PVR Ltd, a chain of multiplexes, announced a strong performance in the June quarter (Q1FY23), with both its Ebitda and profit after tax (PAT) turning positive. Earnings before interest, taxes, depreciation and amortization are known as Ebitda.
After adjusting for the impact of the new accounting method IND-AS 116 -Leases, consolidated Ebitda and PAT were 208 crores and 68 crores in Q1FY23, respectively, compared to a loss of 110 crores and 142 crores in Q1FY22.
Footfall revival and a healthy movie pipeline lifted the company’s average ticket price of $250 and spending per head on food and beverages to a new high in Q1FY23. The company’s management anticipates it would take another six months for foot traffic to fully recover.
Movies like KGF 2 and RRR, among others, had spillover advantages that contributed to their outstanding financial performance. The company installed 14 new screens in the June quarter, and by the end of FY23, it hopes to have added 125. The management stated that internal resources would be used to fund this capital investment.
On the National Stock Exchange, shares of the company increased 2.5 percent in early trading on Friday.
Conversely, its high-margin advertising revenues remained modest at 68% of pre-covid levels. According to management, significant advertisers in industries such as FMCG and other MNCs have yet to increase their ad spending, thus ad revenues are expected to fully recover by Q4FY23.
Analysts at Motilal Oswal Financial Services Ltd predict that the company’s business would be back to normal by FY23, with Ebitda increasing by 14% over FY20 levels. “The rich valuation it commanded historically may fall, given the slower-than-expected growth and danger posed by OTT companies,” the local brokerage company added.
The poor performance of Bollywood films is also considered a possible drag on the company’s revenue trajectory. “Regional and Hollywood films assisted the industry in generating record box office receipts while Bollywood continues to fall short of its former splendor. However, given that the performance of regional films has been patchy, we think that Bollywood content success is required to maintain and outperform current receipts “said analysts at Emkay Global Financial Services Ltd.
Aside from profits, another significant item that investors are keeping an eye on is its merger with Inox Leisure Ltd. The merger is on track and has gained permission from the stock exchanges and market regulator, the company’s management informed analysts. Additionally, it would apply to the National Company Law Tribunal in two to three weeks, and that application should be processed by 4QFY23.
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