Recommendations » India

PVR 3QFY2013 performance highlights and results update

Contributed by Angel Broking

For 3QFY2013, PVR posted an impressive top-line growth of 45% yoy to Rs.202cr, beating our estimates, mainly on account of a robust 54% yoy growth its ticket sales to Rs.121cr and 49% yoy growth in sale of food and beverages (F&B) to Rs.38cr. Among other segments, advertising income grew by 23% yoy to Rs.233cr and convenience fee grew by 63% yoy to Rs.3cr. Although the OPM expanded by 47bp yoy to 16.7%, net profit came in flat yoy at Rs.9cr due to rise in interest cost (on account of increase in debt to fund Cinemax’ acquisition).

Robust ticket sales driven by higher footfalls and ATP:
PVR recorded a 9% yoy growth in footfalls to 6.9mn for comparable properties. Overall, footfalls grew by 38% yoy to 9.1mn aided by robust seat additions over the last few quarters. The average ticket price (ATP) grew by 13% yoy to Rs.174. The healthy growth in footfalls and ATP led to a 45% yoy increase in ticket sales to Rs.202cr.

Strong organic expansion set to continue
The acquisition of Cinemax and robust organic expansion (added 47 screens in 9MFY2013) has made PVR the largest multiplex operator in India with more than 350 screens. The robust organic expansion is set to continue with an addition of ~50 screens in the next six months and another 100 screens over the next 18 months.

Outlook and valuation: PVR is expected to register robust revenues on incremental earnings from its newly opened properties, cinemax acquisition and an impressive movie pipeline. At the CMP of Rs.257, the stock is trading at 14.4x FY2014E EPS. We believe the stock is fairly valued and offers limited upside from the CMP. Hence, we maintain a Neutral view on the stock.