PVR's Q4FY19 results (Outperformer) - Blockbuster performance to end the year!

Q4FY19 Results Highlights

• Exhibition segment metrics (ex SPI): ATP fell 4% yoy to Rs201 (GST revised lower); footfalls rose by strong 24.7% yoy to 23.7m led by good content (Uri, Gully Boy, Simmba, Kesari, Captain Marvel, etc.). Occupancy stood at 37.1% (vs 31.5% yoy), while SPH grew 4.6% yoy to Rs91. Comparable metrics: Footfalls +18% yoy, ATP -2% yoy; SPH +5% yoy, Occupancy 36.3% (vs 31.3% yoy).
• Exhibition segment financials (ex SPI): Rev was up 28% yoy to ~Rs7.2bn led by strong 29% yoy growth in net box office revenue, 26% yoy growth in F&B rev, 10% yoy growth in ad rev. Convenience fee rev. grew 118% yoy (due to the new BMS/PayTM deal).
• SPI performance: Rev. stood at Rs1.1bn while EBITDA came in at Rs192m (17.9% margin). Footfalls stood 3.8m (51.2% occupancy). ATP stood at Rs158/SPH at Rs90. (yoy nos unavailable).
• Cons. Financial performance: Rev. was up 43.2% yoy (3% beat) led by strong ex-SPI exhibition performance, SPI performance was weak on account of poor Tamil/Telugu content pipeline. Cons. EBITDA grew sharply by 70.3% yoy to ~Rs1.6bn (4% beat) led by strong exhibition EBITDA performance. EBITDA margin improved 310 bps yoy to 19.2% (in-line). PAT (Rs467m; +78% yoy) was in-line a tad below expectations due to lower other income.

Key positives: Strong exhibition segment performance.

Impact on financials: FY20E/21E EPS cut by 3%/4% to account for SPI balance equity acquisition.

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 H1FY20E sets the stage for strong 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. 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 Rs1911 (12x FY21E EV/EBITDA). The new accounting norms (AS 116) will bloat the debt (and lower earnings) optically and higher than expected capex run-rate are the key monitorables.