The share price of multiplex chain operator PVR gained more than a percent intraday on January 24 after Morgan Stanley raised price target on the stock to Rs 2,350 following Q3 earnings.
Reiterating a buy call on the stock, the global brokerage said food and beverages (F&B) spend per head grew 11 percent YoY to Rs 100, a key positive in the quarter ended December 2019.
The company continued with its aggressive screen additions and is on track to open more than 90 screens in FY20, Morgan Stanley said.
PVR reported a 34 percent year-on-year in Q3FY20 profit at Rs 36.3 crore due to lower other income (down 43 percent) but it was offset by lower tax expenses and strong operating income.
Revenue from operations grew by 9 percent YoY to Rs 915.8 crore despite weak regional content. The growth was driven by increase in advertising income by 8.4 percent YoY in a challenging environment and 12 percent YoY growth in SPH.
For All Earnings Related News - Click Here
At operating level, earnings before interest, tax, depreciation and amortisation (EBITDA) increased 87 percent to Rs 307 crore and margin expanded sharply by 1,410bps to 33.6 percent.
While having accumulate rating on the stock with a target price of Rs 2,053, Prabhudas Lilladher cut EBITDA estimates by 3.5/3.2 percent for FY20/FY21, respectively, amid continued weakness in Southern film market (34 percent circuit exposure in the region) which was partially overshadowed by strong Bollywood content (around 4/5movies crossed Rs 100 crore in box office collections in Q3FY20).
Given 1) expected revival in regional content 2) leadership position (around 28 percent screen market share) and 3) aggressive screen addition plans (on track to add 90-100 screens in FY20; 67 screens opened YTD), the brokerage expects sales/Ind-AS adjusted EBITDA to grow at a CAGR of 16.6/20.5 percent over FY19-21E.
The stock has rallied 19 percent in the last one year. It was quoting at Rs 1,912, up Rs 14.05, or 0.74 percent, on the BSE at 1038 hours.
Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
