Buy PVR; target of Rs 1447: Prabhudas Lilladher

Prabhudas Lilladher's research report on PVR

PVR’s Ind-AS adjusted EBITDA loss of Rs810mn was broadly in-line with our estimates of Rs786mn as rigorous cost cutting initiatives resulted in fixed opex burn of Rs243mn per month (excluding CAM provisions), in-line with the guidance of Rs220-250mn, given in 1QFY21. We expect burn rate to increase in the initial few months post re-opening as fixed expenses like rent, CAM, and employee expenses will rise (as compared to the levels prevailing in lockdown) without sufficient corresponding rise in footfalls amid 1) occupancy caps and 2) hesitancy to visit multiplexes. Consequently, we expect EBITDA loss to widen to Rs1.3bn (earlier loss estimate of Rs452mn) in FY21E. However, we expect normalcy to resume in the next 6 months as escapism will become even more relevant post-COVID.

Outlook

We upgrade the stock to a BUY (ACCUMULATE earlier) with a revised TP of Rs1,447 (Rs1,435 earlier). Our EBITDA estimates are broadly unchanged (increase of 2.5%/2.0% for FY22/FY23 respectively) while our target EV/EBITDA multiple is also intact at 12x and our UPGRADE is primarily driven by the recent correction in stock price which provides an attractive entry point. (PVR trades at EV/EBITDA multiple of 10.2x/7.7x our FY22/FY23 estimates; LPA is closer to ~12x).

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