PVR Inox Earnings: Post-merger operational efficiencies visible with EBITDA synergy benefits at ₹124-143 crore in H1

PVR Inox Ltd during the announcement of its second quarter results highlighted the benefits of synergies seen during the first half of financial year 2024 (FY'24) after the merger of the two companies came into effect in February this year. 

PVR Inox said that it is on course to deliver significant portion of merger synergies in FY’24.

The EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) synergy benefits were seen at ₹124 crore to ₹143 crore in the first half, as per the company.

“We are pleased to report that the integration process has been progressing seamlessly, yielding substantial operational efficiencies," said PVR Inox.

As per PVR Inox, the synergy benefits on the overhead costs as those of personnel, house keeping, security, have been to the tune of ₹17-21 crore during the first half of FY24.

Also Read- PVR Inox Q2 Results: Multiplex reports net profit of Rs166 crore; revenue jumps 53% QoQ

The per screen savings for PVR Inox were in the range of ₹1,04,000-1,28,000 during the first half of FY24, as per the company’s presentation. The average screen count during the first half stood at 1,656 screens. 

While, the overhead cost per screen rose 2.6% year-on-year to ₹2.44 million ( ₹24.4 lakhs) during the first half of FY24, compared to ₹2.38 million during the first half of FY23. The rise was significantly lower compared to 7-8% increase in the overhead costs the company would have seen normally (prior to merger).

Similarly, overall Box Office EBITDA synergy benefits of ₹75 crore to 84 crore accrued after the merger during the first half of FY24. Food & Beverage EBITDA synergy benefits stood at ₹31 crore to ₹38 crore during the first half of FY24.

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Jinesh Joshi, Research analyst at Prabhudas Lilladher, said that the synergy benefits reported by the company are encouraging. PVR Inox has reported a strong performance for the quarter ending September. The operating performance has been impressive.

The multiplex chain operator on Thursday reported a net profit of ₹166.3 crore for the second quarter of FY24 as compared to a loss of ₹82 crore in the first quarter of this fiscal. The company’s revenue in Q2 jumped 53.3% to ₹1,999.9 crore from ₹1,305 crore in Q1.

PVR Inox continues its strong growth momentum, with 37 new screens opening in seven cinema houses during the quarter and a total of 68 new screens in 12 cinema houses in H1 FY’24. “By exiting 33 underperforming screens during H1 FY’24, we continue to focus on profitable expansion,” said PVR Inox.

Indian Ratings earlier maintained a positive outlook for the merged entity which reflected the agency’s expectation of a recovery in the EBITDA (after lease rentals) over the next 12-18 months and the resultant improvement in its credit profile. 

The rating agency believes the merged entity has a dominant market share in the Indian movie exhibition industry. According to the agency, the higher scale of operations will not only improve revenue efficiencies but also optimise the overall cost structure. The merged entity would also likely have higher bargaining power in negotiating various revenue and cost items such as box office collection, rental rates, advertising rates, convenience fees, among others. All these factors are likely to support the recovery in operating profitability for PVR Inox, it had stated.

However, despite the stellar earnings, the stock closed lower by 1.76% at ₹1,742 on the BSE today.