Neutral PVR; target of Rs 1620: Motilal Oswal

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Motilal Oswal's research report on PVR

After remaining severely impacted for nearly a year, weighed by the COVID-19 disruption, the Cinema industry’s plea has finally been heard by the central government – cinema operators are now allowed to operate their screens with 100% occupancy. Although it would take some months for operations to commence entirely (as many states are still restricting occupancy to 50%), the silver lining is that the release of some fresh content in the regional markets has shown good traction. Moreover, the content pipeline looks strong, with many big banner movies (initially scheduled for release in CY20) awaiting release, including the recent announcement of the Salman Khan starrer ‘Radhe’ in May’21. The rollout of COVID vaccines and cinemas being allowed to run at 100% capacity in Tamil Nadu are welcome positives. However, pan-India recovery could take longer, until which the risk of lower occupancy may continue to put pressure on cash flows and more blockbusters may be released on OTT platforms.

Outlook

Thus, we maintain Neutral, with TP of INR1,620 and a valuation of EV/EBITDA of 14x (in-line with the five-year average) on FY23E.

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