th PVR LTD ISIN… · PVR Ltd. is the largest and the most premium film exhibition company in...

Document code: FOTL 250120194_3 Copyright © 2016 Firstobject Technologies Ltd. All rights reserved

PVR LTDResult Update (CONSOLIDATED BASIS): Q3 FY19

CMP: 1603.75 JAN 25th, 2019

Overweight ISIN:INE191H01014

Index Details SYNOPSIS

PVR Limited (PVR) is the largest cinema chain inIndia which is engaged in the motion pictureexhibition in cinemas.

Revenue for the quarter increased by 51.30% to Rs.8431.10 mn from Rs. 5572.50 mn, when comparedwith the prior year period.

During Q3 FY19, EBIDTA is Rs. 1785.70 mn asagainst Rs. 1035.50 mn in the corresponding periodof the previous year, up by 72.45%.

During Q3 FY19, Profit before tax stood at Rs.892.60 mn from Rs. 449.10 mn in Q3 FY18.

During Q3 FY19, net profit stood at Rs. 517.60 mnas against Rs. 288.70 mn in the correspondingquarter ending of previous year, up by 79.29%.

EPS of the company stood at Rs. 11.07 a shareduring Q3 FY19 as against Rs. 6.18 in thecorresponding previous year same quarter.

Revenue for the 9M FY19 rose by 28.51% at Rs.22479.30 mn as against Rs. 17492.10 mn in 9MFY18.

During 9M FY19, PAT of the company rose by39.02% at Rs. 1369.30 mn as against Rs. 985.00 mnin 9M FY18.

The company acquired SPI Cinemas Private Ltd(SPI) by the way of acquisition of 71.69% equityshared in SPI for cash consideration of Rs. 6356.00mn and for the balance 28.31% stake, through issueof equity shares.

Net Sales and PAT of the company are expected togrow at a CAGR of 17% and 21% over 2017 to2020E, respectively.

Stock DataSector Specialty RetailBSE Code 532689Face Value 10.0052wk. High / Low (Rs.) 1665.70/1064.55Volume (2wk. Avg.) 50000Market Cap (Rs. in mn.) 74959.28

Annual Estimated Results(A*: Actual / E*: Estimated)Years(Rs in mn) FY18A FY19E FY20ENet Sales 23341.10 30404.53 34965.21EBITDA 4331.70 6108.68 6975.25Net Profit 1247.00 1779.75 2038.82EPS 26.68 38.08 43.62P/E 60.11 42.12 36.77

Shareholding Pattern (%)

As on Dec 2018 As on Sep 2018

Promoter 20.25 20.25

Public 79.75 79.75

Others -- --

1 Year Comparative Graph

PVR LTD S&P BSE SENSEX

PEER GROUPS CMP MARKET CAP EPS(TTM) P/E (X)(TTM) P/BV(X) DIVIDENDCompany Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%)PVR Ltd 1603.75 74959.28 34.90 45.95 6.97 20.00Shemaroo Entertainment Ltd 404.70 11000.70 29.07 13.92 2.25 15.50INOX Leisure Ltd 247.05 25411.00 11.65 21.21 3.58 0.00Cineline India Ltd 45.30 1268.40 7.65 5.92 0.79 10.00


QUARTERLY HIGHLIGHTS (CONSOLIDATED BASIS)

Results updates- Q3 FY19,

(Rs in mn) Dec-18 Dec-17 % Change

Revenue 8431.10 5572.50 51.30%

Net Profit 517.60 288.70 79.29%

EPS 11.07 6.18 79.29%

EBIDTA 1785.70 1035.50 72.45%

The company’s revenue stood at Rs. 8431.10 million as against Rs. 5572.50 million in the corresponding quarter ending

of previous year, increase by 51.30%. Net profit for the quarter jumped by 79.29% and stood at Rs. 517.60 million as

against Rs. 288.70 million in the corresponding quarter ending of previous year. Reported earnings per share of the

company stood at Rs. 11.07 a share during Q3 FY19 as against Rs. 6.18 in the corresponding previous year quarter. Profit

before interest, depreciation and tax is Rs. 1785.70 million as against Rs. 1035.50 million in the corresponding period of

the previous year.

