Buy PVR; target of Rs 1460: Motilal Oswal

Motilal Oswal 's research report on PVR

PVR's 1QFY21 operating loss of INR1.3b (v/s est. INR2.1b) was better than expected, driven by sharp cost-cutting measures. Operating expenses are expected to further decline by ~30% QoQ in 2QFY21, driven by the rationalization of employee expenses. We expect the remainder of 1HFY21 to remain a total washout due to COVID-19 and anticipate continued weak capacity due to social distancing measures. Hence, we expect profitability to return only by FY22E. We estimate FY22E revenue/EBITDA at INR37.4b/INR6.2b (at 9%/7% over FY20E) with the return of stability and some capacity additions.

Outlook

We expect a revenue/EBITDA CAGR of 5%/3% for PVR over FY21-22E and value the company at 14x FY22E EBITDA to arrive at target price of INR1,460. Maintain Buy.