Buy PVR; target of Rs 2050: Emkay Global Financial

Emkay Global Financial's research report on PVR

PVR’s Q3FY23 performance improved on the back of better box-office performance. Footfalls grew 21% QoQ, leading to 37% revenue growth. Operational parameters – ATP and SPH – also improved on a sequential basis, after a disappointing Q2. Bollywood failed to live up to expectations in this quarter too, with only one movie performing well, while Hollywood and Regional cinema aided collections. Ad revenue improved, though it remains well below pre-Covid levels. We revise down our FY24/25 footfalls by 8-9%, as we believe that the audience contentfiltration process has become more stringent. We also modify our synergy estimates to factor-in: i) the SPH growth for Inox; ii) the gradual increase in synergies in FY25.

Outlook

With NCLT approval now in the bag, we remove our merger uncertainty weightage, while reducing our target multiple to 11.5x (from 12.5x), to account for the inconsistent content delivery, and arrive at a revised TP of Rs2,050 (roll over to Dec-24E pro forma EBITDA).