1 August 2016
1QFY17 Results Update | Sector: Media
PVR Ltd
Buy
BSE SENSEX
28,003
S&P CNX
8,637
CMP: INR1,123 TP: INR1,330 (+18%)
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Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
Free float (%)
PVRL IN
46.7
52.5 / 0.8
1176 / 646
7/33/34
135
74.7
Financials & Valuations (INR b)
2016 2017E
Y/E Mar
18.7
22.5
Net Sales
3.3
4.3
EBITDA
1.2
1.5
NP
25.5
33.1
EPS (INR)
664.3
29.7
EPS Gr. (%)
186.2 216.8
BV/Sh. (INR)
18.7
16.4
RoE (%)
14.5
13.1
RoCE (%)
37.8
29.2
Payout (%)
5.2
4.5
Div. Yield
2018E
26.7
5.2
2.1
45.2
36.5
259.1
19.0
15.2
21.4
3.7
Estimate change
TP change
Rating change
Results in line with estimates; Growth guidance intact
Revenue and EBITDA margins in line with estimates:
PVR reported overall
revenues of INR5.7b for 1QFY17 (est. of INR5.4b), marking 17% YoY
growth. PVR added 29 DT Cinemas screens during the quarter, taking the total
count to 551 screens in 1QFY17. It aims to surpass 600 screens by the end of
this year. EBITDA margins declined from 22.8% in 1QFY16 to 20.5% in 1QFY17
(est. of 20.7%), primarily driven by lower LTL growth of 6% as some
blockbusters movies were released during the base quarter. Consequently, adj.
PAT came in at INR444m (est. of INR445m), down from INR458m in 1QFY16.
Advertisement revenue growth to bounce back:
Advertisement revenue
growth slowed to 13% YoY in 1QFY17 (v/s +19% YoY in 4QFY16, and +29% YoY
in 3QFY16). This was mainly on account of an increase in the share of regional
(Sairat) and Hollywood-dubbed (Jungle Book) movies during the quarter. The
share of Bollywood movies was down to 37% v/s 52% in 1QFY16. However, PVR
maintained its guidance of 15-17% growth for the full year, as 2Q and 3Q are
seen as bigger quarters in terms of Bollywood movie releases. With full
integration of DT Cinemas over the next 4-6 months, growth can be as high as
18-20%.
Guidance intact for full year, DT integration to aid margin expansion:
PVR
expects to take total screens beyond 600 (including 32 DT cinemas) in FY17 and
clock revenue CAGR of 20% over the next two years. Being located at premium
locations, DT Cinemas enjoys higher ATP and F&B SPH v/s PVR. Going ahead,
F&B margins can improve significantly with PVR’s scale and expertise coming
into picture.
Valuation and view:
We expect 19% revenue CAGR and 25% EBTDA CAGR over
FY16-18. We expect overall EBITDA margins to improve from 17.7% in FY16 to
19.5% in FY18, mainly driven by synergies from its integration with DT Cinemas,
while GST implementation can expand EBITDA margins by 440bp (assuming
18% GST rate). We continue to maintain our estimates and value PVR at 13x
FY18E EV/EBITDA. Maintain
Buy
with a target price of INR1,330.
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
Niket Shah
(Niket.Shah@MotilalOswal.com); +91 22 6129 1535
Chintan Modi
(Chintan.Modi@MotilalOswal.com); +91 22 6129 1554

PVR Ltd
Results in line
PVR reported overall revenue of INR5.7b (est. of INR5.4b) marking a 17% YoY
growth.
PVR added 29 DT cinema screens during the quarter taking the total count to
551 screens in 1QFY17 and aims to surpass 600 screens during the year.
EBITDA margins declined on yoy basis—from 22.8% in 1QFY16 to 20.5% in
1QFY17 (est. of 20.7%).
The key reason for margin decline was lower LTL growth of 6% as the base
quarter had blockbusters movies.
Consequently, adj. PAT came in at INR444m (est. INR445m) as against INR458m
in 1QFY16.
Exhibit 2: EBITDA trend
YoY growth (%)
EBITDA (INR m)
20
17
4,126
5,702
15
15
831
4
108
1,107 905
23
19
Margin (%)
17
11
853
1,167
465
20
Exhibit 1: Revenue trend
Revenue (INR m)
34
25
8
3,623
9
4,002
4,203
-5
2,996
5,005
4,860 4,746
19
38
19
547
586
Source: MOSL, Company
Source: MOSL, Company
Exhibit 3: Property additions
97
109 114
101 102 102 105 106 107
120
Exhibit 4: Screens additions
Number of screens
421
491
444 454 454 467 474 477
524 551
85
39
26 30 33
351
108 123 142
166
Source: MOSL, Company
Source: MOSL, Company
1 August 2016
2

