Will turn EBITDA positive as new releases come – PVR
Update on the Indian Equity Market:
On Tuesday Nifty closed 1.7% higher at 14,521. Among the sectoral indices, Realty (+4.2%), Metal (+2.9%), and PSU Bank (+2.7%) closed higher. None of the sectors closed in the red. Bajaj Finserv (+6.7%), Bajaj Finance (+5.3%), and Tata Motors (+5.2%) closed on a positive note. ITC (-0.4%), Tech M (-0.3%), and Britannia (-0.1%) were among the top losers.
Excerpts from an interview of Mr. Nitin Sood, CFO, PVR with CNBC-TV18 dated 18th January 2021:
- Speaking about footfalls, Sood said the company was given permission to open in October. While the theatres are open, there are no big releases resulting in lower footfalls.
- The film ‘Master’ has done well for the company in the South and it gives hope of new content releasing soon.
- On new content, he said the company is in talks with producers and the Bollywood community where big film releases have not been announced.
- The industry is waiting for someone to take the first leap and with the movie ‘Master’ release, the release pipeline may get kicked off.
- Speaking about earning trajectory, he said it is difficult to predict as it is dependent on the film release calendar. The company expects to turn EBITDA positive in the coming 2 to 3 months as more releases are planned.
- The company has taken cost reduction measures during the nine months in which the business was completely shut.
- The pre-COVID level of average break-even occupancies used to be between 23-25%, these numbers are now sub 20% led by the cost reduction initiatives taken by the company.
- There are a lot of films pending to be released in 2021.
- Speaking about fundraising, he says the company was sitting on the liquidity of Rs 370 crores and they have taken board approval to raise additional liquidity. This will help to keep the balance sheet strong and use to build a new screen portfolio.
Consensus Estimate: (Source: market screener and Investing.com websites)
- The closing price of PVR was ₹ 1,526 as of 19-January-2021. It traded at 64x/ 27x the consensus Earnings per share estimate of ₹ 23.9/56.5 for FY22E/ FY23E respectively.
- The consensus average target price for PVR is ₹ 1567/- which implies a PE multiple of 28x on FY23E EPS of 56.5/-.
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