Buy PVR; target of Rs 2227: Prabhudas Lilladher

Prabhudas Lilladher's research report on PVR

PVR reported decent performance in 4QFY22 with Ind-AS adjusted EBITDA loss of Rs342mn (PLe loss of Rs242mn) amid strong recovery in March. ATP and SPH have witnessed significant jump led by blockbuster content while management highlighted that ad-revenue (key margin lever) is expected to reach pre-COVID base within a quarter. While the last 2 years were marred by COVID, normalcy has finally set in and we expect the momentum to continue given strong content pipeline and easing occupancy restrictions. Plans to open 120-125 screens in FY23E, expected recovery in ad-revenue within a quarter to pre-COVID base, and improved pricing power (ATP/SPH were 19%/27% above pre-COVID base) is likely to result in revenue/EBITDA CAGR of 9.5%/10.9% over 4 years on a pre-COVID base of FY20.

Outlook

Retain BUY on the stock with a TP of Rs2,227 after assigning EV/EBITDA multiple of 15.5x (no change) to the merged entity.

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