PVR's acquisition of SPI Cinemas: Benefits offset high deal valuations

On the financials front, operating profit margins of SPI Cinemas are expected to be in the 21-23 per cent range in FY19, which is much higher than PVR's 18 per cent

The Rs 6.33 billion price for a 71.7 per cent stake in SPI Cinemas enhances PVR’s pan-India presence, especially South India, where it had weak presence. Though South India accounts for half of India’s multiplex screens, it accounted for only 26 per cent of PVR’s overall portfolio. The addition of 89 (current and upcoming) screens will increase the south’s contribution to its overall portfolio to 35 per cent. What will improve it further is the plan to add 100 more screens over the next few years.

While it takes the overall screen count to 706 for PVR and prepares the