Oct 03, 2012, 09.15 PM | Source: CNBC-TV18
Pramod Arora, Group President & CEO, PVR, says that L Capital is a strategic investor or private equity investor but they will bring also bring lot of value along.
Below is the edited transcript of his interview to CNBC-TV18.
Q: What is your understanding with L Capital and what does it bring to the table?
A: L Capital is a strategic investor or private equity investor but they are bringing a lot of value along. They have invested around USD 10 million in our cinema business and also in another subsidiary company, PVR Leisure. We are looking at concepts like BluO. The leisure and entertainment space is coming up with more formats and L Capital may bring in certain formats in the country as they have international relationships and partnerships around the world.
Q: Which are the leisure segments?
A: The leisure segment basically comprises formats like BluO, which is a leisure format. On the F&B front, there can be restaurants, lounges and other spaces. This all comes under leisure portfolio. Gaming can also be a possibility in the leisure portfolio. These formats can come up in this venture and they will be set up in the country soon.
Q: How will this Rs 108 crore be utilized and will this complete your fund requirement for sometime?
A: Of the Rs 108 crore; Rs 57 crore goes towards PVR Ltd which is our exhibition site and the balance towards PVR Leisure. In terms of exhibition for our organic growth strategy we do not need more funding. Money from internal accruals and fund inflow suffice us to go ahead with organic growth of around 70-80 screens per annum. Our investment outlay is around Rs 140-160 crore. So that gets done for the next three years with this investment, internal accruals and the debt availability on the basis of leveraging of our balance sheet.
Q: How has this quarter panned out, Q2 FY13? There have been a range of blockbuster movies as well. How are the occupancy figures for PVR and the average ticket prices? Are you able to hike it up in certain regions?
A: In some places we have hiked the prices of the ticket. But on an average the ticket prices are hovering around the same figure as last year. Our day occupancy figures are 23-25% higher than Q2 of last year, which suggests that we had a good quarter and expect better quarters in times to come.
Q: How does the Q3 look with the kind of releases lined up?
A: The third quarter looks very solid and reasonably well covered. Many movies are expected to come in.
Q: How aggressive would you be on capex as well?
A: In this financial year our capex should be around Rs 140-160 crore which will add around 70-80 screens.
Q: In last Q3 there were also many blockbuster movies. From that daze will you still look at Q3 very strongly?
A: Yes, we would. According to a research there has been an increase in the discretionary spend of people especially on entertainment. Our Sales Per Head (SPH) in terms of concession revenue, like popcorn, Pepsi and other products has increased by 16-18 percent from last year. This will definitely improve our bottom-line vis-à-vis compared to last year’s Q3.
Q: What does this add up to? Occupancy is up 25 percent, other expense is up 16-18 percent, so revenues can go up 50 percent?
A: Not the revenues but the bottom-line would see a robust growth.
PVR stock price
On May 25, 2016, PVR closed at Rs 847.50, up Rs 6.05, or 0.72 percent. The 52-week high of the share was Rs 900.00 and the 52-week low was Rs 616.60.
The company's trailing 12-month (TTM) EPS was at Rs 19.19 per share as per the quarter ended December 2015. The stock's price-to-earnings (P/E) ratio was 44.16. The latest book value of the company is Rs 86.43 per share. At current value, the price-to-book value of the company is 9.81.
Ashwani Gujral, fund manager at ashwanigujral.com
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