4 November 2020
2QFY21 Results Update | Sector: Media
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
61.6 / 0.8
2083 / 707
CMP: INR1,115 TP: INR1,340 (+20% )
Sharp cost measures cushion losses
Net loss at INR1.2b (v/s est. INR1.3b and PAT of INR760m YoY)
With lockdown in force for the majority of the quarter, revenue plunged
96%; however, a sharp 83% cut in opex cushioned
EBITDA loss (pre-Ind-AS
116) to INR810m (better than est. INR1b).
We cut our FY21E/FY22E EBITDA by a further 37%/6% – factoring in the
delay in the resumption of cinema operations across India – reaching
EBITDA of INR5.8b by FY22 (at FY20 levels, even after 12% capacity adds).
PVR’s 2QFY21 revenue plummeted 96% YoY to INR436m (INR9.7b in
2QFY20) due to continued lockdown. Revenue includes sales of INR37m and
INR275m from F&B and movie production-distribution, respectively.
On a pre-Ind-AS 116 basis, EBITDA loss stood at INR810m (INR1.9b YoY),
cushioned by an 83% fall in operating cost to INR1.2b. Fixed cost, which
accounts for two-thirds of opex, was down 75% YoY.
Net loss stood at INR1.2b (INR760m YoY).
It has reached a settlement with the developers of more than 60% of its
cinemas for complete rental waiver during the lockdown and reduced rent
sharing post the reopening. Also, common area maintenance (CAM) charges
would be discounted by 30–50%.
Revenue recovery, which may
take another six months, would be
supported by a) cinema re-openings in Maharashtra and b) new movie
The focus on reducing cost by ~70%
– with a 50% drop in rentals and even
higher decline in employee and other expenses in FY21E – would curb cash
Cinema additions and inorganic opportunities have stalled until normalcy
returns. Nonetheless, expect 30 screen adds (for which 90% work has been
completed) with INR1b capex in FY21.
PVR’s near-term profitability and business scale should be affected as
cinemas have been the last to open, and are operating with much-reduced
capacity and limited timings.
Waiver of rental charges and the sharp drop in employee and other expenses
come as a great relief; >50% decline has been reported in overall costs.
existing >INR5.5b liquidity,
including ~INR3.5b cash (INR3b proceeds from a
rights issue) should cater to the next 6–8 months of cash burn.
The recent shift in movies to OTT platforms and their increased viewership
raise concerns regarding the increased competition from the OTT medium.
However, multiplexes are expected to resume operations with a fixed
exclusive window of movie viewing in cinemas and healthy flow of movie
content. This, coupled with PVR’s scale and execution, should bode well for
We expect PVR to reach FY20 EBITDA levels of INR5.8b in FY22E. We value
the company at 15x FY22E EBITDA to arrive at Target Price of INR1,340 (v/s
Financials & Valuations (INR b)
FY20 FY21E FY22E
EBITDA Margin (%)
16.9 -35.0 17.2
Adj. EPS (INR)
32.2 -70.4 21.4
EPS Gr. (%)
288.3 252.1 273.5
Div Yield (%)
FCF Yield (%)
Shareholding pattern (%)
FII Includes depository receipts
Highlights from management commentary
Valuation and view
Research Analyst: Aliasgar Shakir
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
4 November 2020