PVR Inox rallies 6%, hits over 5-month high on recovery hopes

Shares of PVR Inox hit an over five-month high of Rs 1,512.60, surging 6 per cent on the BSE in Monday's intraday trade, amid heavy volumes on hopes of business recovery. The stock of the multiplex company was trading at its highest level since January 23, 2024. It had hit a 52-week high of Rs 1,879.75 on September 8, 2023.

According to reports, Kalki 2898 AD, the film which was released in theatres last week, has been minting money across the globe. As per the film's team, the multilingual 3D spectacle has entered the Rs 500 crore club within four days of its global release.

 

PVR Inox is the market leader in terms of multiplex screen count in India. Currently, it operates 1,748 screens in 361 cinemas in 112 cities in India and Sri Lanka.

At 02:45 PM, PVR Inox was trading 5 per cent higher at Rs 1,495 as compared to 0.6 per cent rise in the BSE Sensex. The average trading volume on the counter jumped nearly three-fold today with a combined 2.8 million shares having changed hands on the NSE and BSE.

PVR Inox has spelt out Ebitda synergy target of Rs 225 crore by FY25 (~60- 65 per cent of the same likely to be realised in FY24). The company expects Rs 35-40 crore worth of Food & Beverages (F&B) synergies to be achieved due to revised menu and portfolio mix. Furthermore, the increase in advertisement revenue will be led mostly by increase in ad minutes and partially by improvement in realisation.

With strong big budget releases lined up (including Pushpa 2, Kantara 2, Indian 2, Deadpool & Wolverine, Despicable Me 4, Transformers One, Joker: Folie à Deux, Gladiator II etc) from Q2FY25 onwards, analysts at ICICI Securities expect footfalls to witness a recovery.

The brokerage firm expects footfalls of 178 million in FY26 versus likely 152 million in FY24, driving 10 per cent/17 per cent CAGR in box office/F&B revenues over FY24-26E.

ICICI Securities, in its May 2024, report had said that with a strong content pipeline, a sharp recovery will be seen ahead.

"PVR Inox remains a proxy play on urban/semi urban discretionary spends. Given the likelihood of strong recovery, we assign a target of Rs 1,700, valuing the stock at 12.5x FY26 ex-IND AS Ebitda," it said.

After a sub-par Q4FY24, the April-June quarter (Q1FY25) turned out to be a damp squib, with the Indian Premier League (IPL), the T20 World Cup, and the general elections being hurdles for movie releases. The chain’s high fixed-cost structure has aggravated this issue, hitting profitability, analysts at Emkay Global Financial Services said in a stock update.

However, the company should see some respite ahead as the pipeline has improved, even though mega-star movies are likely to be released only in CY25.

The management has started taking initiatives on both, the revenue and cost fronts, aimed at maximising profitability, though fruition of some of these efforts is likely not before the medium term. With structural issues persisting, occupancies are unlikely to rebound to pre-Covid levels which is, though, in the price. The stock performance continues to hinge on improvement in box-office collections, the brokerage firm said.