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Buy PVR; target of Rs 405: Kotak Securities
Kotak Securities is bullish on PVR and has recommended buy rating on the stock with a 12-month target of Rs 405. Research firm believes that the multiplex industry is set to witness strong volume growth on the back of rising consumerism, entertainment tax exemptions, advent of organized retail and overall multiplex under penetration in India.
Kotak Securities is bullish on PVR and has recommended buy rating on the stock in its December 17, 2007 report. "We believe the multiplex industry is set to witness strong volume growth on the back of rising consumerism, entertainment tax exemptions, advent of organized retail and overall multiplex under penetration in India. We opine that, PVR's dominant market share at the box-office, diversification into movie production and aggressive but selective geographical expansion plans bode well for the company's prospects. On a consolidated basis, we expect PVR to deliver 58% revenue CAGR through FY07-09E and its net profit to grow at a 99% CAGR to Rs.420.1mn by FY09E from Rs.105.6mn in FY07. This is expected to translate into a diluted EPS of Rs.8.9 in FY08E and a further Rs.17.4 in FY09E, an EPS CAGR of 94% over FY07-09E. We have valued PVR using the two-stage DCF valuation methodology with a terminal growth rate of 4% and a WACC of 12.2%. This yields a fair value of Rs 405 for the stock on a rolling 12-month basis. We initiate coverage on PVR with a BUY, " according to Kotak Securities research report.
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