Buy PVR; target Rs 335: KRChoksey
KRChoksey is bullish on PVR and has recommended buy rating on the stock with a target price of Rs 335 in its February 05, 2013 research report.
KRChoksey is bullish on PVR and has recommended buy rating on the stock with a target price of Rs 335 in its February 05, 2013 research report.
"PVR reported another quarter of strong results led by strong footfalls and healthy ATP growth. Net sales stood at Rs 202.4crs, robust growth of 43.2% YoY. EBITDA stood at Rs 34.3crs, a growth of 38.8% YoY. Higher operating expenses dented EBITDA margins which increased marginally by 90bps YoY to 17%. Increase in depreciation due to new property launches and interest expenses eroded net profitability. Net profit for the quarter was Rs 9.1crs, marginally up by 1.4% YoY. While net profit margin declined by 190bps over Q3FY12 to 4.5%. Recent Cinemax acquisition gives PVR Numero Uno position in multiplex segment. We expect the company will continue expansion plans in both multiplex and bowling alley segments in near future. Higher ARPU and increase in footfalls will drive strong revenue growth in future. Margins to inch up on account of cost rationalization. We have revised our numbers for FY13E and FY14E considering steady growth in ATP and SPH in Q3FY13.PVR reported strong revenue growth of 43.2% YoY to Rs 202.4crs as footfalls increased by 38% YoY to 9mn and ATP showed healthy growth of 13% over Q3FY12 to Rs 174. F&B spend also increased by 9% YoY to Rs 48. Advertising income continued its upward trend and increased by 23% to Rs 23.2crs. Bowling alley segment showed revenue growth of 83.3% YoY to Rs 9.9crs. The management has reiterated growth in ATP going ahead.PVR plans to rollout 80 new screens each year for next 2 years. The management said focus will be on tier II cities as they will contribute more to growth going ahead. On bowling alley front, 4 new centers will be added in FY13E. This robust expansion plan will help increase occupancy for both exhibition and gaming business. We expect strong revenue growth in multiplex business driven by increase in occupancy and higher ARPU.Valuation: We believe PVR’s acquisition of Cinemax will bring consolidation in movie exhibition industry and this will inch up ATP and drive healthy revenue growth. We have revised our earnings estimates and we believe that margins will inch up further driven by cost rationalization. At current price, the stock is trading at 7.8x PE to its FY14E earnings. We recommend BUY on the stock with a target price of Rs 335," says KRChoksey research report.Shares held by Insurance Companies Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.To read the full report click on the attachment 
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