PVR share price to rise over 16% in one month, says Anand Rathi. Buy or avoid?
PVR share price has been in base building mode since the beginning of December 2022. In YTD time, PVR shares have lost over 10 per cent but in recent one month, it has given signals to come out of the sideways trend. As per the latest Anand Rathi research report, PVR share price is expected to hit ₹1,784 apiece levels in one month time. As PVR share price today is ₹1,530, the brokerage is expecting more than 16 per cent return from this multiplex stock.
On reason for being so bullish on PVR shares, Anand Rathi report says, “PVR share price has been under pressure since quiet some time but at this juncture its trading near its crucial support. Previously the stock turned from this level and we saw a rally towards ₹2200. On DAILY chart there is solid base formation along with bullish regular divergence, which is looking lucrative. Thus we advise traders to go long in the stock with a stop loss of ₹1455.”
PVR news
Apart from technical perspective, the multiplex company has improved on fundamental front as well. CRISIL Ratings has removed its ratings on the bank facilities of PVR Ltd (PVR) from ‘Rating Watch with Positive Implications’ and has reaffirmed the rating at ‘CRISIL AA-/CRISIL PPMLD AA-/CRISIL A1+’ while assigning a ‘Positive’ outlook on the long term ratings and debt instruments and assigned its ‘CRISIL A1+’ rating to the short term rating transferred from the erstwhile INOX Leisure Ltd (INOX) to PVR Ltd.
The removal of ratings from ‘Watch with Positive Implications’ follows the consummation of the merger of INOX with PVR, pursuant to which, INOX has ceased to exist.
The ‘Positive’ outlook indicates the credit risk profile of PVR may benefit from increased scale of operations once more contemporary content is released on multiplexes leading to stability in occupancy levels.
PVR, post the merger of INOX, is the largest multiplex chain in India with presence in 115 cities across the country and a collective screen-count of 1,680. PVR will have market share of 18%, based on number of screens (43% share in multiplexes), and will account for around 30% of total box office collections.
PVR financials
Fiscal 2023 saw a significant variability in the operating performance of multiplex operators due to polarization of some of the Bollywood content as well as fewer Hollywood releases. Moreover, majority of the content released over the past 12 months was conceptualized before or during the pandemic and needed a refresh to meet changing viewer preferences. However, a fresh content pipeline slated for release during fiscal 2024 and increased Hollywood content should help address the variability in occupancy, though it will remain a key monitorable.
PVR INOX merger
The merged entity has a healthy balance sheet with proforma adjusted tangible net worth of ₹2,089 crore as on September 30, 2022. The management has indicated addition of 180-200 screens every year which will entail capital expenditure (capex) of ₹750-850 crore annually (including maintenance capex). Given the large scale of operations, the capex will likely be funded through internal accrual and debt such that overall debt does not increase materially from that at March 2023.
The merger also enables synergies on revenue through synchronization of ticket and food menu as INOX had lower food and ticket prices compared with PVR and bridging ad revenues per screen as INOX had lower ad revenue per screen compared with PVR.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
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