Buy PVR INOX; target of Rs 1650: Emkay

Emkay's research report on PVR INOX

PVR Inox’s Q4 results reflect the subpar performance of a weak movie lineup, sans any tentpole films. Footfalls, ATP, and SPH also saw a sequential decline owing to weak performance of movies and promotional offers. Management is now taking multiple steps to improve performance of current properties on both, driving revenues higher through innovations and optimizing costs. Nearterm performance should continue to be muted as the current pipeline for Q1/early Q2 is unexciting with the ongoing general elections, IPL, and the upcoming T20 world cup. We reduce our target multiple to 11.5x (from 12.5x) to factor in inconsistent content delivery and volatility in the movies’ supply, as structural issues persist resulting in lower occupancies. We have also cut our FY25-26E EBITDA by 5-10% factoring in the Q4 performance, weaker near-term pipeline, and a more calibrated screen opening guidance (and screen closures).

Outlook

Given favorable valuations, we maintain BUY with a revised TP of Rs1,650/share (roll over to Mar-26E, 11.5x pre-IND AS EBITDA).