Buy PVR; target of Rs 1300: ICICI Direct

ICICI Direct's research report on PVRNet ticketing revenues grew 11.5% YoY to Rs 305.6 crore aided by a 8.9% increase in the footfalls to 20.7 million (includes one month of DT Cinemas footfall) and 6.6% YoY increase in average ticket prices (ATPs) to Rs 195. Spends per head grew 5% YoY to Rs 78 resulting in 13.7% YoY growth in F&B revenues to Rs 147.5 crore. Advertisement revenues grew 12.7% YoY to Rs 51.5 crore. EBITDA came in at Rs 116.7 crore vs. our expectation of Rs 105.7 crore while margins came in at 20.5% (estimated 19.8%). EBITDA came in better than estimates on account of better cost optimisation and high operating leverage. The EBITDA would have been higher but for the higher rental expense emanating from the IND-AS impact. Herein, security deposits paid to developers is discounted to present value while differential amount is recognised on a straight line basis as rent expense during the lease term.

Continues to lead across metrics, maintain BUY with target price of Rs 1300 PVR, the largest player in the multiplex space, is poised to benefit from its leadership, strong presence across key locations and superior growth levers in metrics such as advertisement & F&B. We continue to remain positive on the Indian multiplex Industry given the demographics, rising income levels and cinema being the cheapest source of out of home entertainment. We continue to maintain BUY recommendation at 14x FY18E EV/EBITDA and arriving at a revised target price of Rs 1300.