Break up of Expenditure

Break up of

Expenditure

Value in Rs. Million

Q3FY19

Q3FY18

%Change

Movie Exhibition Cost 1850.40 1322.80 40%

Cost of Food &Beverages 657.60 379.00 74%

Employees BenefitsExpense 957.10 621.70 54%

Depreciation &Amortisation Expense 514.40 386.40 33%

Others 3322.90 2233.90 49%


Segment Revenue

Latest Updates:

The company acquired SPI Cinemas Private Ltd (SPI) by the way of acquisition of 71.69% equity shared in SPI for

cash consideration of Rs. 6356.00 mn and for the balance 28.31% stake, through issue of equity shares.

COMPANY PROFILE

PVR Ltd. is the largest and the most premium film exhibition company in India. Since its inception in 1997, the brand has

redefined the cinema industry and the way people watch movies in the country. The company acquired Cinemax in 2012

and had taken over DT Cinemas in the year 2016 serving 76 million patrons annually. Currently PVR operates a cinema

circuit of 748 Screens 161 Properties 64 Cities (21 states and 1 Union Territory).


FINANCIAL HIGHLIGHT (CONSOLIDATED BASIS) (A*- Actual, E* -Estimations & Rs. In Millions)

Balance Sheet as of March 31, 2017 -2020E

FY17A FY18A FY19E FY20EASSETS1) Non-Current Assets

a) Property, plant and equipment 10447.30 11269.50 11945.67 12781.87b) Capital Work in Progress 1055.70 1016.90 986.39 946.94c) Goodwill 4266.00 4266.00 4479.30 4748.06d) Goodwill on Consolidation 70.50 78.70 86.57 93.50e) Other Intangible Assets 303.00 284.30 272.93 264.74f) Equity Accounted Investees 0.00 22.70 23.84 24.79g) Financial Assets

i) Investments 10.10 176.10 225.41 281.76ii) Other Financial Assets 1783.80 2144.30 2465.95 2761.86

h) Deferred Tax Assets (incl. MAT credit entitlement) 1084.00 156.00 112.32 92.10i) Other non -current assets 432.60 1096.40 1403.39 1754.24Sub Total - Non- Current Assets 19453.00 20510.90 22001.76 23749.85

2) Current Assetsa) Inventories 190.40 198.00 207.90 216.22b) Financial Assets

i) Investments 9.60 10.60 11.45 12.25ii) Loans 52.50 10.30 7.73 6.33iii) Trade receivables 1020.80 1556.10 1991.81 2509.68iv) Cash and Cash equivalents 247.50 277.60 305.36 329.79v) Other Bank Balances 51.50 50.30 52.82 54.93vi) Other Financial Assets 370.40 328.10 308.41 296.08

c) Other current assets 861.20 546.50 437.20 371.62Sub Total - Current Assets 2803.90 2977.50 3322.67 3796.89

Total Assets (1+2) 22256.90 23488.40 25324.43 27546.74EQUITY AND LIABILITIES1) EQUITY

a) Equity Share Capital 467.40 467.40 467.40 467.40b) Other Equity 9182.70 10286.20 12065.95 14104.77c) Non-Controlling Interest 405.00 8.10 5.83 4.37

Total Equity 10055.10 10761.70 12539.18 14576.542) Non Current Liabilities

a) Financial Liabilitiesi) Borrowings 6050.40 5615.60 5334.82 5121.43

b) Provisions 71.00 100.10 128.13 160.16c) Deferred Tax Liabilities (net) 9.10 5.90 4.43 3.63Sub Total - Non Current Liabilities 6130.50 5721.60 5467.37 5285.22

