Buy PVR INOX; target of Rs 1700: Emkay Global Financial

Emkay Global Financial's research report on PVR INOX

Over the last decade, PVR Inox has grown into an undisputed leader of the film exhibition segment, now commanding ~30% of the overall revenue market share, and thus displacing legacy single-screens. As per our analysis, PVR Inox currently has market share of 35-40% in Bollywood and of 45-50% in Hollywood, both seeing an uptick from pre-Covid market-share levels. However, Company’s market share in southern India remains woefully low (10-15%, as per our estimates, for movies not dubbed in Hindi) and hence presents a huge opportunity, given market attractiveness. We believe the trend of market-share gains should continue for PVR Inox, at least for the next few years, led by: i) accelerated closure of single screens; and ii) faster expansion in the southern region. After subdued box-office collections in the last couple of quarters, courtesy subpar content quality and delay in movie releases, Company boasts of a strong pipeline of movies in Q2FY24.

Outlook

We cut our FY24E EBITDA by 14%, factoring-in the potential weaker Q1FY24 performance; we marginally tweak our FY25 estimates and maintain BUY, with unchanged target price of Rs1,700/share (rolled forward to Jun-25E, 11.5x Pro-forma EBTIDA).