BPPG response - Options for Defined Benefit schemes - 19Apr24.pdf
PVR
1. 1QFY2011 Result Update | Media
July 30, 2010
PVR BUY
CMP Rs154
Performance Highlights Target Price Rs199
(Rs cr) 1QFY11 1QFY10 % yoy 4QFY10 %qoq Investment Period 12 months
Revenue 102.0 43.6 133.8 87.0 17.2
EBITDA 14.3 (10.3) - 10.3 39.0 Stock Info
OPM (%) 14.1 (23.6) - 11.9 220bp Sector Media
PAT 5.1 (12.9) - 0.4 1,200.0 Market Cap (Rs cr) 395
Source: Company, Angel Research Beta 0.7
52 Week High / Low 204/99
For the quarter, PVR reported top-line growth of 134% yoy (17% qoq), aided
by low base, incremental revenue traction from the 15 screens added in the Avg. Daily Volume 57,520
mid-half of 4QFY2010 (total screen count currently stands at 35,316) and a Face Value (Rs) 10.0
better movie pipeline. The company reported a substantial Rs25 yoy increase
BSE Sensex 17,868
in ATP to Rs157, 940bp yoy (160bp qoq) increase in occupancy and 9% yoy
(3% qoq) increase in the average F&B realisation. The company registered net Nifty 5,368
profit of Rs5.1cr, aided by reduction in interest expenses, substantial margin Reuters Code PVR.BO
expansion and increase in other income. We highlight that this quarter’s Bloomberg Code PVRL@IN
results are not comparable yoy as multiplex revenues in 1QFY2010 were
disrupted by the producers/distributors’ strike. We maintain Buy on the stock.
Strong movies aid top-line, operating leverage expands margins: PVR’s core
exhibition business registered a growth of 141% yoy (21% qoq) to Rs93.9cr Shareholding Pattern (%)
(Rs39cr/Rs77.6cr), aided by increase in the net ticket sales, occupancy level and Promoters 37.3
average F&B realisation. The company registered net profit of Rs5.1cr this quarter
(loss of Rs12.9cr in 1QFY2010 and profit of 0.4cr in 4QFY2010), primarily aided MF /Banks /Indian FIs 24.7
by significant revenue traction and margin expansion to the tune of 220bp qoq. FII /NRIs /OCBs 21.8
Outlook and Valuation: For FY2010-12E, we expect PVR to register ~33% CAGR Indian Public /Others 16.2
in top-line primarily on account of screen additions (PVR Pictures and Blu-O to
grow at 70% and 34% CAGR) as we factor in only 4-5% improvements in ATP
and F&B spends. Earnings are expected to register CAGR of 403% over the same
period on a low base. At Rs154, the stock is trading at attractive valuations of Abs. (%) 3m 1yr 3yr
11.6x FY2012E EPS. We maintain a Buy on the stock, with a revised Target Price Sensex 1.8 16.1 17.1
of Rs199 (Rs192) based on 15x FY2012E EPS of Rs13.3. Downside risks to our
PVR (14.4) 47.1 (25.8)
estimates include higher rental expense and weak movie pipeline
Key Financials (Consolidated)
Y/E March (Rs cr) FY2009 FY2010 FY2011E FY2012E
Net Sales 352.1 334.1 497.6 594.1
% chg 32.4 (5.1) 48.9 19.4
Net Profit (Adj) 8.7 1.3 22.8 34.1
% chg (59.7) (84.6) 1,596.6 49.2
EBITDA (%) 13.4 10.2 15.4 16.9
EPS (Rs) 3.7 0.5 8.9 13.3
Anand Shah
P/E (x) 41.4 293.6 17.3 11.6
022-4040 3800-334
P/BV (x) 1.3 1.3 1.2 1.1
