Buy PVR Inox; target of Rs 708: ICICI Securities

ICICI Securitie's research report on PVR Inox

Revenue was INR 11.9bn (down 5.2% QoQ/8.8% YoY), 2.6% higher than our estimates. Adjusted EBITDA loss was INR 378mn (I-sec estimate: INR 523mn loss). Net loss was INR 1.7bn. Admits decreased 6.7% QoQ/10.3% YoY to 30.4mn in Q1FY25. There was also a sequential decline of 230bps to 20.3% in occupancy. Average ticket price grew to INR 235, down 4.5% YoY (up 0.9% QoQ) and F&B spend per head was INR 134 (up 3.9% QoQ/3.1% YoY). Ticketing revenue declined 15% YoY to INR 5.93bn. F&B revenue was down 6% YoY to INR 4.01bn. Ad revenue grew 5% YoY (down 10.6% QoQ) to INR 1.02bn.

Outlook

We believe CY24 could be a tale of two halves for theatrical content market in India. Q1FY25 was disrupted by Lok Sabha elections and the busiest sporting season in recent memory (IPL, T20 World Cup, Euro Cup, Copa America), which caused producers to delay the scheduled releases. We now see a pent-up content pipeline (mentioned below) which is likely to help in reversing the losses of H1CY24. In particular, Q3FY25 could rival the success of Q2FY24, in our view. We look forward to more clarity on: 1) Effectiveness of ‘passport’ programme, 2) partnership with Devyani to launch food courts and potential impact on SPH, 3) update on negotiations with landlords on revenue/capex sharing, 4) outlook on ad revenue and 5) monetisation of non-core assets. Reiterate BUY with TP at INR 2,000.