PVR's Q3FY19 results (Outperformer) - The show goes on… and on!

Q3FY19 Results Highlights

• Exhibition segment metrics (ex SPI): ATP grew by 4% yoy to Rs220; footfalls rose by strong 22.4% yoy to 21.3m led by good content (Badhai Ho, Andhadhun, Thugs, Simbaa, Zero, 2.0, etc.). Occupancy stood at 33% (vs 29.1% yoy), while SPH fell 2.2% yoy to Rs90. As it consciously is driving better value for consumers. Comparable footfalls grew 10% yoy, while comparable ATP rose 6% yoy.
• Exhibition segment financials (ex SPI): Rev was up 27% yoy to ~Rs7bn led by strong 26% yoy growth in net box office revenue, 24% yoy growth in F&B rev, 16% yoy growth in ad rev. Convenience fee rev. grew 145% yoy (due to the new BMS/PayTM deal).
• SPI performance: Rev. stood at Rs1.4bn while EBITDA came in at Rs307m (22.4% margin). Footfalls stood 4.4m (57% occupancy). ATP stood at Rs172/SPH at Rs89. (yoy nos unavailable).
• Cons. Financial performance: Rev. was up 51.3% yoy (6% beat) led by strong ex-SPI exhibition performance and SPI consolidation for full quarter. Cons. EBITDA grew sharply by 62% yoy to ~Rs1.6bn (7% beat) led by strong exhibition EBITDA performance. EBITDA margin improved 130 bps yoy to 19.5% (in-line). PAT (Rs516m; +79% yoy) was in-line despite EBITDA beat due to higher finance costs/tax rate.

Key positives: Strong exhibition segment performance.

Key negatives: Higher finance costs/tax rate.

Impact on financials: FY19E/20E/21E EPS cut by 2%/3%/4% due to higher fin/dep. costs.

Valuations & view

PVRL’s execution has been flawless over the past as it continues to deliver industry leading operating metrics due to its presence in the best catchment areas across its markets. A strong content pipeline in H2FY19E sets the stage for strong box office and ad rev. performance for the year. Buyout of SPI Cinemas helps improve reach in South (which was low) and a favourable deal with BMS and PayTM reinforces the strength of its brand. The recent reduction in GST rates on ticket prices could improve footfalls, although we believe that content would be the main driver in this case than prices. With receding concerns from the pending F&B issue, we continue to remain constructive on the multiplex space and PVRL remains best placed here. Maintain Outperformer with a PT of Rs1779 (11x FY21E EV/EBITDA)