anand.shah@angeltrade.com
RoE (%) 3.6 0.5 7.2 9.9
RoCE (%) 2.8 1.3 6.4 8.8 Chitrangda Kapur
EV/Sales (x) 1.3 1.4 1.0 0.8 022-4040 3800-323
EV/EBITDA (x) 10.4 15.0 7.1 5.3 chitrangdar.kapur@angeltrade.com
Source: Company, Angel Research
Please refer to important disclosures at the end of this report 1
2. PVR|1QFY2011 Result Update
Exhibit 1: Quarterly Performance (Consolidated)
Y/E March (Rs cr) 1QFY11 1QFY10 % yoy 4QFY10 % qoq FY2010 FY2009 % chg
Net Sales 102.0 43.6 133.8 87.0 17.2 334.1 352.1 (5.1)
Film Distributor’s Share 26.6 9.4 184.4 20.5 29.9 80.3 63.2 27.1
(% of Sales) 26.1 21.4 23.5 24.0 18.0
Movie Dist/Print Chgs 2.6 0.5 390.6 2.3 12.1 18.3 51.0 (64.1)
(% of Sales) 2.6 1.2 2.7 5.5 14.5
Consumption of F&B 6.5 3.2 106.0 5.3 23.6 20.4 19.3 5.6
(% of Sales) 6.4 7.2 6.0 6.1 5.5
Staff costs 11.9 10.1 18.5 9.7 22.9 42.0 38.4 9.6
(% of Sales) 11.7 23.0 11.1 12.6 10.9
Rent 12.9 10.8 19.6 11.4 12.5 45.0 37.7 19.3
(% of Sales) 12.6 24.7 13.1 13.5 10.7
Other Expenses 27.2 20.1 35.5 27.5 (1.2) 93.8 95.2 (1.5)
(% of Sales) 26.7 46.0 31.6 28.1 27.0
Total Expenditure 87.6 53.9 62.6 76.7 14.3 299.9 304.9 (1.6)
Operating Profit 14.3 (10.3) 10.3 39.0 34.2 47.2 (27.5)
OPM (%) 14.1 (23.6) 11.9 10.2 13.4
Interest 3.5 4.6 (24.7) 3.5 (0.6) 15.9 12.6 26.4
Depreciation 7.6 6.4 19.4 8.2 (7.2) 27.4 35.3 (22.4)
Other Income 4.1 2.6 58.9 1.6 154.7 9.8 11.6 (15.8)
PBT (excl. Ext Items) 7.4 (18.6) 0.3 0.7 11.0 (93.6)
Ext Income/(Expense) - - - - -
PBT (incl. Ext Items) 7.4 (18.6) - 0.3 2,542.9 0.7 11.0 (93.6)
(% of Sales) 7.3 (42.7) 0.3 0.2 3.1
Provision for Taxation 1.8 (6.0) - 0.3 513.3 (0.1) 2.6 -
(% of PBT) 24.9 32.3 107.1 - 23.9
Minority Interest (0.5) (0.2) 0.4 0.6 0.4
Reported PAT 5.1 (12.9) - 0.4 1,200.0 1.4 8.7 (84.5)
PATM 5.0 (29.5) 0.4 0.4 2.5
Equity shares (cr) 2.6 2.3 2.3 2.6 2.3
EPS (Rs) 2.0 (5.6) 0.2 0.5 3.8
Source: Company, Angel Research
Low base and better movie pipeline aid top-line growth
PVR reported a robust top-line growth of 134% yoy (17% qoq) for its consolidated
1QFY2011 results to Rs102cr (Rs43.6cr). The core exhibition business of the
company registered a growth of 141% yoy (21% qoq) to Rs93.9cr (Rs39cr/Rs77.6cr),
aided by a 142 yoy/18% qoq increase in the net ticket sales to Rs57cr (Rs23.5cr/
Rs48.5cr) as the ATP increased by a substantial Rs25 yoy to Rs157 (impacted
positively by the increase in the ticket pricing across various properties and key films
like Raajneeti, Housefull, Toy Story-3, Shrek-3 and Prince of Persia). Increase in
occupancy level by 940bp yoy (160bp qoq) to 29.3% (19.9%/27.7%) and 9% yoy
(3% qoq) increase in the average F&B realization to Rs40.9 (Rs37.6/Rs39.9), aided
top-line. For the last two quarters, the bowling business of the company, PVR
Blu-O’Ray has been registering flat income of Rs3.8cr. While this quarter saw no
production income, the company registered distribution income Rs5.3cr. Going
forward, Aisha and Khele Hum Jee Jaan se are two movies scheduled to be released
from PVR Pictures.
