Buy PVR Cinemas for a target price of Rs 192 says Angel Securities
June 3, 2010 by admin
Filed under Brokerage Recommendations, General
BUY PVR CINEMAS FOR TARGET OF RS 192 -ANGEL SECURITIES
Angel Securities in its Research report dated June 1st, 2010 is bullish on the stock PVR Cinemas and has recommended a buy rating on the stock with a target price of Rs 192.
Angel Securities further said about PVR Cinemas “We highlight that PVR allotted 0.26 cr shares at a premium of Rs 155 per share to Major Cineplex Group on a preferential basis in 4QFY2010, which led to equity dilution of ~11% for PVR and a cash infusion of Rs 40 crore.
For the quarter, PVR reported Top-line growth of 16.9% yoy, aided by a substantial increase of Rs 23 in ATP to Rs 163, a 40bp yoy increase in occupancy and a 10.2% yoy increase in average F&B realisation. The company registered profit of Rs 0.3 crore, aided by reduced Depreciation charges, despite Margin contraction.”
It Further said “After 4QFY2010 results, we have revised our estimates upwards to factor in
1) addition of 28 screens from February till April 2010,
2) visibility in the production pipeline for PVR Pictures,
3) promising movie pipeline for 1HFY2011,
4) continued focus on cost curtailment and
5) higher Depreciation cost on account of increased capex and higher contribution from the movie division. During FY2010-12E, we expect PVR to register a 34% CAGR in Top-line, primarily aided by seat additions (as we factor in only 3% improvements in ATP and F&B spends), 56% CAGR in revenue from film distribution and 42% CAGR in revenue from Blu-O’Ray. Earnings are expected to register a 394% CAGR over the same period. High Earnings growth is on account of low base (FY2010 earnings were affected due to a weak movie pipeline and 1QFY2010 washout on account of the strike) and Margin expansion (on low base, we expect operating margins of 16-17% in FY2011-12E).
At CMP of Rs 146, the stock is trading at attractive valuations of 11.4x FY2012E EPS. We maintain our Buy recommendation with a revised target price of Rs 192 (Rs 211) based on 15x FY2012E EPS of Rs 12.8.”
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