Pyramid Saimira Theatre (PSTL) has posted a 263% y-o-y growth in standalone revenues for Q4FY08 to Rs2.5 billion, which is in line with our expectations.
The EBITDA margin has increased by 260bps to 12% led by the robust topline growth and efficient input cost control. Despite the strong operational performance, the company incurred a net loss of Rs31 million due to the transfer of its distribution business to a subsidiary, which resulted in higher tax provisioning.
We are optimistic about PSTL’s future plans and maintain our revenue and earnings estimates for FY09 and FY10.
The company is expected to ramp up the number of theatre screens from 765 at present to 1,300 in FY09 and further to 1,650 in FY10. This would enable revenue CAGR of 62% over FY08-FY10 with a net profit growth of 83%.
However, we are realigning our valuation multiples to the industry average. Considering the current market downturn, this gives us a reduced target price of Rs480 for PSTL from Rs557 previously. We reiterate a BUY on the stock.