Buy PVR Inox; target of Rs 1950: ICICI Securities

ICICI Securities is bullish on PVR Inox recommended buy rating on the stock with a target price of Rs 1950 in its research report dated June 29, 2023.

Broker Research

June 30, 2023 / 13:19 IST

Buy

live

bselive
nselive

Volume

Todays L/H

ICICI Securities research report on PVR Inox

As clichéd as it sounds, we feel the cricket inspired title of the note holds true for PVR Inox. It is a strong market leader in its category with a history of value creation and a clean record on corporate governance. Further, competitive intensity in the space has reduced materially over the past couple of years. Given that India’s per capita GDP growth is likely to be sustained over the foreseeable future, we think movie exhibition is likely to benefit as more Indians enter the category of discretionary consumers. However, the stock has corrected ~35% from its peak over the past year due to rising concerns over content quality and inability of movie exhibitors to get back to pre-covid occupancy levels. This has been further exacerbated by a persistent inflationary environment since CY22 which has had a meaningful impact on ad-revenues across the board. Our analysis indicates that the concerns regarding the impact of digital mediums (‘watching OTT content at home’ substituting ‘going to theatres’) and the ability of Hindi movies to draw audiences into theatres are not warranted.

Outlook

Accordingly, our target price is Rs1,950 (prior: Rs2,100) with an unchanged multiple of 16x FY25E EBITDA. In our bull case, we see the stock trading at Rs2,200 and in our bear case - at Rs1,150, implying a risk reward skew of 3.56:1. Re-iterate BUY.

For all recommendations report, click here