PVR may resume talks with DLF

PVR may resume talks with DLF

Mumbai: Indian multiplex PVR Ltd’s agreement to buy the cinema operations of DLF group firm remains suspended but talks may resume if it favours shareholders, a senior PVR official said on Thursday.

PVR and DT Cinemas Ltd had mutually agreed to end the deal in February, as the latter did not comply with certain issues needed to complete the deal.

“Both parties are willing to consider the deal and take the discussions forward the day it becomes conducive to both. If it benefits our shareholders we will go for it," Pramod Arora, group president, told reporters on the sidelines of an industry summit.

“We are not under any pressure for inorganic growth," he added.

Analysts at brokerage KR Choksey (KRC) and Batlivala & Karani had viewed the deal termination as negative for PVR as it delays its expansion plans. KRC had downgraded the stock to ‘hold´ from ‘buy´ after the deal was called off in February.

Brokerage B&K had said PVR could be a potential take-over target with its promoter shareholding at 37 percent, after it issued shares to Thailand’s largest cinema chain operator Major Cineplex.

Major, which holds about 11% in PVR, is keen to raise its stake to capitalize on India’s fast-growing cinema business, its chief executive Vicha Poolvoraluck told Reuters in March.

“It is very difficult for us to forecast what they will do. But they have a very keen interest," PVR’s Arora told reporters.

Future outlook

To fund expansion projects in the fiscal year 2010-11, PVR has earmarked Rs100 crore and will add 60 to 80 screens in the period, Arora said at India Shopping Centre Forum.

PVR currently has 136 screens in 18 cities across India.

The expansion will be funded mainly through internal accruals, he said, adding the company expects to annually grow at 35-40% for the next three years.

Of nine analysts tracking the firm, six have a ‘buy’ rating on it while one has rated it as ‘sell’, according to ThomsonReuters I/B/E/S, with its FY11 earnings per share estimated at Rs12.

Ticket prices across the industry are expected to rise 8-10%, Arora said.

“Ticket prices would see a spurt across the country in line with inflation. Until and unless you want your margins to be squeezed you cannot hold it, it’s impossible," he said.

Shares in PVR ended down 2% at Rs161.95 each in a weak Mumbai stock market.