3) Current Liabilitiesa) Financial Liabilities

i) Borrowings 1250.80 998.30 878.50 808.22ii) Trade Payables 1976.20 2511.10 2248.77 2068.87iii) Other Payables 2007.70 2416.30 2851.23 3233.54

b) Provisions 32.50 26.70 23.50 21.62c) Other Current Liabilities 804.10 1052.70 1315.88 1552.73Sub Total - Current Liabilities 6071.30 7005.10 7317.88 7684.98

Total Equity and Liabilities (1+2+3) 22256.90 23488.40 25324.43 27546.74


Annual Profit & Loss Statement for the period of 2017 to 2020E

Value(Rs.in.mn) FY17A FY18A FY19E FY20EDescription 12m 12m 12m 12mNet Sales 21194.30 23341.10 30404.53 34965.21Other Income 622.50 313.40 410.19 471.72Total Income 21816.80 23654.50 30814.72 35436.93Expenditure -18058.10 -19322.80 -24706.05 -28461.68Operating Profit 3758.70 4331.70 6108.68 6975.25Interest -805.80 -837.10 -1252.34 -1477.76Gross profit 2952.90 3494.60 4856.34 5497.49Depreciation -1383.80 -1536.90 -1903.62 -2189.16Exceptional Items -40.70 -5.90 0.00 0.00Profit Before Tax 1528.40 1951.80 2952.72 3308.33Tax -570.00 -704.40 -1091.03 -1208.20Profit after Tax 958.40 1247.40 1861.68 2100.12Minority Interest -0.50 6.80 -75.86 -54.62Share of Profit/Loss Assoc. 0.00 -7.20 -6.08 -6.68Net Profit 957.90 1247.00 1779.75 2038.82Equity capital 467.40 467.40 467.40 467.40Reserves 9182.70 10286.20 12065.95 14104.77Face value 10.00 10.00 10.00 10.00EPS 20.49 26.68 38.08 43.62

Quarterly Profit & Loss Statement for the period of 30th June, 2018 to 31st Mar, 2019E

Value(Rs.in.mn) 30-June-18 30-Sep-18 31-Dec-18 31-Mar-19EDescription 3m 3m 3m 3mNet sales 6962.70 7085.50 8431.10 7925.23Other income 42.60 61.00 142.60 163.99Total Income 7005.30 7146.50 8573.70 8089.22Expenditure -5590.60 -5845.40 -6788.00 -6482.05Operating profit 1414.70 1301.10 1785.70 1607.18Interest -208.10 -298.20 -378.70 -367.34Gross profit 1206.60 1002.90 1407.00 1239.84Depreciation -401.30 -447.80 -514.40 -540.12Profit Before Tax 805.30 555.10 892.60 699.72Tax -283.10 -211.60 -337.30 -259.03Profit after tax 522.20 343.50 555.30 440.68Minority Interest 1.10 -11.80 -36.20 -28.96Share of Profit/Loss Assoc. -1.80 -1.50 -1.50 -1.28Net Profit 521.50 330.20 517.60 410.45Equity capital 467.40 467.40 467.40 467.40Face value 10.00 10.00 10.00 10.00EPS 11.16 7.06 11.07 8.78


Ratio Analysis

Particulars FY17A FY18A FY19E FY20E

EPS (Rs.) 20.49 26.68 38.08 43.62EBITDA Margin (%) 17.73% 18.56% 20.09% 19.95%PBT Margin (%) 7.21% 8.36% 9.71% 9.46%PAT Margin (%) 4.52% 5.34% 6.12% 6.01%P/E Ratio (x) 78.25 60.11 42.12 36.77ROE (%) 9.93% 11.60% 14.85% 14.41%ROCE (%) 14.01% 16.09% 22.43% 23.34%Debt Equity Ratio 0.76 0.62 0.50 0.41EV/EBITDA (x) 85.55 65.14 45.40 39.48Book Value (Rs.) 206.46 230.07 268.15 311.77P/BV 7.77 6.97 5.98 5.14

Charts


OUTLOOK AND CONCLUSION

At the current market price of Rs. 1603.75, the stock P/E ratio is at 42.12 x FY19E and 36.77 x FY20E respectively.

