To the movies….BUY PVR with a target of Rs 840/-

For a nation that makes the largest number of films globally – ~ 1500 a year it is safe to conclude that we like going to the movies! Lack of outdoor options especially in an urban setting would only make movies one of the best option available for entertainment.

PVR is India’s largest multiplex chain.  Of the  gross box-office collections, multiplexes have a lion’s share and within that PVR with its 462 screens across 40 plus cities is definitely the leader by far.  Also, based on the leases signed with mall owners PVR is set to add screens at a good clip over the next 2-3 years.

Given the improving economic situation the footfalls to multiplexes will only increase in 2016 –2018, this combined with their revenues from advertisements and food & beverage the EBITDA and EPS will be on an upward swing over the same period.  The penetration of screens across the country and their strategic location will further help in adding to profitability.

Higher rentals and slow development of malls could be game spoilers but given the presence PVR has already built and factoring in higher rentals it is still reasonable to expect a good  25% CAGR EBITDA growth over FY16-18, and a much better PAT expectation going ahead.  BUY PVR with a 12-18 month target of Rs 840/-

Comments

  • How do you derive the price target?

    Thanks.

    AshishApril 8, 2015
    • I think I have briefly given the synopsis in the last para, in any case target is now achieved, but you can continue to hold further

      Sharmila JoshiJuly 29, 2015
  • bought pvr @ 668. is it still a hold?

    reen mathewsAugust 2, 2015
    • Yes

      Sharmila JoshiSeptember 22, 2015

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