ICICI Securities research report on PVR Inox
PVR Inox’s occupancy reverted to ~26% in Q2FY25 despite a very weak content pipeline. Management has guided for significant improvement in Q3FY25. In fact, management called out that moviegoer excitement levels are now back to pre-Covid peaks and lower number of movie releases are the only hindrance to occupancy levels reverting to >30% levels. Given the pipeline in Q3FY25, management is hopeful of replicating the success of Q2FY24, which is in line with our thesis (link). We believe capex intensity may also reduce as a proportion of revenue from FY26 as PVR plans to open 15% screens on FOCO model, 35-50% on asset-light model and rest on structured lease model. Net debt declined by INR 1.4bn in H1FY25. Monetisation of assets is also on track and may help in deleveraging further. Re-iterate BUY.
Outlook
We maintain our target price of INR 2,250 valuing the company at multiple of 16x adj. EBITDA (1-year forward).
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