Buy PVR; target of Rs 1010: ICICI Direct

PVR's Q4FY16 results showed revenue growth of 37.7% YoY was aided by footfalls of 15.3 mn (vs. estimate of 14.9 mn), up 35.2% YoY. Net collections came in at Rs 214.4 crore, up 35.8% YoY aided by 8.3% YoY growth in average ticket prices (ATPs) to Rs 182.0. F&B revenues came in at Rs 103.7 crore, aided by 17.7% YoY growth in spends per head (SPH) to Rs 73.0. Advertising revenue was stellar at Rs 45.5 crore, up 19.3% YoY. EBITDA came in at Rs 46.4 crore vs. our expectation of Rs 20.2 crore while margins came in at 11.3% (estimated 5.2%). The EBITDA came in better than estimates on account of higher operating leverage and an adjustment made with respect to rental expense. PAT loss came in at Rs 10.3 crore, lower than our estimate of a loss of Rs 14.0 crore aided by a superior operating performance.

We continue to remain positive on the multiplex space given the demographics, rising income levels and cinema being the cheapest source of out of home entertainment. PVR is poised to benefit from leadership, strong presence across locations coupled with other growth levers such as advertisement and F&B. We continue to maintain BUY recommendation on the stock at 12x FY18E EV/EBITDA and arrive at a revised target price of Rs 1010. For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.