Hold PVR Inox; target of Rs 1052: Prabhudas Lilladher

Prabhudas Lilladher's research report on PVR Inox

While our EBITDA estimates are broadly unchanged, our PAT estimates for FY26E/FY27E have undergone a meaningful upward revision as we tweak our depreciation and interest cost assumptions given PVRINOX IN is increasingly adding screens via FOCO and asset light route. In 1QFY26, IND-AS 116 impact on depreciation & interest was lower by 3.7% YoY to Rs3,436mn. PVRINOX IN reported better than expected performance with pre-IND AS EBITDA of Rs950mn (PLe Rs779mn) aided by 10.4% YoY rise in SPH to Rs148 and tight cost control (fixed cost for comparable cinemas was up 2.8% YoY to Rs7,671mn). Given ongoing challenges surrounding footfall growth, PVRINOX IN has been taking innovative steps like blockbuster Tuesdays (discounted weekday pricing of Rs99) and alternative programming initiatives (re-releases, IPL matches, concerts etc) to drive occupancy.

Outlook

Given these initiatives and strong content pipeline we expect footfall CAGR of 6% over the next 2 years with preIND AS EBITDA margin of 12.1%/15.4% in FY26E/FY27E. Retain ‘HOLD’ on the stock with a TP of Rs1,052 (11x Sep-26 EBITDA; no change in target multiple).