February 14, 2017 / 18:14 IST
Axis Direct's research report on PVR PVR (PVRL) recorded healthy operational performance in Q3despite adverse impact of demonetization. While occupancy rates took a hit (32% vs. 34% YoY; partially due to weak content as well), ATP^ was flat YoY at Rs 199 while SPH# grew 12% YoY to Rs 83 (+8% for comparable screens). This was partially led by attractive combo offers launched. Ad revenue grew impressive 13% YoY (in line with screen addition), significantly higher than 2% growth recorded by Inox Leisure.
Outlook
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While we like PVR for its strong geographical presence and ability to monetize footfalls (higher SPH/ ad revenue) in the medium term, we believe the near-term upside remains limited given the sharp stock price appreciation (up 14% in past month). Downgrade to SELL (HOLD earlier) on premium valuations (EV/EBITDA of 18x FY17E and 12.5x FY18E) with TP of Rs 1,020 (10x FY18E EV/EBITDA).
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