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Strong content line up ahead…

About the stock: PVR Ltd. is the market leader in terms of multiplex screen count in India. Currently, it operates 854 screens in 173 cinemas in 74 cities in India and Sri Lanka with an aggregate seating capacity of ~1.79 lakhs seats.

*  With leadership in the high realisation key markets of Maharashtra/NCR, it enjoys superior ATP, SPH and advertisement than peers.

Q4FY22 Results: PVR reported an in line performance

* Reported revenue was at | 537.1 crore, (down 12.5% QoQ) with decline largely due to lower movies distribution (down 79% QoQ) & ad revenues (down 48% QoQ). PVR reported box office revenue of | 293.9 crore (down 2% QoQ), | 180.2 crore of F&B revenues, | 11.4 crore of movie distribution revenues. Footfalls were down 1% QoQ at 14.3 million and ATP at | 242 was up 1.3% QoQ owing to slate mix. SPH at | 122 was down 5% QoQ.

* EBITDA loss (without impact of Ind AS116) was at | 29.7 crore. Adjusted for | 8.7 crore forex loss for Sri Lanka operation, EBITDA loss at | 21 crore was in line. On reported basis, EBITDA was at | 99.9 crore (margin of 18.6%).

* PVR had | 26.1 crore with respect to rental waivers received (net of rent paid). Consequently, the reported net loss was lower at | 105.5 crore

What should investors do? PVR’s share price has grown by ~14% over the past five years (from ~| 1500 in May 2017 to ~| 1706 levels in May 2022).

* We maintain BUY rating on the company

Target Price and Valuation: We value PVR at | 2240 i.e. 15x FY24E EV/EBITDA

Key triggers for future price performance:

* Strong content slate line up to drive recovery in footfalls/revenues

* The company is likely to have ~8-10% permanent saving in costs (ex-rental) given the rationalisation measures

* Merged entity (PVR Inox) will benefit from scale of expansion, faster growth trajectory and other revenues/cost synergy

Alternate Stock Idea: Apart from PVR, among multiplex we like Inox Leisure.

* A play on footfall recovery post pandemic and strong balance sheet

* BUY with target price of | 670

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