PVR Ltd, engaged in the business of movie exhibition, distribution and production, has delivered strong returns to investors during the last ten years. PVR Ltd share price has zoomed from Rs 119.55 on August 26, 2009 to Rs 1,562 on the BSE. An investment of Rs 1 lakh in PVR Ltd stock on August 26, 2009 would have grown to Rs 13.06 lakh today. PVR Ltd share price gained 17.87% in the last one year. However, the share has seen some weakness in 2019 logging a fall of 2.74% during the period.
PVR share price has outperformed its closest competitor Inox Leisure by a huge margin in last 10 years. While PVR logged gain of 1,214% in last 10 years, Inox Leisure share price could manage a rise of 383.44% during the same period. Mumbai-based Inox Leisure is among the country's largest multiplex chain.
PVR Ltd's strong earnings performance has helped the stock rise during the period. PVR Ltd logged Rs 190.52-crore net profit in last fiscal compared to a loss of Rs 9 lakh for the fiscal ended March 2010.
Total revenue rose to Rs 3,118.70 crore for fiscal ended March 2019 compared to Rs 341.33 crore for the fiscal ended March 2010.
Earnings per share rose to Rs 39 for fiscal ended March 2019 compared to Rs 1 for the fiscal ended March 2010. Return on capital employed ratio rose to 14.99% for fiscal ended March 2019 compared to 0.28% for the fiscal ended March 2010. Return on equity ratio also rose to 14.78% for fiscal ended March 2019 compared to 0.53% for the fiscal ended March 2010. Return on assets stood at 4.68% for fiscal ended March 2019 compared to 0.25% for the fiscal ended March 2010.
However, the firm's Q1 earnings in this fiscal did not meet street expectations due to rising costs. PVR reported a 69 per cent year-on-year decline in its consolidated net profit at Rs 16.18 crore for the first quarter ended June 30, 2019, due to sharp rise in financial cost.
The company had posted consolidated net profit of Rs 52.15 crore in June quarter of 2018 and Rs 46.70 crore in March quarter 2019. Consolidated total income rose 27 per cent to Rs 887.16 crore as compared to Rs 700.53 crore in the year-ago period. Adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) zoomed 102 per cent to Rs 285.35 crore compared with Rs 141.47 crore in the same quarter last fiscal. Adjusted EBITDA margin increased by 1,200 basis points (bps) year-on-year to 32.2 per cent.
The financial cost of the company jumped 99 per cent year-on-year to Rs 131.43 crore in June quarter.
"This includes an amount of Rs 9.71 crore due to accounting adjustment made pursuant to IndAS-115 for income received in advance with respect to long-term agreement signed by the PVR and SPI Cinemas with online ticketing aggregators," PVR said. In August 2018, PVR had announced to acquire 71.69 per cent stake in SPI Cinemas for about Rs 633 crore, in an all-cash deal.
Apart from the past financial performance, the outlook for multiplexes (particularly PVR) remains bright.
According to a report by Nirmal Bang, the movie exhibition business has two large players: PVR Ltd and Inox Leisure which can deliver at least 5%-10% annual volume growth in the next 10 years.
This would result in compounded annual growth rate (CAGR) of 10%-15% with profit after tax growing a tad faster.
Geojit in a report post Q1 earnings reduced rating for the stock and said, "Considering the aggressive growth of the company, synergy from SPI acquisition and margin expansion on GST cut, we are positive on the long-term prospects of the company. However, given the weak quarter, we reduce the rating to accumulate from buy with a revised target price of Rs 1,604 at 33 times FY21 expected price to earnings."
PVR owns and operates multiplexes across 19 states and union territories with a total of 794 screens. Major income segments for the firm are box office (ticket revenue), food and beverage and advertisement.
Edited by Aseem Thapliyal