Buy PVR; target of Rs 2050: Motilal Oswal

Motilal Oswal's research report on PVR

EBITDA up 16% YoY; PAT down 20% YoY (in-line): On a pre-Ind-AS 116 basis, consol. revenue grew strongly by 26% YoY, driven by healthy screen adds. EBITDA increased 16% YoY to INR1.6b (in-line). PAT declined 20% YoY (in-line), led by a significant increase in depreciation and interest cost, partly due to the SPI acquisition. On an Ind-AS 116 basis, PAT was down by a steep 69% YoY, unlike peers which faced limited impact, as the company has longer 15-year leases with higher liability and interest charge.

Outlook

Healthy growth prospects, coupled with strong competitive position, favor premium valuations. We have adjusted our EV/EBITDA multiple due to the EBITDA reclassification. Subsequently, we ascribe 10x EV/EBITDA (at five-year average multiple) to FY21E EBITDA of INR7.8b, arriving at a TP of INR2,050 (15% upside). Maintain Buy.