Analyst corner: PVR’s Q4 Ebitda was in line with expectations

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Published: May 16, 2019 2:35:34 AM

Q4FY19 Ebitda was in line with expectations as relatively strong movie content aided 25% jump in footfalls (37% occupancy vs. 31.5% y-o-y; highest in last 16 qtrs), driving strong performance across segments.

Analyst corner: PVR's Q4 Ebitda was in line with expectationsAnalyst corner: PVR’s Q4 Ebitda was in line with expectations

Q4FY19 Ebitda was in line with expectations as relatively strong movie content aided 25% jump in footfalls (37% occupancy vs. 31.5% y-o-y; highest in last 16 qtrs), driving strong performance across segments.

FY19’s healthy movie content led to 17% growth (ex-SPI) in footfalls (occupancy at 35% vs. 5-yr avg. of 33%), aiding 40% Ebitda jump. Net ATP (+3%)/ SPH (+6%) growth was relatively calibrated given pass through of rejig in GST rates and its decision for measured price hikes. We expect management’s growth strategy across net SPH (price and volume), ad revenue (led by yields, as volume growth to be restrained), net ATP (gradual hike) and full benefit of SPI’s acquisition (H2FY19 Ebitda at `0.5 bn; expected `1 bn+ in FY20) to play out in FY20. While we still appreciate PVRL’s ability to monetise footfalls (higher SPH/ ad revenue), we believe, CMP factors in most of the positives.

Q4 consolidated revenue stood at `8.3 bn, Ebitda at `1.6 bn (Ebitda margin at 19.2%) and PAT at `467 million. Ex-SPI, PVRL’s ticket sales grew 29%, F&B/ad revenue grew 26/10% on strong footfall growth (+25%); ad revenue growth was largely led by screen addition as revenue per screen was flattish y-o-y in Q4. Standalone (PVRL; ex SPI) net ATP grew 3.5% (gross down 4%; impact of pass through of lower GST rate), but net SPH growth remained slow at 1% in Q4 (+12% in H1) given higher discounts/ promotions (to promote higher conversions).

PVRL added 70 screens organically in FY19 (+72 screens under SPI), aggregating to 771 screens in FY19; management maintained guidance for 90 screen addition in FY20. Capex guidance at `5-5.5 bn in FY20 for (a) screen additions (2/3rd of capex; `30mn/screen) and (b) upgrade/ renewal of older screens (1/3rd capex); FY19 capex stood at `4.8 bn. Aggregate debt stood at `12.5 bn (debt/ Ebitda at 2.1x FY19). (a) Focus to gradually reduce ad minutes per show especially for premium screens (currently at 18 mins for iconic screens and 22 mins for non-iconic screens); this will be compensated by price hikes, (b) SPH growth to see an uptick as management expects higher conversion rate going ahead, (c) ATP growth to be gradual though gross ATP growth may remain subdued due to pass-through of lower GST rates.

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