Earning per share (EPS) of the company for the earnings for FY19E and FY20E is seen at Rs. 38.08 and Rs. 43.62

respectively.

Net Sales and PAT of the company are expected to grow at a CAGR of 17% and 21% over 2017 to 2020E,

respectively.

On the basis of EV/EBITDA, the stock trades at 45.40 x for FY19E and 39.48 x for FY20E.

Price to Book Value of the stock is expected to be 5.98 x and 5.14 x for FY19E and FY20E respectively.

Hence, we say that, we are Overweight in this particular scrip for Medium to Long term investment.

INDUSTRY OVERVIEW

The Indian Entertainment Industry is growing rapidly:

Indian media and entertainment (M&E) industry grew at a CAGR of 11.61 per cent from 2011-2016; and is expected to

grow at a CAGR of 13.9 per cent to touch US$ 37.55 billion by 2021 from US$ 19.59 billion in 2016.The next 5 years

will see digital technologies increase their influence across the industry leading to a sea change in consumer behaviour

across all segments. The entertainment industry is projected to be more than US$ 62.2 billion by FY25. With intent of

ushering in an era of conversational computing, Microsoft has released an artificial intelligence chat bot known as Ruuh

for Face book Messenger. The English speaking chat bot is only available to users in India and is to be used for

entertainment purposes. The industry provides employment to 3.5-4 million people, including both direct and indirect

employment as of 2017.


Segments of Indian Entertainment Industry:

The entertainment industry continues to be dominated by the television segment, with the segment accounting for

44.24 per cent of revenue share in 2016, which is expected to grow further to 48.18 per cent by 2021

Television, print and films together accounted for 79.54 per cent of market share in 2016, in value terms

Print media would be the second largest sector in the overall entertainment industry in India, following which sectors

of Out of Home (OOH) and Radio are expected to contribute almost 2 per cent each to the entire industry by 2021

India prints media industry generated revenues worth US$ 4.51 billion in FY2017 (till December 2016).

PVR Cinemas plans to add around 75 screens across India during FY 2017-18, thereby raising its capacity to 650

screens and has a target to achieve 1,000 screens in India by 2020.

Google's video platform, YouTube, plans to increase its user base in India to 400 million, as rising internet penetration

in the rural areas will enable the consumers to access videos on their smart phones.

The Indian digital advertising industry is expected to grow at a Compound Annual Growth Rate (CAGR) of 32 per

cent to reach Rs 18,986 crore (US$ 2.93 billion) by 2020, backed by affordable data and rising smart phone

penetration.

Radio, Animation and Vfx, Gaming and Digital Advertising on High Growth Phase:

Radio, animation and VFX, gaming and digital advertising are also emerging as fast growing segments.

During 2008-21, these segments are expected to increase at CAGRs of:

Digital advertising (32 per cent)

Gaming (15.97 per cent)

Radio (10.93 per cent)

Animation (13.34 per cent)

With increasing use of internet and other digital resources, Digital Advertising is expected to grow at the fastest rate

among peers like print media, radio and outdoor advertising.

India digital advertising market has reached US$ 1 billion in FY 2016-17.

Advertising expenditure in India is expected to grow 13 per cent year-on-year to Rs 69,346 crore (US$ 10.71 billion) in

2018.

Expenditure on digital advertisements in India is expected to increase at CAGR of 30.8 per cent between 2016-21, as

internet penetration and data consumption increases in the country.

Regional Entertainment:

Regional Entertainment channels comprising mostly of regional GECs (General Entertainment Channels), regional

movies and regional music.


