On a like-to-like basis, PVRs core exhibition business registered a strong 34% growth in revenues and 30% growth in Ebitda, aided by robust organic expansion (66 screens added in last 12 months).
Improved scale is driving benefits in the form of lower film hire cost and COGS. This has aided in maintaining Ebitda margins at 19% in spite of aggressive screen rollout. The key positive is the significant cost savings on account of higher scale. The PVR business model has transformed from being another multiplex operator to now controlling 30% of all India content produced.
This has aided in bringing in sustainability in PVRs business. The management is well focused on improving all operational parameters (ATP and SPH) underpinning strong profit growth. While the stock has given 144% return in the last 12 months, we believe the increased relevance of the business and its market capitalisation, as also its consistent performance will continue to create a positive rub off on the stock. We maintain outperform.