Buy PVR; target of Rs 1650: Motilal Oswal

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Motilal Oswal's research report on PVR

Excluding SPI Cinemas consolidation, revenue grew 16% YoY to INR6.5b in 2QFY19, led by healthy growth in the movie exhibition business. Subsequently, EBITDA rose strongly by 21% YoY to INR1.1b, with the margin expanding 60bp to 16.9%. Including SPI acquisition, consol. revenue grew 28% YoY to INR7.1b (5% beat). Consol. EBITDA surged 37% YoY to INR1.2b (11% beat), with the margin expanding 120bp YoY to 17.5%. Adj. PAT increased 30% YoY to INR330m (2% beat).

Outlook

At CMP, the stock trades at EV/EBITDA of 12.1x/10.9x FY19/20E EBITDA. Thus, attractive valuation, an upbeat earnings outlook and a fillip in return ratios augur well for PVRL. Maintain Buy with a TP of INR1,650 (v/s 1,700 earlier) ascribing 13x (~10% discount to three-year average) to FY20E EBITDA.

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