July 30, 2010 2
4. PVR|1QFY2011 Result Update
Exhibit 5: Exhibition capacity
1QFY11 1QFY10 Addition 4QFY10 Addition
Propts Under Operation 32 26 6 30 2
Screens Under Operation 136 108 28 123 13
Seats Under Operation 35,316 27,827 7,489 32,173 3,143
Source: Company, Angel Research
Strong earnings aided by margin expansion and higher other income
In terms of earnings, for 1QFY2011, PVR registered a profit of Rs5.1cr (loss of
Rs12.9cr last year and profit of 0.4cr in 4QFY2010), primarily aided by significant
revenue traction and margin expansion. Moreover, depreciation charges declined
7% qoq to Rs7.6cr (Rs8.2cr), despite screen additions on account of high base of
distribution income, and other income increased by 59% yoy (155% qoq) to Rs4.1cr
(Rs2.6cr/Rs1.6cr), further aiding earnings.
Exhibit 6: Expect robust earnings on low base in 2H Exhibit 7: OPM to sustain at 16-17% in FY2011/12E
10.0 20.0 30.0
15.0 20.0
5.0 10.0 10.0
(Rs cr)
- 5.0
(%)
-
(Rs cr)
-
(5.0) (5.0) (10.0)
(10.0) (20.0)
(10.0) (15.0) (30.0)
1QFY2009
2QFY2009
3QFY2009
4QFY2009
1QFY2010
2QFY2010
3QFY2010
4QFY2010
1QFY2011
(15.0)
1QFY2009
2QFY2009
3QFY2009
4QFY2009
1QFY2010
2QFY2010
3QFY2010
4QFY2010
1QFY2011
EBITDA (LHS) OPM (RHS)
Source: Company, Angel Research Source: Company, Angel Research
Robust top-line and operating leverage expands operating margins
On the operating front, consolidated operating margins expanded by 220bp qoq to
14% (11.9%), as rent expense (down 53bp qoq), other expenditure (down by 497bp
qoq) and movie distribution and production cost (down by 12bp qoq) decreased,
while F&B expense and staff cost, as a percentage of revenues, were maintained at
the same level qoq. However, film distributiors’ expense registered a spike of 254bp
qoq on account of new revenue sharing model between the film distributors and
producers.
July 30, 2010 4
5. PVR|1QFY2011 Result Update
Investment Rationale
Diversified model ensures de-risked business: PVR is present across the movie
value chain (exhibition-production-distribution) and has forayed into the retail
entertainment in the form of PVR Blu-O. While we expect PVR pictures to grow at
~70% CAGR over FY2010-12E aided by improved movie pipeline and a slate of
four productions, two of which (Aisha and Khele Hum Jee Jaan Se) are set to
release in 2Q and 3QFY2011; PVR Blu-O’s revenue estimates are tweaked
downwards to account for flat revenue traction over the past couple of quarters,
rendering an expectation of 34% CAGR over FY2010-12E.
Improved movie pipeline and lighter sports calendar to keep top-line robust:
FY2010 revenues for multiplexes were plagued by: 1) strike between
producers/distributors, which saw no movies releasing in 1QFY2010, 2) heavy
sports calendar with IPL season-3, FIFA world cup, winter Olympics and
Wimbeldon, and 3) weak movie pipeline. FY2011 looks promising with movies
like Raajneeti, Housefull, Toy Story-3, Shrek-3, Prince of Persia, Inception, Salt,
Despicable Me, Udaan, Once upon a time in Mumbai, Peepli- live, Aisha and
Dabang. PVR has recorded an increase in occupancy and footfalls by 940bp
and 122% yoy respectively, albeit on a low base this quarter. For FY2011E, we
have modeled in ~23mn footfalls and ~146bp yoy increase in occupancy at the
back of improved movies pipeline and less sports dependent calendar (IPL
Season-4 is scheduled to start in 4QFY2011).
