SPI Cinemas adds flair to PVR's Q1 script; revenue up 26% at Rs 880 cr

Reported topline jumped 26 per cent, but net profit down 69 per cent due to change in accounting norms and weak show by key segments

PVR’s Q1 reported profits were disappointing, and fell short of meeting the Street’s expectations. Revenue at Rs 880.4 crore —a 26.4 per cent year-on-year (YoY) rise — was marginally higher than expectations of Rs 867 crore.

The major underperformance, however, was on the net profit front. The latter plunged 69 per cent YoY to Rs 16.2 crore, as against Bloomberg consensus estimates of Rs 42.7 crore. Higher interest and depreciation expenses on account of the shift to the new IND-AS 116 accounting norms, as well as a few one-time expenses, pulled net profit down.

Even though adjusted net profit (excluding impact of IND-AS) at Rs 44 crore was largely in line with estimates, comparable analysis shows that the top line performance was weak, especially for PVR’s two key segments — movie tickets and food & beverages (F&B).

While movie ticket revenues fell 2 per cent YoY to Rs 345.4 crore, that for the F&B segment remained flat at the year-ago level of Rs 186 crore. These two segments account for 90 per cent of PVR’s revenue. The IPL season, followed by the Cricket World Cup, as  well as weaker content (movie performance), impacted these two segments.

The acquisition SPI Cinemas was a shot in the arm for PVR’s top line. Sequential or YoY growth numbers are not available for SPI.

However, SPI’s 52.5 per cent occupancy rate and footfall of 3.9 million aided PVR’s performance. For instance, overall footfall rose 19 per cent to 27 million (partly aided by addition of new screens).

SPI contributed Rs 38 crore to PVR’s consolidated Ebitda (earnings before interest, tax, depreciation and amortisation). On a like-to-like basis, PVR’s footfall fell 8 per cent YoY to 19.1 million, and occupancy rate dropped 100 basis points to 35.6 per cent in the quarter. Advertisement revenue jumped 28 per cent YoY as the company managed to get good contracts, which was a positive.

Though the management expects the September and December quarters to be stronger on the back of good quality content and the festive season, some cautious commentary should also be kept in mind.

First, there could be a slowdown in screen additions (36 added in FY20 so far) if real estate developers remain under pressure. In addition, overall sluggishness in the macro environment and consumption slowdown could restrict advertisement revenues. Analysts at a domestic brokerage believe that if screen additions face a delay, it could hit the share price, given the pricey valuation.

At 12x its FY21 estimated enterprise value to Ebitda, PVR is trading at a 50 per cent premium to peer Inox Leisure.