Buy PVR Inox; target of Rs 2240: ICICI Direct

ICICI Direct's research report on PVR Inox

We met Mr Nitin Sood, Chief Financial Officer, PVR Inox. Takeaways: 1) Rental cost may come down to 16-17% of revenue (from 19-20% at present) over the next 12-18 months. 2) Company is entering capex sharing contracts with landlords to increase RoCE. Overall, capex in FY25 will be 35-40% lower than FY24. 3) De-leveraging is becoming company’s key focus. Non-core assets (real estate space) may be liquidated to reduce debt. 4) Management to focus on trimming screen portfolio to ensure optimal footprint and brand premium retention. 5) Ad revenues may return to pre-covid levels on an absolute basis by FY25. 6) To achieve additional post-merger synergies of INR 1.2-1.3bn in FY25. 7) Piloting a feature to allow movie goers to order from PVR food menu through Zomato app. Maintain BUY.

Outlook

Our target price remains unchanged at INR 2,240 with a multiple of 16x FY26E adj. EBITDA

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