PVR rating: Maintain ‘hold’ with target price of Rs 1,261

Rights challenge (Rs3 billion) carried out in July to supply adequate liquidity.

By Edelweiss Securities

With cinemas remaining shut all through Q1FY21, PVR reported nil core working income, resulting in ebitda and PAT losses of Rs 1.1 billion and Rs 2.2 billion, respectively. Given the circumstances, PVR minimize worker and different bills 35% and 74% YoY, respectively, and is eyeing everlasting 10-15% reset in value construction over the long-term. Clarity on resumption of enterprise stays restricted as Covid instances proceed to rise and state governments might use their discretion. However, ~25-30% discount in month-to-month money burn, ample liquidity and resumption with a leaner value construction (anticipate break-even occupancy to be ~17-18% towards ~20% earlier) bode optimistic for the enterprise, in our view. Maintain ‘hold.’

While screens remained closed for enterprise, PVR’s gross sales got here in marginally forward of our estimates, owing to sale of its packaged gourmand popcorn and revenue from distribution rights and recognition of comfort payment. Ebitda, nevertheless, belied our estimate, primarily owing to one-time personnel value of Rs55 million; Rs280 million provision for CAM funds; and Rs25 million value stock write-off taken in Q1FY21. Going forward, the administration expects the month-to-month money burn to cut back to Rs220-250 million from Rs320 million in Q1FY21. Additionally, everlasting discount in manpower and cutback in different overheads are anticipated to positively affect the breakeven occupancy rate and the corporate’s mounted value construction.

Rights challenge (Rs3 billion) carried out in July to supply adequate liquidity. Gross debt place stands at Rs12.7 billion towards the liquidity of Rs5.5 billion. Has supplied for CAM, however is not going to be paying for the lockdown interval; discussions with property homeowners underway over rental agreements for stability FY21. To add 30 screens in FY21; incremental capex to be ~Rs400 million. Screens in Sri Lanka resumed operations a month in the past– occupancy at 65-70% of pre-Covid ranges, encouraging indicators on F&B off-take. However, too early to touch upon advert income.

While near-term headwinds persist, we stay assured of the long-term story for the multiplex trade. Hence, our revision of ranking stays contingent on bettering visibility on display opening/occupancy; price correction (at 31x FY22E ex-Ind AS EPS); and readability over leases. Maintain ‘hold/SP’ with target price of Rs 1,261.

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