CMP: Rs. 668.85; Market Cap: Rs. 2,768.83 Cr; 52 Week
High/Low: Rs. 750.00 / Rs. 490.0o; Total Shares: 4,13,96,888 shares;
Promoters : 1,22,55,260 shares –29.60 %; Total Public holding : 2,91,41,628 shares – 70.40 %; Book Value: Rs. 94.32;
Face Value: Rs. 10.00; EPS: Rs. 13.39; Dividend: 25.00% ; P/E: 49.98 times; Ind P/E: 36.93;
EV/EBITDA: 15.34. Total Debt: 502.12 Cr; Enterprise Value: Rs. 3,258.38 Cr.
Priya Village Roadshow (PVR) Cinemas: PVR Limited was incorporated in 1995 and is
based in Gurgaon, India. PVR LTD was incorporated in April 1995 pursuant to a
joint venture agreement between Priya Exhibitors Private Limited and Village
Roadshow Limited, one of the largest exhibition companies in the world. PVR
Limited is an India-based company that operates movie houses in India. PVR Ltd came with an IPO on December 08, 2005 with an
issue price of Rs. 225 per share and raise about Rs. 173.25 Cr with an
objective to utilize the proceeds to finance the then new cinema projects in
various cities across the country, to expand the film distribution business,
technological up gradation and renovation of cinemas. The Company also
generates revenue from in-cinema advertisements and product displays and
in-cinema sale of food and beverages. It also produces and co-produces movies;
and distributes movies, as well as operates 24 lane bowling centres. PVR,
Currently controls 398 including 135 Screens with Cinemax India Ltd at 92
locations across 37 cities in 13 States and 1 Union Territory. Company’s
subsidiaries include CR Retail Malls (India) Limited (CRR), PVR Pictures
Limited (PVR Pictures) and PVR bluO Entertainment Limited (PVR bluO). The
Company has diverse cinema circuit in India consisting of 35 Cinemas with 154
screens spread over 20 different cities: Delhi, Faridabad, Gurgaon, Ludhiana,
Ghaziabad, Mumbai, Bangalore, Hyderabad, Chennai, Lucknow, Indore, Aurangabad, Baroda,
Allahabad, Ahmedabad, Udaipur, Chandigarh, Surat, Latur and Raipur. PVR Ltd
announced the opening of a multiplex on August 15, 2012, at Empress Mall, in
Nagpur in the state of Maharashtra. The multiplex consists of five screens. On
January 8, 2013, PVR through its wholly owned subsidiary Cine Hospitality
Private Ltd purchased a controlling stake of over 69 % followed by the open
offer for another 26% in the Cinemax India Limited for Rs. 395 Cr or Rs. 203.65
per share from the Rashesh Kanakia and family. PVR Ltd is locally compared with
Prime Focus ltd, Reliance Broadcast Network Ltd, Balaji Telefilms ltd, Media
Matrix Worldwide Ltd, Shree Ashtavinayak Cine Vision Ltd, Tips Industries Ltd,
Fame India Limited, Cinemax Properties Ltd, Era E Zone (India) Ltd, Pyramid
Saimira Theatre Limited and Inox Leisure Ltd and globally compared with Walt
Disney Co of US California, Time Warner Inc of USA, IG Port Incorporated of
Japan, Twenty First Century Fox, Inc of New York, Lions Gate Entertainment Corp
of California, UTV Media PLC of UK,
Dreamworks Animation Skg Inc of California, Orange Sky Golden Har. Ente.
Holdings Ltd of Hong Kong, Kinepolis Group NV of Belgium, Cinemax X AG of
Germany, Digital Cinema Destination Corp of United States and Reading
International Inc of United states, Geo Dinos Company Ltd of Japan, Nakanihon
Kogyo Company Ltd of Japan.
