Analyst corner | Maintain ‘buy’ on PVR, target price Rs 2,100

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Published: October 19, 2019 3:48:59 AM

The company’s standalone performance also remained strong with NBOC, F&B and ad revenue jumping ~25%, ~31% and ~9% YoY, respectively, propelling revenue ~24% YoY.

Analyst corner, PVR, target price, PVR price, PVR share price, market newsPVR’s NBOC (consolidated) grew ~32% Y-o-Y bolstered by ~25% Y-o-Y surge in footfalls despite the general economic slowdown.

PVR’s Q2FY20 revenue came in line, while EBITDA and PAT (excluding Ind AS 116) surpassed estimates. Strong content fuelled revenue, EBITDA and PAT spurt of ~37%, ~57% and ~98%, respectively. Footfalls (consolidated) rose ~25% Y-o-Y with 37.8% occupancy.

The focus on promoting F&B offerings led to 13% Y-o-Y (Rs 99) SPH growth, spurring 38% growth in F&B revenue. Ad revenue jumped 16% YoY despite a tough ad environment. PVR Pictures shined in Q2FY20— raked in Rs 650 million distribution revenue. Though we remain positive on multiplexes, we will keep an eye on: i) time windows between theatrical & digital release; and ii) any impediments to screen expansion. Maintain ‘buy’ with a target price of Rs 2,100.

PVR’s NBOC (consolidated) grew ~32% Y-o-Y bolstered by ~25% Y-o-Y surge in footfalls despite the general economic slowdown. The company’s standalone performance also remained strong with NBOC, F&B and ad revenue jumping ~25%, ~31% and ~9% YoY, respectively, propelling revenue ~24% YoY. Adjusting for Ind AS 116, PVR’s EBITDA rose ~57% YoY with EBITDA margin expanding ~250bps YoY to 20% (multi-quarter high) despite elevated expenses.

Screen expansion continues to remain in focus—screen count at 800 in Q2FY20 and on track to meet 80 screen opening guidance for FY20.

Employee expenses rose 18% on comparable basis due to some one off expenses and increase in minimum wages in some states, South has been the slowest segment in H1FY20, has not done as well as English and Hindi, PVR has 30% strike rate in terms of audience participation in F&B, May open 50-60 screens in H2FY20; and vi) PVR’s Utsav brand is expanding rapidly in Tier III cities. Despite an unfavourable base, we expect Q3FY20 to be benign for PVR owing to the solid start and robust content pipeline.

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