Thread by @alphaspotcap

PVR Ltd Analysis!🇮🇳

A Detailed Thread🧵👇🏻
#investing #StocksToBuy

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About-

PVR Ltd is the country’s largest & most premium multiplex company, with a diverse portfolio of premium
formats across the length & breadth of the country, under its belt.

Revenue streams - Screening, F&B sales, advertising, convenience fees & movie distribution.

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History:

PVR was est in 1995 as a 60:40 JV between Priya Exhibitors Pvt Ltd & Village Roadshow Ltd. In 1995, PVR took a single-screen cinema hall, Anupam, in Delhi on lease & converted it into a 4-screen multiplex & started operations in 1997 as the first multiplex in 🇮🇳

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Journey So Far:

• 2002 - VRL exited the JV

• 2012 - PVR acquired Cinemax (138 screens) & became the largest multiplex operator in 🇮🇳

• 2016 : PVR acquired DT cinemas

• 2017 : Warburg Pincus acquired 14% stake in PVR

• 2018 : PVR acquired SPI cinemas(76 screens)

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Talk of the Town!

PVR INOX Merger:

The merger will give PVR-Inox mammoth size advantage with total screen network of 1546 screens across 341 properties across 109 cities (as per screen count of PVR & INOX as on March 27, 2022) with a screen market share of ~45-50%

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1. Goal is to add 200 screens every year

2. Merger will take ~9 months to complete

3. INOX shareholders will receive 3 shares in PVR for 10 shares of INOX

4. The promoters of INOX will become co-promoters along with the existing promoters of PVR.

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Key Growth drivers:

1. All India Brand:

PVR had ~871 screens with operations in 181 locations across 73 cities. Acquisition SPI Cinemas in 2018 helped improve the market position in south India as cinema from the region contributes ~35% to the overall box office.

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2. Key operating parameters such as ATP (Average Ticket Price) & Spend per head on f&b stood higher at ₹239 & ₹129 respectively, during the Q3FY22 as compared to ₹204 & ~₹99 respectively, in FY20

However, Q4FY22 nos will have some affect of 3rd Covid wave in January.

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3. Strong box office Performance:

Movies released since last week of February reported strong performance at the box office. Business should continue to boost in the coming quarters, supported by covid unlocking & strong content line up for the next few months.

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Other long term growth drivers:

1. Growing Urbanisation

2. Huge potential in tier 2&3 cities

3. Young Age demography (28.2years median age in India)

4. Demand for Quality content

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What shareholders would like to see!?

1. Significant reduction in debt.
And net debt to EBITDA to sustain below 2x

2. Continuous margin recovery from here on aided by improving operational efficiency

3. Better box office collection from upcoming movies.

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Key Risks:

1. Inheritant risk in the Film exhibition business

2. Fresh covid related restrictions

3. Competition from OTT platforms’ subscription based model

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Revenue Breakup:

1. Sale of Movie Tickets : ~52%

2. F&B Sale : ~28%

3. Advertising Income : ~12%

4. Convenience Fees : ~5%

5. Other : ~3%

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All of PVR Brands:

1. PVR ICON
2. PVR 4DX
3. PVR Superplex
4. PVR Play House
5. LUXE
6. PVR Play House
7. PVR Onyx
8. PVR IMAX
9. PVR P[XL]
10. PVR D-Box
11. PVR Sapphire

It owns 94 Premium screens across which accounts for 11% of the company's screen portfolio.

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Conclusion:

The merger of PVR INOX would help the entity to lead the cinema exhibition industry with a significant market share and higher synergies.

Keeping Covid related restrictions aside, the business is exp to post strong numbers in the coming quarters.

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Do you prefer Multiplex or OTT Platforms?

@caniravkaria @MadhusudanKela @kuttrapali26 @VRtrendfollower @stockifi_Invest