PVR-Inox Shares Dip 2%, But Brokerages Predict 28% Upside After Strong Q2 Performance

PVR-Inox shares saw a 2 percent decline to Rs 1,707 on the BSE as investors took some profits off the table. However, the drop followed a strong performance in the July-September quarter (Q2FY24), which beat Street estimates. The company reported a profit of Rs 166.3 crore in Q2FY24, a significant improvement from the Rs 81.6 crore loss in the previous quarter, thanks to robust box office collections. Meanwhile, the S&P BSE Sensex was down 243 points or 0.3 percent at 65,385 levels as of 9:30 AM on October 20.

Over the past three months, PVR-Inox’s stock has surged by 21 percent, in contrast to the 3 percent decline in the Sensex benchmark.

During Q2FY24, PVR-Inox’s revenue saw a 53 percent increase quarter-on-quarter (QoQ), reaching Rs 1,999 crore compared to Rs 1,304 crore. The company also reported its highest footfalls at 4.8 crore, with an average ticket price (ATP) of Rs 275 and spending per head (SPH) at Rs 136. In the June-ended quarter, the multiplex operator had 3.39 crore footfalls, an ATP of Rs 246, and an SPH of Rs 130.

HSBC, a global brokerage firm, issued a ‘buy’ recommendation on the stock with a target price of Rs 2,200 per share. They noted that the September quarter results exceeded consensus expectations and highlighted the record levels of ATP, SPH, and admissions, driven by blockbuster movies and post-merger synergies.

PVR-Inox’s cinema, screen, and seat counts grew by 6/9/6 percent year-on-year in Q2FY24, respectively. The company is on track to open 160 screens and close 60 screens in FY24.

Kotak Institutional Equities analysts maintained their estimates, with a forward value (FV) of Rs 1,850 per share and an ‘add’ rating. They highlighted that Q2 marked the best performance of PVR-Inox on several operational and financial metrics, which partially eased concerns around structural risks.

Nuvama Institutional Equities reiterated their ‘buy’ rating on the stock with an unchanged target price of Rs 2,210 per share. They pointed out the potential risk of weak content performance.

Additionally, the company’s net debt decreased to Rs 1,100 crore in the September quarter, down from Rs 1,500 crore in Q1FY24, thanks to strong cash-flow generation.

While advertising revenues increased by 32 percent QoQ, led by a recovery in box office hits, they still remained below pre-Covid levels. The management expects ad-revenues to return to pre-Covid levels next year, while it’s anticipated to reach those levels by the end of this fiscal year. Convenience fees also rose by 23 percent year-on-year, partly impacted by the renewal of a deal with BMS on a revenue-share basis in Q1.

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