Buy PVR INOX; target of Rs 1650: Emkay Global Financial

Emkay Global Financial's research report on PVR INOX

PVR Inox’s weak stock performance reflects the lack of major movie releases over the last couple of quarters. After a subpar Q4FY24, Q1FY25 is also turning out to be a damp squib, with the IPL, the T20 World Cup, and the general elections being hurdles for movie releases. The chain’s high fixed-cost structure has aggravated this issue, hitting profitability. The company should see some respite ahead, as the pipeline has improved, even though mega-star movies are likely to be released only in CY25. The management has started taking initiatives on both, the revenue and cost fronts, aimed at maximizing profitability, though fruition of some of these efforts is likely not before the medium term.

Outlook

With structural issues persisting, occupancies are unlikely to rebound to pre-Covid levels which is, though, in the price. Stock performance continues to hinge on improvement in box-office collections. We maintain BUY on PVR INOX and TP of Rs1,650/share (11.5x Mar-26E pre-Ind AS EBITDA).

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