PVR: 9M: PUSHPA GIVES A GOOD JUMP IN FOOTFALLS & PVR DELIVERS THE SAME DIALOGUE: MAIN JHUKEGA NAHI!
One of the largest players in the specialty retail industry. PVR is a Film entertainment company in India. PVR Ltd was incorporated IN 1995, as Priya Village Roadshow Ltd pursuant to a joint venture agreement between Priya Exhibitors Pvt Ltd and Village Roadshow Ltd. Later ICICI Venture invested around 40 Cr in 2003.
Very high growth has been seen during the last decade as the revenue has risen from 50 Cr during the year 2003 to 3400 Cr Pre-Covid shows the CAGR growth of 28%. Located at around 179 locations, 73 Cities have 860 Screens with a 1.82 Lakh Seating Capacity. Yes, there was some debt along with high lease cost, hence have small historical margins of around 4-5%. But they are the leaders and with better margins then other peers. Sales growth of 28%, while due to low margins Profits have grown by 12% & price has appreciated by 15% CAGR along with Consistent Dividends. High growth has given good profit to investors as an investment is 6X in the last 13 years of IPO. So yes considering a company from the emerging industry of India but with debt & large rental lease liability as -ve point 1% investment of the portfolio has been recommended for a long time by us. Many people have already held since 6 years back around 300 and are still holding even during this challenging time...why?
Specialty retail and majorly touch intensive industry like multiplex was the most affected industry during Covid. The history of continuous growth was broken during covid as this 2021 was the 1st year in their history since IPO where we saw the sales in de-growth, this is the effect of the pandemic. The effect was not short-lived but it hurt the footfalls and the sales were damaged by 92% last year. 90% of the industries were able to recover but this industry was highly touched intensive and hence the damage was not recovered. Single year loss last year of 750 Cr was equal to full compounded 17 years profit of 750 cr. A huge problem we saw here. Management were able to infuse more capital and even the landowner helped them with rentals refund which helped the company during covid.
The entire circuit had become operational in Q3 this year with Maharashtra allowing cinemas to commence operations from October onwards. Content flow from the Bollywood film industry commenced post-Maharashtra re-opening, resulting in business witnessing robust demand in the months of November and December this year. The Q3 was marked with strong performances from movies such as Sooryavanshi, Annaatthe, Eternals (during November’21), Spiderman, 83, & best of all Pushpa delivering excellent box office collections. The business at least stopped burning cash after
the long 6 quarters. Telangana, AP and MP are running at 100% capacity, while Maharashtra, Karnataka, UP, TN, Gujarat & Punjab running at 50% capacity. We saw the net sales growth of 702% this 9M due to low base and highly affected last year. Even waiver from landlord this 9M of 284 Cr also helped in other income. BROADBASED DEMAND RECOVERY ON THE BACK OF NEW CONTENT was seen. During Oct we saw 39% footfalls, Novemeber was with 58% recovery in footfalls while December was with 77% recovery as during this time Pushpa and Spiderman gave huge spike of 112% recovery in footfalls even if we consider pre-covid era. That shows the huge recovery and even it shows a bright future ahead. East and South are already showing more than 100% footfalls precovid. Q3 FY 22 was the best quarter in the last 7 quarters with the Bollywood movie release calendar starting in Nov’21. There was an improvement in operating performance driven by strong growth in Admits 191 lakh v/s just 10 lakh last year, Average Ticket Price of 229 v/s 166 last year. It resulted in a much stronger revenue recovery. Sales in movie tickets along with Food & Beverages also helped as it grew from 243 Cr v/s 191 Cr last year. Wave 2 rental negotiations have been concluded for >97% of properties. Achieved rental discount of 57% in 9M FY 22. Fresh discussions are underway for the current ongoing wave of Covid.
Hence pure sales growth of 702% was seen and even expected 500% growth this year which will take PVR towards the sales of 1700 Cr this year which is still lesser than provide the level of 3400 cr. We may see PVR cross pre-covid level next Year. Losses are also improving by improved margins, we saw growth of 17% this 9M. This year we may see PVR with the loss of 500-600 Cr which is still better than last year's 750Cr. Profits should be back in 2023. The debt of 1500 Cr is a high debt v/s total equity of 1800 Cr, but this is a challenging time for the whole industry.
STRONG LINE UP OF MOVIES this year like, GANGUBAI KATHIAWADI, JAYESHBHAI JORDAAR, BACHCHAN PANDEY, DHAAKAD, LAAL SINGH CHADDHA, TIGER 3, MAIDAAN, RAKSHA BANDHAN, THE KASHMIR FILES, PRITHVIRAJ, JHUND and many more.
All those added during these bad times and fall near 1000 should hold it and again new buying can be done during any fall in the whole range of 1350 to 900 and can book some 5%-10% Profits during recovery near 1920 this year. Can expect 15-20% growth in the future and a multi-year rally could be seen with near-term strong challenges due to the increasing debt burden in the Covid era. 1% weightage of Portfolio should be tied up. Good for long term, but 2 Years could be affected till again we see the normalcy.
Just 17% promoter holding while 17% MF companies holding and 43% FII holding. ICICI PRU MF has bought around 13 Lakh shares during the CORONA panic fall near 1300. We saw some exits from big past investors during this year.
