PVR-INOX Q1 Results Review - Sequential Improvement; Occupancy Remains Key Monitorable: Motilal Oswal

Motilal Oswal Report

PVR-INOX Ltd.'s occupancy remained weak in Q1 FY24 but is now improving owing to good responses to recent big-ticket movies. While the pipeline remains strong, the sustained performance of Bollywood movies would remain a key monitorable to track occupancy.

The merged entity, with an expected revenue scale of ~Rs 83 billion as on FY25E and expected Ebitda margins of 19%, is currently trading at 10 times FY25E enterprise value/Ebitda and 23 times FY25E earnings per share.

Volatility in the performance of Bollywood movies, a slower recovery in advertising revenues, increased risk of rising scale and the traction of movie releases over OTT platforms, as highlighted in our report, continue to be our key monitorables.

We expect the business to see some recovery in Q2 FY24. Sustaining occupancy and recovery in ad revenue amid an increasing threat from deep-pocketed OTT players remain vital for growth.

We value PVR-Inox at 11 times FY25E EV/Ebitda to arrive at our target price of Rs 1,650. We reiterate our 'Neutral' rating on the stock.

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