Brokerage firm JM Financial said on Thursday that PVR Inox Ltd’s earnings for the second quarter ended September 2023 have proven that the company is “firmly out of the woods now”. In a post-earnings note dated October 19, JM Financial maintained its ‘buy’ rating on PVR Inox, but raised the target price on the stock to ₹2,340 per share from ₹2,270 earlier.
The revised target price indicates a 34% upside to Thursday’s closing price of ₹1,742.40 per share. On Thursday, PVR Inox said that its profit stood at ₹166 crore in the July to September quarter as against a loss of ₹82 crore in the preceding quarter. Shares of PVR Inox were trading 2.2% lower at ₹1,704.15 apiece on BSE at 11:52 am.
Meanwhile, the company’s revenue for the second quarter of the fiscal year rose more than 53% sequentially to ₹1,999.9 crore. JM Financial said that PVR-Inox had a record second quarter in FY24, with the company posting the highest-ever performance across all key performance indicators.
“Strong content drove footfalls – pushing up admits (64% year-on-year; pro-forma) and occupancy (+11 percentage points),” the brokerage said in its note.
“Box office release calendar is lighter in October and November, owing to cricket world cup. But the December slate is robust. Animal and Dunki in Hindi and Wonka, Aquaman in English are some of the keenly awaited movies scheduled for December release. Management expects Q4 to be strong as well,” the brokerage added.
Also, PVR Inox is on track to open 160 new screens in FY24 (100 net). “Despite these capex commitments, the company expects to turn FCF (free cash flow) positive which should help it pare down debt,” JM Financial said.
Another financial services firm HSBC also turned bullish on PVR Inox after Q2 results. It gave a ‘buy’ call on the stock with a target of ₹2,200 per share, indicating an upside of 26% from Thursday’s closing price.
HSBC said that the September quarter results were ahead of consensus expectations on account of record levels of ATP (average ticket price), SPH (spend per head), and admits driven by blockbuster movies and merger synergies.
It added that the PVR Inox stock offers multi-year growth opportunities at appealing valuations, with pending normalisation in advertising income being a key short-term catalyst.
Interestingly, despite the positive commentary, shares of PVR Inox fell for a second straight session after Q2 earnings announcement. On Friday, the stock dropped as much as 2.6% to hit an intra-day low of ₹1,694 apiece after closing 1.6% lower on Thursday.
On the stock price decline, JM Financial said, “We see apprehension, reflected in muted stock reaction. That should provide a good entry point.”
(Edited by : Akanksha Upadhyay)
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