Buy PVR Inox Ltd For Target Rs. 1,307 - Prabhudas Liladhar Capital Ltd
Best 1Q operating performance since last 4 years
PVRINOX IN reported better than expected operating performance with pre-IND AS EBITDA margin of 12.9% (PLe 11.3%) led by a healthy combination of price-volume mix. While ATP/SPH increased 7.5% YoY/8.8% YoY to INR273/INR161 respectively; footfalls increased 7.6% YoY to 36.6mn aided by movies like Bhoot Bangla, Cocktail-2, Michael, Obsession, and spill-over in collections from Dhurandhar: The Revenge. PVRINOX IN has transitioned to a positive net cash position of INR807mn, reflecting improvement in BS health. The continued pivot towards asset-light/FOCO model (79% of screen addition in FY27E is on an asset light route) should preserve cash flows, improve capital efficiency and drive higher RoE/RoCE over time. We expect modest footfall CAGR of 4.7% over FY26-FY28E with pre-IND AS EBITDA margin of 14.1%/15.7% in FY27E/FY28E led by tight cost control and disciplined screen churn. PVRINOX IN trades at an attractive valuation of 10x/8x our FY27E/FY28E pre-IND AS EBITDA estimates. We retain BUY on the stock with a TP of INR1,307 (9.5x FY28E pre-IND AS EBITDA; no change in target multiple).
Top line increased 11.9% YoY:
Top line increased 11.9% YoY to INR16,222mn (PLe INR16,523mn) primarily due to strong regional and Hollywood content (with titles such as Project Hail Mary, Michael and Obsession). Footfalls for the quarter increased by 7.6% YoY to 36.6mn (PLe 36.4mn) while occupancy stood at 25.3%. In 1QFY27, Gross ATP increased 7.5% YoY to INR273 (PLe INR268) while gross F&B SPH increased by 8.8% YoY to INR161 (PLe INR160).
Pre-Ind AS EBITDA margin at 12.9%:
Ind-AS adjusted EBITDA increased 104.7% YoY to INR2,092mn (PLe Ind-AS adjusted EBITDA of INR1,870mn) with a margin of 12.9% (PLe 11.3%). Ind-AS adjusted EBITDA was higher than our estimate due to lower-thanexpected other expenses of INR4,529mn (PLe INR5,200mn) and lower F&B expenses of INR1,180mn (PLe INR1,240mn). Ind-AS adjusted PAT stood at INR705mn (PLe Ind-AS adjusted PAT INR433mn) with a margin of 4.3% (PLe 2.6%) as compared to an Ind-AS adjusted PAT loss of INR264mn in 1QFY26. Reported profit stood at INR565mn (PLe INR216mn) with a margin of 3.5% (PLe 1.3%) as compared to reported PAT loss of INR474mn in 1QFY26.
Con-call highlights:
1) PVRINOX IN achieved a net cash position of INR807mn as of Jun'26 following consistent free cash flow generation and disciplined capital allocation.
2) 100 screens are expected to be opened in FY27E translating into 80 net additions.
3) Capex for FY27E has been revised downwards to ~INR3,500mn driven by adoption of capital-light model while prioritising renovations of key high-value assets.
4) Screen additions are expected to accelerate from FY28E onwards driven by expansion into underpenetrated Tier 2 and Tier 3 cities through the FOCO model.
5) FIFA World Cup screening attracted around 64,000 viewers for the final, with ATP of around INR380-400 and healthy F&B spending.
6) SPH grew 8.8% YoY to INR161 driven by a 70:30 contribution from pricing and volume.
7) ATP growth of 7.5% YoY to INR273 was supported by AI-enabled dynamic pricing, premium screen formats and differentiated pricing across show timings.
8) Online ticket penetration increased to ~69%, driven by stronger digital marketing initiatives, with further gains expected to moderate as penetration matures.
9) Web and app monetisation has been launched with an initial annual revenue potential of ~INR20–30mn.
10) Alternate programming generated materially higher ATP of ~INR409 in 1QFY27. The content cost for the same varies significantly (ranging between 35% to 70% of ticket revenues) depending on the event and artist.
11) BO market share for Hollywood movies ranges from ~60-90%.
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SEBI Registration number is INH000000933
