In the first quarter of FY25, PVR Inox (NSE: PVRINOX | BSE: 532689) faced a challenging environment with several factors impacting its performance. Despite these challenges, the company is well-positioned for a strong rebound in the latter half of the financial year.
Current Performance and Challenges
PVR Inox reported a decline in revenue by 8.8% year-on-year to Rs11,907 million, primarily due to a lower number of releases and weaker content amid general elections and a strike in Hollywood. Footfalls also saw a decline of 10.3% year-on-year to 30.4 million, with an occupancy rate of 20.3%. Gross Average Ticket Price (ATP) decreased by 4.5% year-on-year to Rs235.
The company’s performance was notably weak in 1QFY25, with a pre-Ind AS EBITDA loss of Rs381 million. This marks the weakest quarter since 1QFY23. However, the adjusted EBITDA loss was significantly better than projected, standing at Rs381 million compared to the estimated Rs719 million.
Strategic Adjustments and Future Outlook
Analyst Jinesh Joshi from Prabhudas Lilladher highlights that PVR Inox is currently in a “reset mode,” focusing on cost rationalisation, reducing capital expenditure, and managing debt. These strategic adjustments are expected to yield positive results as the content flow stabilises.
The movie calendar for the second half of FY25 looks promising, with highly anticipated releases such as “Pushpa-2,” “Singham Again,” “Sitare Zameen Par,” and “Bhool Bhulaiya-3” scheduled to hit the screens post-October 2024. This improved lineup is expected to drive a sharp recovery in box office fortunes.
Expansion and Innovation
PVR Inox continues to innovate and expand its footprint. The company has formed a joint venture with Devyani International to launch a new food court business, branded as ‘Street Junction’. The venture plans to open two outlets in the next two to three months and aims to have four to five outlets operational by the end of FY25.
Additionally, the company opened 50 new screens while closing 14 under-performing ones. Premium screens now constitute about 15% of the portfolio, reflecting PVR Inox’s commitment to enhancing the viewing experience for its customers.
Financial Projections
Despite the current setbacks, PVR Inox’s financial outlook remains robust. The company is projected to achieve a pre-Ind AS EBITDA margin of 14.5% in FY25 and 16.7% in FY26. Revenue is expected to reach Rs66,972 million in FY25 and Rs74,594 million in FY26.
Joshi retains a ‘HOLD’ rating on the stock with a target price of Rs1,474, assigning an EV/EBITDA multiple of 12x. This reflects confidence in the company’s strategic direction and its ability to navigate through the current challenges.
Final Thoughts
PVR Inox is navigating a challenging period with strategic adjustments and a focus on cost management. The promising movie calendar for the second half of FY25, coupled with the company’s innovative expansion plans, positions it well for a strong recovery. With a robust financial outlook and strategic focus, PVR Inox is poised to deliver value to its stakeholders in the coming years.
PVR INOX Ltd, formerly known as PVR Cinemas, is an Indian multiplex chain based in Delhi. It was formed as a result of the merger between PVR Cinemas and INOX Leisure Multiplex. PVR pioneered the multiplex revolution in India by establishing the first multiplex cinema in 1997 at Saket, New Delhi.
