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PVR Inox Ltd.’s occupancy surged in Q2 FY24 as the quarter witnessed strong footfalls of 48.4 million on the back of several big-ticket movie releases across genres and languages. The release pipeline remains strong.
Key things to watch out for: Sustained occupancy, a recovery in advertising revenue, increased risk of rising scale and the traction of movie releases over OTT platforms, as highlighted earlier by us.
The merged entity, with a revenue scale of ~Rs 80 billion as on FY25E and expected Ebitda margins of 18.5%, is currently trading at a significant discount of ~30% versus pre-Covid at enterprise value/Ebitda and price/earnings valuation of 12 times/27.6 times on FY25E basis.
We expect business momentum to remain intact in Q3 FY24 on the back of a healthy release pipeline. We value PVR-Inox at 12 times FY25E EV/Ebitda to arrive at a target price of Rs 1,700. We reiterate our ‘Neutral’ rating on the stock.
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