Priya Village Roadshow (PVR) Cinemas is a leading cinema chains in India. The company began as a joint venture agreement between Priya Exhibitors Private Limited and Village Roadshow limited in 1995 with 60:40 ratios. PVR pioneered the multiplex revolution in the country by establishing the first multiplex cinema in 1997 at Saket, New Delhi. The opening of the first multiplex opened up a new era in the Indian cinema viewing experience, which also set a role model for others to follow suit. PVR has set new benchmarks in the cinema exhibition business including establishment of the first largest 11 screen multiplex in the country, Gold Class Cinema, luxury cinema, IMAX theatres and ECX (Enhanced Cinema Experience). PVR, Currently controls 398 including 135 Screens with Cinemax India Ltd at 92 locations across 37 cities in 13 States and 1 Union Territory. It also plans to open another 500 screens by 2015. PVR has an impressive market share of around 25 % including Cinemax of the total 1600 multiplex screens in the country. The Indian Media and Entertainment (M&E) industry is around Rs. 83,000 crore (US$ 13.23 billion) and is on high growth trajectory. Proving its resilience when the global economy was going through tough times, the Indian M&E sector was on the cusp of a strong phase of growth, backed by rising consumer payments and advertising revenues across all sectors. The industry has been largely driven by increasing digitisation and higher internet usage over the last decade. In today’s times, the Indian entertainment segment is largely driven by digitisation and internet penetration. More than 22.7 Cr Indians use their mobiles, computers, tablets or other devices to access internet to listen to music, watch a film, a TV show or a cricket match. India ranks third in the world in watching videos online through a PC/laptop and fourth in the world when it comes to watching videos on the phone, according to the statistics. The CII-PwC report named 'India Entertainment & Media Outlook 2013' estimates that the Indian M&E industry would exceed Rs. 224,500 crore (US$ 35.8 billion) by 2017, growing at a CAGR of 17 per cent from 2013. The growth would be majorly driven by increasing penetration of digital platforms across the industry segments. While the print sector is expected to register a CAGR of 9 % and touch Rs 33,100 crore (US$ 5.28 billion) of revenues by 2017, sectors such as internet access, internet advertising, gaming and music are expected to continue on their high growth trajectory, said the report. The report highlighted that immense use of the internet, high penetration of smart phones; digital advertising, wireless broadband, digital content consumption and supportive regulatory eco-system have had and will continue to have a significant impact on the E&M sector. PVR has an impressive market share of 25 % including share of Cinemax and has the total of 1,600 multiplex screens in the country. After the Cinemax acquisition, PVR now has a combined revenue share of 20-22 % from Bollywood films and 30-35 % from Hollywood films as in multiplex revenues. The company has about 462 screens as on date and plans to raise 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. It is expected that in FY16E the total screens of PVR can reach 525 in 114 properties and in FY17E the total number of screens could be 575 in 123 properties. The Annual maintenance capex comes at 1-2 % of revenue. Every screen requires refurbishment after 6-8 years to keep the cinema maintained and fresh. This amounts to 20-30 % of original capex. Capex required is on an average of Rs. 2.5 Cr per screen. 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. Owing to its strong competitive position after the Cinemax acquisition the company has been able to effectively pass on price hikes. The average ticket prices (ATPs) have been on an upward trajectory since FY13. As the demand for the movies are increasing so do the investments in movies are increasing. Hence, there would be an increase in ATPs. Moreover, the consolidation in the multiplex industry and with PVR being a market leader it would be in best position and be able to pass on price hikes effectively. Also, there are some major releases in the pipeline and several Hollywood releases would help PVR to take price hikes as per the heavy demands for star-studded movies. It is expected that Average Ticket Prices to grow at a CAGR of 4.2 % to Rs. 186.4 by FY17E. PVR also benefits from its strategy of following differentiation pricing based on the regions, target audience and the movie to be released. PVR has always remained quite consistent with its property roll-out guidance. The company has the first mover advantage in various smaller towns and cities where it has already cornered the best location. In Q4FY13, as the Cinemax numbers were consolidated the tally of the properties increased from 47 to 86. As on date, the company has 104 properties with 462 screens in total. The company has rolled out about 73 screens at the end of FY14. The company guided at maintaining the run rate of 70-80 screens for the coming two years. PVR has 60 million footfalls, which makes advertisers comfortable to advertise with PVR as the audience is also easily traceable. 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 Rs. 141.9 crore in FY14. There is also an uptrend seen in the Spends per head in the food and beverage (F&B) segment. This gives PVR an ability to take price hikes and higher operating leverage in the coming future and this will in turn help in the margin expansion to the tune of about 17.2 % in FY16E and 18.1 % for FY17E from 16.0 % in FY14. PVR has entered into a share purchase agreement with L Capital for purchase of their entire investment in equity shares and preference shares of PVR Leisure. L Capital had bought the stake at Rs. 50 Cr in 2012. L Capital will be exiting its investment at a loss and PVR will be buying its stake at Rs. 37 Cr. Since PVR Leisure has Rs. 15 Cr to Rs. 16 Cr cash, net outflow for PVR will be Rs. 22 Cr. Apart from one property scheduled to be opened in Ludhiana in the next 2‐3 months, PVR will not be expanding further in the bowling business. L Capital will continue to be a significant shareholder in the main company. Also, PVR Cinemas has entered into a 5 year strategic partnership with BookMyshow.com to be its online ticketing partner across India. The multiplex targets to sell tickets worth of Rs. 1000 crores over these five years exclusively on BookMyshow.com besides its existing sale of tickets from its Box Office and other channels. Also with the GST coming into force by 2016 and the GST rate being fixed at 16 %, it could potentially lead to a 4.50 % to 5.50 % improvement in EBITDA margin for PVR. Given the fact that movie watching is a discretionary spend and the category has pricing power, so PVR will be in good position to absorb all benefits of GST rather than passing it on to consumers. PVR’s has good prospects with improvement in RoCE and RoE with free cash flow visibility and with the timely execution of the given aggressive roll-out plan it will maintain its leadership position.
