For 4QFY2009, PVR declared muted topline growth of a mere 6.2% y-o-y to Rs57.7 crore (Rs54.3cr) on a standalone basis impacted by lower occupancies (dipped from 31.9% to 27.3% in y-o-y terms) leading to muted 2.5% y-o-y growth in footfalls (including franchise theaters) to 3.8mn (3.7mn).
However, ATPs and Average Spend per Head continued to register modest growth of 6% to Rs140 and Rs36 respectively, driven by higher ATPs across newly opened PVR Premiere properties.
PVR accounted for approximately 12% of net box office collection of key movies during the quarter.
For FY2009, on a consolidated basis, PVR registered topline growth of 32.4% y-o-y to Rs352.1 crore (Rs265.9cr), which includes revenue (in gross terms) from its subsidiaries – Blu-O (Rs0.7cr), Sunrise Infotainment (Rs14.6cr), CR Retail Malls (Rs4.4cr) and PVR Pictures (Rs78.2cr).
We have revised our topline estimates downwards by 19% for FY2010 to factor in longer-than-expected continuation of the ongoing tiff between the Exhibitors and Producers affecting both Exhibition as well as Production business of PVR.
Hence, over FY2009-11E, we expect PVR to register 15.6% CAGR in Top-line mainly driven by addition in seating capacity as we expect ATP to remain flat due to the economic slowdown.
We expect the screen count to increase from the current 108 screens to 153 screens in FY2011. In terms of PVR Pictures, we have factored in Rs35cr and Rs50cr Top-line in FY2010 and FY2011 respectively, on the back of surplus capital of Rs105cr (due to fund infusion).
On the Operating front, we expect Margins to dip by 67bp in FY2010 owing to a dismal 1QFY2010 and marginal losses in its subsidiaries before improving by 417bp to 16.9% in FY2011E in turn posting 29.8% CAGR in EBITDA during the period FY2009-11E supported by lower E-Tax outflow (factoring E-tax benefits from Delhi, Punjab and Karnataka), lower overheads (spread over a larger revenue base) and likely break-even in PVR’s loss-making subsidiaries.
We have downgraded our Earnings estimates for FY2010 by 57.8% to factor in weaker revenue growth (due to the ongoing strike) and significantly higher-than-anticipated depreciation charges in the consolidated P&L (jumped 107% y-o-y during FY2009 due to amortisation charges in PVR Pictures).
Hence, we expect net profit to post 83.7% CAGR over FY2009-11E partially aided by a lower base in FY2009.
We believe PVR’s superior management bandwidth, integrated business model and strong set of properties (in terms of location) make it the most preferred play in the Exhibition space.
However, at Rs130, PVR is trading at 10.2x FY2011E EPS of Rs12.8, which limits the upside for investors.
Moreover, we believe that the Multiplex Sector is set to face several headwinds in the near term, which are likely to create an overhang on Multiplex stocks on the bourses.
Some of negatives that could drag these stocks include - no movie released in 1QFY2010 owing to ongoing Exhibitor-Producer tiff and IPL season, slowdown in expansion plans owing to credit crunch and delay in roll-out of malls by real estate players; and stagnation in Footfalls and ATPs due to slowdown in consumer spends.
Hence, we maintain our NEUTRAL view on the stock.