PVR Ltd announced last week on BSE that the company will not place any buy orders under its buy-back scheme after Monday. The company had commenced its buy-back on 7 July.
The PVR stock performed well during the period and touched a high of about Rs 128. However, currently the stock trades at Rs 110. Still, investors who would have invested initially when the company announced in May-end that the board would consider a buy-back proposal would have seen a 13.5% improvement in the share price, which is not bad at all given the current market scenario.
Earlier this month, the multiplex firm released its June quarter earnings, which were above expectations. That was encouraging, especially, because it came after a very lacklustre March quarter, which was affected due to the cricket World Cup and lack of blockbuster movies.
Also, the quality of content was better in the June quarter. Movies such as Ready, Double Dhamaal, Hangover II and Pyaar ka Punchnamaperformed well, leading to better occupancy levels sequentially.
Accordingly, PVR’s total consolidated revenue rose by about 14% from a year ago to Rs 117 crore. The company derived about nine-tenths of its revenue from the movie exhibition business. Operating performance, too, was strong, with the company posting an improvement of 2 percentage points in the operating profit margin to 17%.
Even as the movie exhibition business performed well, PVR’s movie production and distribution business delivered weak numbers; the segment posted a Rs 4.6 crore loss at the earnings before interest and tax level. However, net performance was greatly helped by one-time items worth Rs 12 crore pertaining to profit on sale of investment in a subsidiary. As a result, the reported net profit shows a huge 205% growth to Rs 15.5 crore compared with a year ago.
The good thing is that on the production side, there is only one movie Shanghai that is under production and the same is expected to release this fiscal year. Analysts believe restricting the movie production business operations is likely to provide more stability to margins and cash flows.
Meanwhile, PVR operates 154 screens across 20 cities currently. In this fiscal, the company is looking to add about 50 screens. Analysts also believe quality of content is likely to improve. That may leave room for a bit more upside in the stock.
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