PVR share price jumped over 4% in early trade on Tuesday, a day after the multiplex chain operator reported consolidated net loss to Rs 105.49 crore during the fourth quarter ended March 2022, compared to net loss of Rs 289.21 crore in the January-March quarter a year ago. PVR stock jumped over 4.7% to touch an intraday high of Rs 1,785 as against Rs 1,704.95 at previous close on the BSE. PVR share price has rallied 32% so far this year and analysts expect up to 43% potential rally going forward given that PVR has plans to push the pedal by opening 125 new screens across India to grab market share and increase reach. The post pandemic recovery is also slated to push growth in FY23.
Should you buy, hold or sell PVR shares?
ICICI Securities: Buy
Target price: Rs 1,965; Upside: 15%
Analysts at ICICI Securities said, “The guidance of 126 new screen openings is strong due to imminent handover of pent-up sites, and commencement of operations therein w.e.f. H2FY23. PVR is excited about the currently strong movie pipeline. Recent successes of dubbed Hindi content increase the addressable box office market in India. Ad revenues are crucial for profitability, and the company expects the same to normalise in 3-4 months.” The brokerage raised EBITDA estimates by 10-30% over FY23-24 as it increased its ATP assumption. Accordingly, it maintained a ‘buy’ call on the stock and increased its target price on the stock to Rs 1,965 from Rs1,804 earlier. But it cuts EV/EBITDA multiple to 15x (from 16x) to bring parity with INOX.
JM Financial: Buy
Target price: Rs 2,120; Upside: 24%
JM Financial Services analysts believe that PVR has withstood the worst of the pandemic and is now slated to post best ever FY23 on account of bunched up movie releases, new screen additions and higher ticketing and F&B spends. The ongoing recovery reinforces the relevance of cinemas for Indian consumers (amidst higher levels of OTT adoption) and a strong theatrical release pipeline should help normalise footfalls to pre-pandemic levels. Moreover, PVR is expected to aggressively add screens which are now getting delivered thereby driving growth over the medium term. The brokerage expects ticket price hikes and higher spends per head to drive the underlying profitability compared to pre-Covid levels. “With multiplexes likely to exhibit significant consolidation, a long runway for screen penetration and higher profit pools, we assume coverage on multiplexes with a BUY rating on PVR with a target price of Rs 2,120, presenting upside of 24%”, it said.
Nirmal Bang: Buy
Target price: Rs 2,438; Upside: 43%
Analysts at Nirmal Bank believe that the strong pipeline of content, a customer base that is thirsting to go out, higher ATP and SPH give them the confidence of a stellar bounce back in FY23. The high margin advertising business is lagging the recovery in BO and F&B segments by 3-4 months. Ad spends in 4QFY22 were 25% of pre-Covid level. “Starting FY23, we expect complete normalcy in the sector and we continue to remain bullish on PVR with a ‘Buy’ stance and a target price (TP) of Rs2,438, based on an EV/EBITDA multiple of 14x FY24E EBITDA. With the proposed merger (PVR-INOX Merger), we believe that valuation multiples could expand beyond what we have baked in,” the brokerage said.
Motilal Oswal: Neutral
Target price: Rs 1,650; downside: 3%
According to analysts at Motilal Oswal Financial Services, the recovery process in PVR paused in 4QFY22 due to the Omicron COVID wave. At present, a recovery in occupancy, a healthy ATP on an exit basis, and a strong movie pipeline are the key positives for the company. “A return to the exclusive screening window of eight weeks for Hindi movies by Jul’22 would allay the risk posed by OTT platforms. We largely maintain our estimates and Neutral rating,” they said. The risk emanating from rising scale and traction of movie releases over OTT platforms since the COVID-19 pandemic, coupled with subscriber growth and strong reception of mainstream actors on these platforms has kept the analysts cautious on the Cinema space. “We expect the dynamics of the industry to alter over time,” Motilal Oswal added.
(The stock recommendations in this story are by the respective research analysts and brokerage firms. TheSpuzz Online does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)