Buy PVR; target of Rs 1673: Prabhudas Lilladher

Prabhudas Lilladher's research report on PVR

PVR’s Ind-AS adjusted EBITDA loss of Rs1,268mn (excluding other income) was broadly in-line with our estimate of Rs1,296mn as rigorous cost cutting initiatives resulted in fixed opex burn of Rs527mn per month in 3QFY21. Given prevailing occupancy caps & dearth of fresh content we expect next quarter to be more or less a replica of 3QFY21 where the focus will be on cost management/liquidity. Consequently, we expect Ind-AS adjusted EBITDA loss of Rs4.3bn in FY21E. However, we expect normalcy to resume from FY22 onwards amid strong content pipe-line (pent-up demand due to bunching up of releases) and gradual relaxation in occupancy caps. Further, current trends on ATP (higher/similar to pre-COVID levels for fresh content released in 3QFY21) and SPH (down only 5.0% YoY from pre-COVID base) indicate no structural change in consumer behavior post-COVID. As a result, we keep our EBITDA estimates broadly intact (marginal decline of 1.9%/3.3% for FY22/FY23 respectively).

Outlook

We maintain BUY with a revised TP of Rs1,673 (Rs1,704 earlier) valuing the stock at an EV/EBITDA multiple of 11x (earlier 12x) our FY23 estimates. (PVR trades at EV/EBITDA multiple of 12.5x/9.9x our FY22/FY23 estimates; LPA is closer to ~12x).

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