Takes continuous ATP hikes… • PVR :: ICICI Securities, PDF link

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Takes continuous ATP hikes…
• PVR reported its Q2FY15 numbers with revenues at | 400.2 crore, up
9.4% YoY (vs. expected | 387.0 crore) due to the hike undertaken in
ATP & higher revenues from the F&B segment. The growth was also
higher due to higher-than-expected footfalls at 15.7 million footfalls
• The EBITDA came in at | 58.6 crore, down 21.6% YoY, due to higher
operating expenses on a YoY basis. EBITDA margins came in at
14.7% as per our expectations
• PAT came in higher at | 9.2 crore, slightly higher than our
expectations of | 7.1 crore
PVR emerges as strong leader post Cinemax acquisition
PVR has an impressive market share of ~25% (inclusive of Cinemax) of
the total 1600 multiplex screens in the country. After the Cinemax
acquisition, PVR has a combined revenue share of 20-22% (Bollywood)
and 30-35% (Hollywood) of the multiplex revenues. The company has
about 445 screens as on date and plans to augment its market share by
rolling out 70-80 screens each year. This leadership position gives PVR
the leverage to negotiate better deals with movie producers. We expect
total screens at PVR to reach 106 properties with a total screen of 484 and
116 properties with total screens of 540 in FY15E and FY16E, respectively.
PVR also plans to use this immense bargaining power to negotiate with
the government so that there can be some minimum window before
movie releases are available on other platforms.
Consolidation in industry, ATPs to trend upwards
There has been massive consolidation in the sector with the acquisition of
Cinemax by PVR and a recent acquisition of Satyam Cineplexes by Inox.
Both PVR and Inox are emerging as two major players in the industry with
PVR as the market leader. This consolidation will further help operators in
taking price hikes. We expect PVR’s ATPs to grow at 4.5% FY14-16E
CAGR to reach | 179.8 by FY16E. Moreover, the company is refurbishing
its offerings in the food and beverage segment, which has led to spend
per head expansion to | 64. Going ahead, with the disposable income of
people increasing and improved quality of offerings by the company, F&B
spends are expected to rise to | 63.0 and | 64.5 by the end of FY15E and
FY16E, respectively, from | 53 currently.
Advertisement revenue continues to grow as per expectations
PVR is strategising to augment its advertising revenues by about 25-30%
on a YoY basis by providing advertisers various deals such as pay per
eyeballs and other innovative deals. The company has earned about
| 141.9 crore in FY14. PVR has ~60 million footfalls, which provide
advertisers with easily reachable audience and undivided attention.
Hence, we have factored in a growth rate of 15% and 10% to reach
| 163.1 crore and | 180 crore of ad revenues by FY15E and FY16E,
respectively.
Maintain BUY with target price of | 780
We expect consolidated revenue and EBITDA growth of 14.3% and 21.3%
in FY14-16 CAGR, led by ATP uptick and increased occupancies aided by
the higher property roll-out. Moreover, a gradual recovery in economic
activity will increase the disposable income of the people and keep
growth buoyant. We continue to maintain BUY valuing it at an 11x
EV/EBITDA, hence, arriving at a target price of | 780.

LINK
http://content.icicidirect.com/mailimages/IDirect_PVRLtd_Q2FY15.pdf