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PVR (PVRL) Summary

Core Content

PVR (PVRL) is a leading player in India's movie exhibition business. The document outlines the company's financial performance, strategic initiatives, and market outlook for FY15 and FY16. It also includes key financial metrics, earnings forecasts, and peer comparisons.

Main Points

• Share Price & Target Price: The current share price is INR599, with a target price of INR746, representing a 24% increase.
• Market Capitalization & Average Daily Trade Value: The market cap is USD403M, and the average daily trade value is USD1.0M.
• Financial Performance (4QFY14):
  • Revenue from ticket sales was INR1.7B, 6.5% higher than forecast.
  • Footfalls increased by 30% YoY, offsetting a 2.4% decline in ATP.
  • EBITDA was INR331m, better than the forecast of INR270m, with an EBITDA margin of 10.5% (vs. 8.9% forecast).
• Growth Drivers:
  • Strong growth in F&B revenue (+46% YoY) and advertisement revenue (+48% YoY).
  • PVRL plans to expand its screen count by 65-70 per year over the next four years.
  • The company has already secured agreements with retail malls for expansion.
• Rebranding & Goodwill Write-off:
  • PVRL has written off INR3B of goodwill from the Cinemax acquisition.
  • The remaining INR1B will be amortized over the next 10 years.
  • Rebranding of Cinemax properties to PVR is expected over the next two years.
• Earnings Forecast:
  • FY15 EPS is forecasted at INR25.7, a 14% cut from the previous forecast of INR29.8.
  • FY16 EPS is forecasted at INR37.3, an 8% cut from the previous forecast of INR40.6.
  • Despite the cuts, the forecast is 16% ahead of the consensus.
• ROE & FCF:
  • ROE is expected to rise to 20.3% in FY15F and 24.2% in FY16F.
  • Free cash flow (FCF) is forecasted to be INR80m in FY15, with a sharp pickup expected in subsequent years, reaching INR5.3B over FY16-18F.
• Capacity Expansion:
  • PVRL's capacity is expected to double over the next four to five years.
  • The company's portfolio is set to grow to 551 screens by FY16F.
• Movie Slate:
  • PVRL is bullish on FY15's movie slate, which includes major Bollywood, Hollywood, and regional films.
  • This is expected to drive growth in footfalls and ticket sales.

Key Financial Metrics

Peer Comparison

Strategic Outlook

• PVRL remains optimistic about FY15, with a strong movie slate expected to drive performance.
• The company is targeting a 15.5% growth in footfalls and a 4.1% increase in ATP.
• This is projected to result in a 20.3% growth in ticket sales, 26% in F&B revenue, and 29% in advertisement revenue.
• PVRL plans to continue expanding its portfolio through organic growth and M&A, with a focus on acquiring regional players.
• The company aims to increase its capacity to over 800 screens in the next four to five years.

Key Data

Conclusion

Despite the cut in earnings forecasts due to rebranding and amortization costs, PVRL is expected to maintain strong growth in revenue and EBITDA. The company's strategic focus on market leadership, expansion, and integration is expected to provide long-term value. The target price remains at INR746, indicating strong confidence in its future performance.