Hold PVR Inox; target of Rs 1211: Prabhudas Lilladher

Prabhudas Lilladher's research report on PVR Inox

PVRINOX IN reported better than expected performance with pre-IND AS EBITDA margin of 16.8% (PLe 15.4%) aided by 14.7% YoY rise in footfalls to 44.5mn (PLe 44.0mn) amid strong BO performance across languages. Despite a solid performance (2nd best quarter post-COVID) in 2QFY26, we broadly maintain our estimates for the year as our existing 2HFY26E ask-rate for footfalls and pre-IND AS EBITDA stands at 69mn/Rs4,150mn respectively. To bring footfall stability and attract value conscious audience, PVRINOX IN has plans to roll out smart screens in tier-2 & 3 markets. In our view, smart screens could turn out to be a structural lever to bridge the gap between high ATP and stagnant admissions. On the other hand, a dine-in cinema has been launched in Bangalore. The bet here is on food becoming a core draw, not just an add-on. The objective is 2 pronged 1) elevate the cinema into a lifestyle venue and 2) strengthen non-ticket revenues.

Outlook

We would await proof of concept on these moves and expect footfall CAGR of 6.7% over the next 2 years with pre-IND AS EBITDA margin of 12.4%/15.6% in FY26E/FY27E. Retain HOLD on the stock with a TP of Rs1,211 (10.5x FY27E EBITDA; no change in target multiple).