Buy PVR; target of Rs 1850: Motilal Oswal

Motilal Oswal 's research report on PVR

3Q was the first quarter with full three months impact of SPI Cinemas consolidation. Including SPI Cinemas, consol. revenue was up 51% YoY to INR 8.4b (6% beat). EBITDA surged 62% YoY to INR1.6b (11% beat), with the margin expanding 130bp YoY to 19.5%. PAT grew 79% YoY to INR518m (29% beat). However, excluding SPI Cinemas, revenue was up 27% YoY to INR6,949m, driven by strong growth across segments, while EBITDA/PAT grew 40%/62% YoY.

Outlook

At CMP, the stock trades at EV/EBITDA of 13.2x/11.4x FY20/21E EBITDA. Thus, attractive valuation, an upbeat earnings outlook and a fillip in return ratios augur well for PVRL. Maintain Buy with a TP of INR1,850, ascribing 13x (three-year average) to FY21E EBITDA.