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Motilal Oswal Report
The merged entity PVR-INOX Ltd., with a revenue scale of Rs 82.3 billion as of FY25E and expected Ebitda margins of 18.6%, is currently trading at 10 times FY25E enterprise value/Ebitda, which is lower than its historical average.
However, weak occupancy poses risk to earnings. Moreover, the lack of visibility in occupancy improvement, increasing threat from the digital (over-the top) segment and the lower return on capital employed profile may keep valuations inexpensive.
We believe key factors that could drive profitability include:
a strong release pipeline from June 2023 onward; and
recent initiatives like increasing average ticket prices and optimising revenue through spends per head and ad revenues.
We value the merged entity at 10 times FY25E enterprise value/Ebitda to arrive at a target price of Rs 1,495. Maintain 'Neutral'.
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