MOSL: PVR (Buy)-Strong screen addition to aid growth momentum
​PVR: Strong screen addition to aid growth momentum
(PVRL IN, Mkt Cap USD1.0b, CMP INR1421, TP INR1640, 15% Upside, Buy)
Results below estimates; margins expand 150bp: PVR’s revenue grew 2.1% YoY to INR5,554m (est. of INR5,930m). EBITDA increased 13% YoY to INR905m (est. of INR1,008m), with the margin expanding 150bp YoY to 16.3% (est. of 17%) led by reduced rent cost (-40bp to 17.5% of sales) and significantly lower admin expenses (-500bp to 24.7%), partly offset by higher movie exhibition cost (+290bp to 24%). Consequently, adj. PAT increased to INR255m (est. of INR291m) in 2QFY18 from INR291m in the year-ago period.
Significant screen additions planned for 2HFY18: PVR has already added 21 screens in 1HFY18 (13 additions in 2QFY18 – 10 in Pune and 3 in Delhi). The company plans to further add 48 screens in 2HFY18, with 65% of these to be in south India. With Golmaal Again running well on box office and the content pipeline appearing promising with the likes of Padmavati and Tiger Zinda Hain, the company is set to leverage the expected increase in traction.
Growth in ad revenue intact: PVR clocked growth of 10% YoY to INR688m in sponsorship revenue in 2QFY18 (+20% YoY in 1HFY18). The increase in ad revenue can primarily be ascribed to better content, and with 2HFY18 lined up with crowd-pulling content, ad revenue is expected to continue growing at a rate over 15% in the next couple of years.
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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