MOSL: PVR LTD (Buy)-Recovering post demonetization-outlook remains strong
​PVR Ltd: Recovering post demonetization; outlook remains strong
(PVRL IN, Mkt Cap USD1.0b, CMP INR1446, TP INR1666, 15% Upside, Buy)
- Revenue in-line, EBITDA below estimate: PVR reported overall revenue of INR4.8b (est. of INR4.6b), as against INR4.1b in 4QFY16, marking growth of 18.4%. EBITDA margin expanded to 9.7% (est. of 11.3%) in 4QFY17 from 8.8% in 4QFY16. EBITDA stood at INR467m (est. of INR517m), as against INR360m in 4QFY16. Rental cost was higher by 24% YoY, mainly on account of Ind-AS adjustment and renewal of some properties. Consequently, adj. PAT stood at INR-0.5m in 4QFY17 (est. of INR12m), as against INR-23m in 4QFY16, led by higher tax of INR45m in 4QFY17 v/s INR-23m in 4QFY16. For FY17, overall revenue increased 14.6% to INR21.2b, EBITDA margin shrunk 100bp to 14.8% and adj. PAT declined 8% to INR984m.
- Sponsorship revenue to face near-term pressure: Under the new rules, the government has made it compulsory for all advertisements to have a censorship certificate, and the application has to be made online. This has created some operational issues, and PVR has seen some impact in 1QFY18. In 4QFY17, sponsorship revenue grew 5% on a comparable basis, witnessing continued impact of demonetization.
- Targeting 70 screens in FY18, higher growth in ATP/SPH: Management targets to open 70 screens in FY18, with major ones to come up in southern cities like Chennai, Bangalore, Mysore and Hyderabad. It has 8-9 properties almost ready, but awaiting approvals. However, management cited slowdown on delivery of new malls from developers. It is confident of achieving strong growth in ATP and SPH in FY18. PVR is also investing in Sri Lanka to capitalize on growing opportunities in an emerging market.
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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