In print media, the rise in literacy rates, significant population growth, the rise in incomes in smaller towns and the entry

of big players in regional markets is likely to drive future expansion of circulation and readership across India.

Viewership in South India is dominant for regional entertainment as Tamil and Telugu channels together account for more

than half of the total viewership. It is comparatively less for Oriya and Bhojpuri, which is equivalent to only 2 per cent

each.

Between 2015-2017, YouTube’s regional viewership in India has tripled, with the top 10 regional YouTube channels

having subscriber bases ranging between 300,000-800,000.

Growth Opportunities in the Media and Entertainment Segments:

Animation and VFX:

The Indian animation industry was worth US$ 928.16 billion in 2016 and is expected to expand at a CAGR of 17.2 per

cent to US$ 2.05 billion by 2021.

Growth in international animation films, especially 3D productions and the subsequent work for Indian production houses

will help the growth in this segment.

Animation, Gaming and VFX industry is expected to reach US$ 1.66 billion in 2017.

Television:

Television industry is expected to grow at CAGR of 14.7 per cent during 2016-2021, increasing from US$ 9.17 billion in

2016 and reaching US$ 18.18 billion by 2021.

Television is projected to garner over 46 per cent of media and entertainment by the end of 2017.

Print:

The print industry was worth US$ 4.73 billion in 2016 and with a CAGR of 7.3 per cent for 2016-2021, it is expected to

reach US$ 6.72 billion by 2021.

Accelerated growth is forecasted in regional print and local news segments.

Print industry will reach US$ 5.06 billion in 2017

Film:

Size of the Indian film industry is expected to touch US$ 3.22 billion by 2021, up from US$ 2.21 billion in 2016 at a

CAGR of 7.7 per cent

Increasing digital screens and 3D films are expected to help industry growth

In order to promote India as a location destination for foreign production houses, the government is setting up a single

window clearance system for shooting permissions


To promote joint productions, co-production agreements have been signed with Italy, Germany, Brazil, UK, France, New

Zealand, Poland, Spain and Canada

Radio:

Size of the Indian radio industry is expected to reach US$ 745.65 million by 2021, up from US$ 354.10 million in 2016

Phase III of e-auctions for FM radio licenses will provide an impetus to the segment

Radio advertising is another area likely to experience accelerated growth

Music:

Size of the music industry is expected to grow to US$ 396.22 million by 2021, up from US$ 190.31 million in 2016

Mobile VAS and arrival of 3G are likely to lead to a surge in paid digital downloads

Phase III radio licensing will also help in increasing music revenues from radio

Online Streaming Services:

Recent investment of US$ 3 billion was made by Amazon.com Inc., focusing primarily on the establishment of their

online streaming service, Amazon Prime, in the country.

The niche segment for Netflix in India is much bigger than the whole markets in most countries and the company has

commissioned the highest number of shows in India after US, UK and Japan.


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The information and opinions in Firstcall Research was prepared by our analysts and it does not constitute an offer orsolicitation for the purchase or sale of any financial instrument including any companies scrips or this is not an officialconfirmation of any transaction. The information contained herein is from publicly available secondary sources and dataor other secondary sources believed to be reliable but we do not represent that it is accurate or complete and it should notbe relied on as such. Firstcall Research or any of its affiliates shall not be in any way responsible for any loss or damagethat may arise to any person from any inadvertent error in the information contained in this report. Firstcall Research and/or its affiliates and/or employees will not be liable for the recipients’ investment decision based on this document.

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Exposure/Interest tocompany/sector UnderCoverage in the CurrentReport

Dr.C.V.S.L. Kameswari M.Sc, PGDCA,M.B.A,Ph.D (Finance)

Pharma &Diversified

No Interest/ Exposure

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B. Anil Kumar M.B.A Auto, IT &FMCG


V. Harini Priya M.B.A Diversified No Interest/ Exposure

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th PVR LTD ISIN… · PVR Ltd. is the largest and the most premium film exhibition company in...

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