Apr 22, 2013, 03.20 PM IST
PVR business this season has been on upswing as it has not been affected by Indian Premiere League compared to previous years, says Pramod Arora, President & CEO of the company in an interview to CNBC-TV18. However, Arora expects a rise in the average ticket prices in the near term in-line with the inflation anticipated at 7-8 percent.
The company has a debt of around Rs 640 crore. It had recently acquired multiplex chain Cinemax . Arora expects about 8 to 10 percent synergy benefits coming into the balance sheet of PVR for FY13.
Below is the verbatim transcript of Pramod Arora’s interview on CNBC-TV18
Q: How has business been and importantly in the current quarter considering that Indian Premier League (IPL) will have its own impact in terms of competition?
A: The business seems to be on the upswing and IPL has not impacted the business as much as we had anticipated in the previous years. However, there have been constant flows of movies that have been coming in, which builds up the case that the occupancies are up since same quarter last year. Therefore, IPL is not having any negative impact on the business and the numbers look promising.
Q: If things are not getting impacted and are looking up as well from business point of view, is there a case for the average ticket price to go up, currently you stand at Rs 174? Over one year period, how much increase in ticket price do you anticipate?
A: It is linked to the inflation indices the way the ticket prices go up. However, predominantly one will end up seeing a rise in the ticket prices inline with inflation, which is anticipated about 7-8 percent. It will be the rise in average ticket prices.
Q: At the moment what is your debt situation? How will interest cost pan out from hereon?
A: We have about Rs 640 crore of debt on both the entities taken together. The EBITDA is reasonably positive wherein we do not see any problems and have sufficient coverage.
Q: Will there be any impact from rating agencies on your cost of money?
A: We do not see that happening.
Q: You have acquired Cinemax how are the synergies progressing and how much more of an incremental synergy can we expect in FY14?
A: The process of synergies is in progress and we are seeing a lot of positive synergies coming in, in terms of economies of scale whether it is capital buying or programming of films or the concession strategy. In the year going by, we should be looking at about 8 to 10 percent synergy benefits coming into the consolidated company.
Q: Does it give you some kind of monopoly power since you have an overwhelming majority of exhibition halls and we will therefore, see margins improve?
A: One, we would see the margins improve but not monopolistic situation. The margins are going to improve considering the economies of scale that will state aggregating in the business. We do see these economies of scale helping us improve the margins in the business. In terms of monopolistic situation, I do not see that sort of angle to the acquisition.
Q: By how much will margins improve because of synergies? How much improvement can you see in margins and why?
A: One could potentially see a 7 to 10 percent increase in the margins from the base level. Considering the economies of scale which are triggering in whether it is capital purchases or operating supplies or the concession strategy per se.
Q: Your debt is Rs 640 crore, any plans to pare it down in the next two-three quarters?
A: Not really, because as of now, the growth on the organic side isn’t complete. We are looking at growing the company by about 80 to 100 screens this year as well. We do not see any reason for us to reduce that side of things.
Q: Give us an idea of the capex plans then? How will that be funded, will that mean more debt or will it be more of accruals?
A: It will be a little more debt that we will take, but more or less it will be funded from the internal accruals. The debt position may go up a little bit, but more or less it will be service from the internal accruals because the EBITDA seems to be very-very healthy and positive.
Q: When you say EBITDA growth, what exactly are you looking at ballpark directionally?
A: I would not like to give any guidance on the numbers but it should be a positive improvement to the extent of the number of screens going and to the extent of what we have seen in the last year’s growth in terms of EBITDA numbers.
Q: Were you talking about the same store?
A: We don’t see that situation happening soon because we have reasonably covered.
Q: Any big releases that you and we should look forward to?
A: The year is packed. In May you have Shoot out, Bombay Talkies, Go Goa Gone, The Great Gatsby, Star Trek, Fast and Furious, Hang over 3, Yeh Jawaani hai Deewani and in June you have SuperMan. The year is filled with movies. We do anticipate the year will be very-very strong in terms of content both for Hollywood as well as Bollywood.
PVR stock price
On December 12, 2013, PVR closed at Rs 584.70, down Rs 3.9, or 0.66 percent. The 52-week high of the share was Rs 650.70 and the 52-week low was Rs 229.55.
The company's trailing 12-month (TTM) EPS was at Rs 17.55 per share as per the quarter ended September 2013. The stock's price-to-earnings (P/E) ratio was 33.32. The latest book value of the company is Rs 161.39 per share. At current value, the price-to-book value of the company is 3.62.
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