The metamorphosis of PVR from screen play to lifestyle appears to have convinced analysts and may lead to a re-rating of the company's shares.
"We expect the PVR stock to re-rate due to increased focus on being a lifestyle company and rising consolidation in the multiplex industry," Abneesh Roy and Alankar Garude, analysts with Edelweiss Securities, wrote in their note to clients.
The brokerage has recommended its clients to "buy" PVR shares and rated the stock as 'sector performer'. It has set a target price of Rs 240 per share for the stock.
PVR, which runs multiplexes across India, has entered the lifestyle space and operates a bowling business PVR bluO Entertainment in partnership with Major Cineplex Group. It has also ventured into retail entertainment and management of food courts to diversify its revenue stream.
The company has also chalked out an aggressive expansion plan in multiplex business. It plans to add 160 screens to its existing 197 screens in the next two years and has signed up with developers to add 300 screens over the next four years.
"We are enthused by PVR's sharp expansion in exhibition business and also its diversification into new lifestyle businesses. At Rs 203, the stock is trading at P/E (price to earnings) of 13.7 times and 10.9 times 2012-13 and 2013-14 (expected earnings), respectively," the analysts said.
At 2:49PM, PVR shares were traded at Rs 205 on the National Stock Exchange (NSE), up 1.1% from Monday's close.