Innovative ways to book tickets via online and app |
KEY FINANCIALS | FY14 | FY15E | FY16E | FY17E |
---|---|---|---|---|
SALES (₹ Crs) | 1,347.50 | 1,541.20 | 1,906.30 | 2,236.10 |
NET PROFIT (₹ Cr) | 50.40 | 51.40 | 119.50 | 137.80 |
EPS (₹) | 12.90 | 13.00 | 29.50 | 34.00 |
PE (x) | 53.10 | 52.50 | 23.10 | 20.10 |
P/BV (x) | 7.00 | 6.30 | 5.00 | 4.10 |
EV/EBITDA (x) | 16.30 | 14.40 | 9.90 | 8.10 |
ROE (%) | 10.10 | 12.60 | 24.10 | 22.40 |
ROCE (%) | 9.70 | 10.90 | 16.20 | 18.50 |
*As the author of this blog I disclose that I do not hold PVR Ltd in my any of the portfolios.
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Disclaimer:
Disclaimer:
This is a personal blog and presents entirely personal views on stock market. Any statement made in this blog is merely an expression of my personal opinion. These informations are sourced from publicly available data. By using/reading this blog you agree to (i) not to take any investment decision or any other important decisions based on any information, opinion, suggestion, expressions or experience mentioned or presented in this blog (ii) Any investment decisions taken if any would be his/hers sole responsibility. (iii) the author of this blog is not responsible.
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Thanq once again and again on behalf of all ur blog readers for providing wonderful ideas
ReplyDeleteJaipal Reddy
Thanks Jaipal Reddyji for ur wishes :)
DeleteDo visit again
Hi Bhavikk
ReplyDeleteis 552 cr debt a concern
Thanks Srikant For ur comment
DeleteLooking at the cash flow of the company, debt shld not be a concern
Do visit again
wishing you a wonderful day ahead
regards
bhavikk shah
Very informative post Bhavvik. Thanks for sharing!
ReplyDeleteHii Archan maam
DeleteThanks for your comments
do visit again
wishing a wonderful day ahead
regards
Bhavikk shah
Thanks for the reply Bhavikk, two queries
ReplyDelete1) promoter holding of PVR is 29%, in general what should the promoter holding for any company
2) your view on ILandFS Engineering
Hi Srikant
DeleteIf u check my previous posts on PVR u will observe that promoters have gradually increased their stakes
and for the ILFS Engineering I would recommend you to give a look at ILFS Transport although both companies are different in businesses but later is best
Thank you Bhavik, this is a very comprehensive article about PVR cinemas. Never knew so much about them. Esp their full form. I had never thought about it, quite a nice surprise for me :)
ReplyDeleteHi Vinayji
DeleteThanks and pls do keep on visiting
have a wonderful day ahead
What about low roe ?
ReplyDeletehttps://www.screener.in/company/?q=532689 shows p/e 78 not 48, why difference ?
ReplyDeleteHii Meet Sugat
DeleteThanks for your visit
I would recommend you to give a look at moneycontrol.com for the financial ratios and there's could be non updation of screeners website
Eps of PVR is Rs.13.39 as per moneycontrol.com so when u divide Cmp of PVR 659.45 with EPS 13.39 will give you PE 49.24
Now even if u take eps given on screeners they give it EPS of Rs.Rs.13.43 this also gives you PE of 49.10
So that website is not recently updated
For ROE its 14.79 refer money control
Do visit again
Regards
Bhavikk shah
Thank you for reply
DeleteI saw many movies at PVR Mumbai and I simply cannot compare it to any other theaters in the town. It has awesome sound and picture quality. The 3D movies are awesome too.!
ReplyDelete