MOS: PVR (Buy)-Expansion in southern market to lead growth
​PVR: Expansion in southern market to lead growth
(PVRL IN, Mkt Cap USD1.0b, CMP INR1353, TP INR1628, 20% Upside, Buy)
- Revenue in-line, EBITDA and PAT below estimates: PVR reported overall revenue of INR6.4b (est. INR6.3b) in 1QFY18 as against INR5.6b in 1QFY17 marking a YoY growth of 13.2%. EBITDA margins declined to 17.6% in 1QFY18 (est. 20.5%) from 19% in 1QFY17. EBITDA stood at INR1,120m (est. INR1,309m) as against INR1,065m in 1QFY17. The margins declined on account of higher movie exhibition cost which increased by 90bp to 22.8% of net sales and higher employee expenses which increased by 100bp to 10.7%. Consequently, adjusted PAT stood at INR445m in 1QFY18 (est. INR506m) as against INR444m in 1QFY17.
- Screen additions in South market to aid growth: PVR added 8 new screens in 1QFY18 out of which 5 were added in Chennai and 3 in Kota. 30 more screens are ready and await licenses or completion certificate from the developers’ end. The company plans to leverage on the lesser penetrated markets of south and expand its footprint there. Going forward, the company plans to open 65-70 new screens in FY18 to leverage on the strong pipeline of upcoming content.
- Advertisement revenue to maintain uptrend: PVR reported a sponsorship income of INR674m as compared to INR515m in 1QFY17, a growth of 31%. The growth was primarily led by strong content which usually fetches significantly higher advertisement revenue. The strong growth is expected to continue with strong content in pipeline for 2QFY18. Further, the quarter also witnessed a growth of 10% in average ticket price (ATP) which went up to INR214 with the company intending to sustain price at existing levels.
PVR Limited is an India-based holding company. The Company is a film entertainment company, which is engaged in the motion picture exhibition in cinemas. The Company has organized its operations into three business segments: Movie exhibition, Movie Production & Distribution, and Others. Its Others segment includes bowling, gaming and restaurant. The Company is also engaged in in-cinema advertisements/product displays and sale of food and beverages at cinema locations. The Company offers technologies, including 4DX Technology, which stimulates the senses with effects, such as seat motion, wind, rain, fog, lights and scents to match the audio and video in both two-dimensional (2D) and three-dimensional (3D); IMAX, which provides a viewing technology with optimized sound and projection system, and Playhouse, which is designed for kids. The Company operates a network of approximately 550 screens spread over 120 properties in approximately 50 cities across the country.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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