PVR Anupam Multiplex in Saket, New Delhi.  (Mint)
PVR Anupam Multiplex in Saket, New Delhi. (Mint)

PVR screens brighter picture for investors with Q3 results

  • Stand-alone performance was helped by a nearly 4% hike in average ticket price and 22% higher footfalls
  • The company has done well on many parameters and surprised analysts to an extent

Muliplex firm PVR Ltd’s shares have put up a decent show this fiscal year, appreciating by as much as 30%. A better movie content line-up, new screen additions, acquisition of SPI Cinemas, and receding worries on the threat to food and beverage revenues have brought cheer.

What’s more, the December quarter results announced late last week will lend support to valuations. The last quarter was the first full quarter of consolidation with SPI Cinemas and, therefore, the consolidated numbers are not exactly comparable on a year-on-year basis.

Nonetheless, the company has done well on many parameters and surprised analysts to an extent. Consolidated revenues (including SPI Cinemas) for the December quarter increased robustly by 51% over the same period last year to 843 crore. Net profit grew at a much faster pace of 90% to 55 crore, as margins rose.

On a stand-alone basis, PVR’s revenues and net profit increased by 27% and 62%, respectively. Stand-alone performance was helped by a nearly 4% increase in average ticket price and 22% higher footfalls. Advertising revenues increased at a relatively slower pace of 16%. Investors would do well to keep a tab on advertising growth in the coming quarters.

Outlook on screen additions remains encouraging. The company said that it has added 55 screens so far in this fiscal year. With the management remaining confident about adding 90-plus screens in FY19, Emkay Global Financial Services Ltd has raised its screen addition estimate to 90 from 75 screens.

However, the meaningful appreciation in the PVR stock could well mean that investors are baking in a good share of optimism in the valuations. The stock trades at 32 times estimated earnings for FY20, based on Bloomberg data.

Against this backdrop, content performance has to be extremely strong in FY20 to beat the base of 14% growth in FY19, pointed out analysts at Emkay Global. “Although predicting movie collection might not be relevant, aggressive growth assumptions, along with premium valuations, are not leaving any room for error," they said.

Essentially for investors, the buck now passes to the box- office performance.

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