresh certificate of incorporation issued by Registrar of Companies, Delhi on February 16, 2018. The Registered office of Company was shifted from Delhi to Gujarat w.e.f. November 18, 2019. Further, the name of Company was changed to Connplex Cinemas Limited pursuant to fresh certificate of incorporation issued by Registrar of Companies, Central Processing Centre on August 14, 2024.

It is distinguished by its customer experience which includes cinema making, film distribution, programming and latest technologies. CCL’s strategic locations and theatre technologies give it an edge in attracting and retaining audiences. It caters to a diverse audience, including families, young adults, and cinema enthusiasts, with programming designed to engage these segments through a mix of mainstream blockbusters, art films, and themed events. It has redefined cinema experiences by strategically focusing on under-served markets in Tier 2, 3, and 4 cities, as well as expanding in metro locations including tier 1 cities across India. Its mission has always been to bring entertainment to regions where such experiences were previously unavailable or inaccessible. 

By introducing a cinema model that blends high grade standards, convenience, and affordability, it has broken traditional barriers, allowing audiences from various regions to enjoy a premium movie-going experience without the prohibitive costs typically associated with large multiplex chains. Its cinemas are constructed and designed with a deep understanding of customer preferences and regional nuances. With majority of recliner seating, sound systems, and high-definition projection technology, CCL ensures that every aspect of the movie experience is elevated. The smaller, boutique-style cinemas offer an intimate and private yet upscale environment, catering to local audiences who previously had limited access to cinemas. This approach allows it to build strong connections with communities, providing them not only with a place to watch films but also with a venue for private events such as corporate screenings, birthday parties, and special premieres.

In addition to enhancing the movie-watching experience, it has prioritized developing multiple revenue streams that extend beyond ticket sales. Its food and beverage (F&B) services are a key part of business model. The company offers a wide variety of snacks and beverages. Its partnership with delivery partners allows customers to enjoy cinema-quality popcorn, nachos, beverages and other snacks from the comfort of their homes. It is also providing advertising solutions within its cinemas. Its venues offer both on-screen and off-screen advertising opportunities, giving brands a direct platform to engage with captive audiences. Whether it is through movie trailers, interactive digital displays, or custom brand integrations, it helps companies maximize their exposure to key demographics. 

As of March 31, 2025, it had total 66 cinemas in operations out of which 63 were on FOFO model and 3 on FOCO model. Its major focus of expansion is on Tier-I, Tier-II, and Tier-III cities. Gujarat has the lion share in its operational screens with 35 numbers, followed by Bihar with 19 nos. And in its income, setting up of cinemas leads the pack with around Rs. 49 cr. for FY25. As of June 30, 2025, it had 96 employees on its payroll.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO of 5100000 equity shares of Rs. 10 each to mobilize Rs. 90.27 cr. at the upper cap. It has announced a price band of Rs. 168 – Rs. 177 per share. The issue opens for subscription on August 07, 2025, and will close on August 11, 2025. The minimum number of shares to be applied is for 1600 shares and in multiples of 800 shares, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 26.70% of the post-IPO paid-up capital of the company. From the net proceeds of the IPO, it will utilize Rs. 14.79 cr. for capex on purchase of new corporate office, Rs. 24.44 cr. for capex on purchase of LED Screens and projectors, Rs. 37.63 cr. for working capital, and the rest for general corporate purposes. 

The IPO is solely lead managed by Beeline Capital Advisors Pvt. Ltd., and MUFG Intime India Pvt. Ltd., is the registrar to the issue. BEELINE group’s Spread X Securities Pvt. Ltd. is a market maker as well as a syndicate member. Registrar to the company is Accurate Securities and Registry Pvt. Ltd.

The company has issued entire initial equity shares at par value. It has issued bonus equity shares in the ratio of 27 for 1 in November 2024. The average cost of acquisition of shares by the promoters is Rs. NIL per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 14.00 cr. will stand enhanced to Rs. 19.10 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 338.07 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit of Rs. 25.61 cr. / Rs. 1.65 cr. (FY23), Rs. 60.83 cr. / Rs. 4.09 cr. (FY24), Rs. 96.78 cr. / Rs. 19.01 cr. (FY25). Quantum jump in bottom lines for FY25  raise eyebrows.

For the last three fiscals, the company has reported an average EPS of Rs. 7.96 and an average RoNW of 84.45%. The issue is priced at a P/BV of 10.14 based on its NAV of Rs. 17.46 as of March 31, 2025, but its post-IPO NAV data is missing from offer documents.

If we attribute FY25 super earnings on post-IPO fully diluted equity capital, then the asking price is at a P/E of 17.79. Based on FY24 earnings, the P/E stands at 82.71. Thus, the issue appears fully priced.

For the reported periods, the company has posted PAT margins of 6.50% (FY23), 6.78% (FY24), 19.88%, (FY25), and RoCE margins of 119.48%, 88.36%, 98.25%, respectively for the referred periods. 

DIVIDEND POLICY:
The company has not paid any dividends for the last five fiscals. It will adopt a prudent dividend policy, based on its financial performance and future prospects.

COMPARISION WITH LISTED PEERS:
As per the offer document, the company has shown PVR Inox as its listed peer. It is trading at a P/E of NA (as of August 05, 2025). However, they are not truly comparable on an apple-to-apple basis.

MERCHANT BANKER’S TRACK RECORD:
This is the 64th mandate from Beeline Capital in the last four fiscals including the ongoing one.  Out of the last 12 listings, 3 opened at discount, and the rest with premium ranging from 0.56% to 146.91% on the date of listing.