Exhibition capacity ramping up: PVR, on a yoy basis, has added 28 screens and
7,489 seats under operation in 1QFY2011on account of base effect (FY2010
saw slow capacity addition). For FY2012E, we expect PVR to add 25 screens and
6,250 seats under operation resulting in total of 175 screens, 45,173 seats from
35 properties under operation
Outlook and Valuation
After 1QFY2011 results, we have marginally tweaked our estimates to factor in: 1)
flat revenue traction from PVR Blu-O, and 2) higher depreciation cost on account of
increased capex and higher contribution from the movie division.
Exhibit 8: Change in estimates
Parameter Old Estimate New Estimate % chg
(Rs cr) FY11E FY12E FY11E FY12E FY11E FY12E
Revenue 510 603 498 594 (2.4) (1.5)
OPM (%) 15.9 16.6 15.4 16.9 (52bp) 38bp
EPS (Rs) 9.1 12.8 8.9 13.3 (2.3) 3.8
Source: Company, Angel Research
July 30, 2010 5
6. PVR|1QFY2011 Result Update
PVR added 28 screens and 7,489 seats under operation in 1QFY2011. Going
forward, we expect substantially higher footfalls in 2QFY2011 on account of
promising movie pipeline, which is expected to help PVR register higher occupancies.
For FY2010-12E, we expect PVR to register 33.3% CAGR in top-line primarily aided
by seat additions (as we factor in only 4-5% improvement in ATP and F&B spends).
Earnings are expected to register CAGR of 403% over the same period on a low
base (FY2010 earnings were affected by weak movie pipeline and 1QFY2010
washout on account of the strike) and margin expansion (on low base, we expect
operating margins of 16-17% in FY2011-12E). At CMP of Rs154, the stock is trading
at attractive valuations of 11.6x FY2012E EPS. We maintain a Buy on the stock, with
a revised Target Price of Rs199 (Rs192) based on 15x FY2012E EPS of Rs13.3.
Downside risks to our estimates include: higher rental expense and weak movie
pipeline.
Exhibit 9: Peer Valuation
Company Reco Mcap CMP TP Upside P/E (x) EV/Sales (x) RoE (%) CAGR #
(Rs cr) (Rs) (Rs) (%) FY11E FY12E FY11E FY12E FY11E FY12E Sales PAT
Inox Leisure Neutral 515 83 - - 22.6 14.4 2.2 1.8 7.8 11.1 26.3 169.6
PVR Buy 326 154 199 29.2 17.3 11.6 1.0 0.8 7.2 9.9 33.3 403.1
Source: Company, Angel Research, Note: #denotes CAGR for FY2010-12E
Exhibit 10: Angel v/s Consensus estimates
Top-line (Rs cr) FY2011E FY2012E EPS (Rs) FY2011E FY2012E
Angel estimates 498 594 Angel estimates 8.9 13.3
Consensus 501 602 Consensus 8.9 11.1
Diff (%) (0.6) (1.3) Diff (%) - 19.8
Source: Company, Angel Research
July 30, 2010 6
10. PVR|1QFY2011 Result Update
Research Team Tel: 022 - 4040 3800 E-mail: research@angeltrade.com Website: www.angeltrade.com
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Disclosure of Interest Statement PVR
1. Analyst ownership of the stock No
2. Angel and its Group companies ownership of the stock Yes
3. Angel and its Group companies' Directors ownership of the stock No
4. Broking relationship with company covered No
Note: We have not considered any Exposure below Rs 1 lakh for Angel, its Group companies and Directors.
Ratings (Returns) : Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
Reduce (-5% to 15%) Sell (< -15%)
July 30, 2010 10
