MOSL: PVR (Buy)-Across-the-board traction; new screen additions – a key growth driver
PVR: Across-the-board traction; new screen additions – a key growth driver
(PVRL IN, Mkt Cap USD1b, CMP INR1563, TP INR1850, 18% Upside, Buy)
- Robust performance across segments: 3Q was the first quarter with full three months impact of SPI Cinemas consolidation. Including SPI Cinemas, consol. revenue was up 51% YoY to INR 8.4b (6% beat). EBITDA surged 62% YoY to INR1.6b (11% beat), with the margin expanding 130bp YoY to 19.5%. PAT grew 79% YoY to INR518m (29% beat). However, excluding SPI Cinemas, revenue was up 27% YoY to INR6,949m, driven by strong growth across segments, while EBITDA/PAT grew 40%/62% YoY.
- Higher admits drive growth: Excluding SPI Cinemas, PVR added 33 screens, reaching a total of 676 screens. Subsequently, admits were up 23% YoY to 21.3m. This, coupled with a 3% YoY uptick in ATP to INR220, drove a 26% YoY jump in ticketing revenue. F&B revenue grew at a healthy 24% YoY, led by the uptick in admits, partly offset by a 3% YoY drop in SPH (INR90). Ad revenue rose 16% YoY to INR1b, while convenience fees grew 1.45x YoY to INR350m.
- Concall highlights: (1) F&B growth to revive in 3-6 months. (2) Cut in the GST rate on movie tickets is passed on to customers. (3) Reiterated FY19 guidance of 90 new screen adds. (4) Expect PVR-SPI merger to get concluded in 4-5 months.
- New screens – key catalyst for growth: We broadly maintain our revenue estimate – 16% CAGR over FY19-21 on the back of (1) SPI Cinemas consolidation (2) average of 85 screen additions and (3) healthy content pipeline driving footfalls. Steady uptick in ATP/SPH should further support growth. This, coupled with merger synergies, should drive 17% EBITDA CAGR over FY19-21. Higher other income in 3Q leads us to revise our FY19 PAT estimate upward by 16%.
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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