Buy PVR; target of Rs 1891: Prabhudas Lilladher

Prabhudas Lilladher's research report on PVR

PVR’s operational performance was broadly in-line with our estimates with pre Ind-AS EBITDA margin of 6.2% (PLe 7.4%) aided by strong content (5 movies crossed Rs1bn mark). ATP/SPH at Rs239/Rs129 was 14%/28% higher than 3QFY20 (comparable pre-COVID quarter) indicating that recovery has been sharp. While onset of 3rd wave has delayed the recovery process and prompted us to re-align our FY22 reported EBITDA estimates (loss of Rs467mn versus break-even earlier) we keep our FY23/FY24 EBITDA estimates broadly intact amid 1) less severe nature of the virus and 2) pick up in vaccination drive (~70% adult population is fully vaccinated). Further, in 3rd wave we have seen occupancy restrictions being re-imposed rather than outright closures (Delhi and Haryana are exceptions) indicating that recovery to pre-COVID levels will be faster this time around leading to sharp revival in box office revenues due to bunching up of releases.

Outlook

Consequently, we expect PVR’s FY23 sales/EBITDA to be higher by 14%/18% over the FY20 base. Maintain BUY with a TP of Rs1,891 (earlier Rs1,881) valuing the stock at 11.5x (no change) Sep23 EBITDA.