PVR Ltd
Exhibit 5: Seats additions
Number of seats
Exhibit 6: Quarterly footfall trend
Total patrons during the year (mn)
59.9
54.9
41.3
31.1
25.327.0
22.0
15.7
15.2
20.7
18.8
15.3
12.2
19.0 16.5
16.0
Source: MOSL, Company
Source: MOSL, Company
Advertisement revenue growth to bounce back
Advertisement revenue growth slowed down 13% for 1QFY17 YoY vs previous
quarter growth rate (4QFY16 up 19% YoY, 3QFY16 up 29% YoY).
This was mainly on account of increase in share of regional (Sairat) and
Hollywood dubbed (Jungle Book) movies during the quarter.
The share of Bollywood movies was down to 37% vs 52% YoY. However, PVR
held on its earlier guidance of 15-17% growth for full year as 2Q and 3Q are seen
to be bigger quarters in terms of Bollywood movies.
With full integration of DT cinemas in next 4-6 months, the growth can be as
high as 18-20%.
Exhibit 8: SPH going strong
SPH (INR)
63 63 67 62
54 54 54 56
74 68 74 72 78
Exhibit 7: ATP continues to be robust
ATP (INR)
187 200 182 195
169 169 175 160 176 181 185 168 183
Source: MOSL, Company
Source: MOSL, Company
Exhibit 9: Snapshot of key matrices
Consolidated
Location
Screens
Seats
Footfalls (m)
ATP
SPH
1QFY17
120
551
126,377
20.7
195
78
1QFY16
106
474
111,278
19
183
74
Change %
13.21%
16.24%
13.57%
8.95%
6.56%
5.41%
4QFY16
114
524
119,673
15.3
182
72
Change %
5.26%
5.15%
5.60%
35.29%
7.14%
8.33%
Source: Company, MOSL
1 August 2016
3

PVR Ltd
Exhibit 10: Consolidated revenue break up (INR m)
Particulars
Ticket sales
Sale of Food and beverages
Advertisement and royalty income
1QFY17
1QFY16
Change %
4QFY16
Change %
3,056
1,475
515
2,667
1,298
457
14.60%
13.65%
12.74%
2,144
1,037
455
42.54%
42.25%
13.33%
Source: Company, MOSL
Guidance intact for full year, DT integration to aid margin expansion
PVR expects to take total screens beyond 600 (including 32 DT cinemas) in FY17
and revenue CAGR of 20% over next two years.
DT cinemas being located in premium location enjoys higher ATP and F&B SPH
vs PVR.
Going ahead F&B margins can improve significantly with PVR’s scale and
expertise coming into picture.
Valuations and view – Maintain ‘Buy’
We value PVRL at 13x FY18E EV/EBITDA with a target price of INR1,330 justified by:
Continued leadership in film exhibition business in India.
Significant screen additions in the pipeline.
Strong content outlook going forward.
GST rollout which can result in 400-500bp margin expansion.
We believe the following factors pose risks to our assumptions:
Weaker content which can reduce footfall growth.
Slower than expected roll out of GST which can delay margin expansion.
Escalating rental costs which can put pressure on margins.
Continued price controls by state governments in several states like TN and AP.
Exhibit 11: Target Price Methodology
Valuations
EBITDA- FY18E
Target Multiple
Target Enterprise Value
Net Debt
Target Market cap
No of shares
Value per share
(INR m)
5,178
13.0
67,310
5,179
62,131
46.7
1,330
Source: MOSL
1 August 2016
4

PVR Ltd
Story in charts
Exhibit 12: India has the lowest screen density
Screen / mn population
61
77
125
Exhibit 13: Multiplex penetration still quite low
Single Screen
888
Multiplexes
31
8
38
43
45
46
52
53
960
1104
1400
1700
8700
8600
8100
7700
7700
2010
Source: MOSL, Company
2011
2012
2013
2014
Source: MOSL, Company
Exhibit 14: PVR is India’s largest multiplex chain
421
348
No of screens (FY14 end)
259
84
82
Exhibit 15: PVR – most aggressive screen additions
Number of screens
516
603
658
29
351
166
421
464
FY12
Source: MOSL, Company
FY13
FY14
FY15
FY16
FY17E
FY18E
Source: MOSL, Company
Exhibit 16: RoCE to improve significantly
RoCE (%)
14.5
10.9
8.5
10.7
8.0
11.7
14.8
Exhibit 17: Free cash to improve significantly
Free cash flow (INR m)
2,955
859
680
-153
FY12
FY13
FY14
FY15
FY16E
FY17E
FY18E
FY11
-841
-68
FY12
FY13
FY14
-384
-2,476
FY15
FY16E FY17E FY18E
Source: MOSL, Company
Source: MOSL, Company
1 August 2016
5

PVR Ltd
Exhibit 18: Upcoming Content
Source: MOSL, Company
Exhibit 19: Upcoming Content
Source: MOSL, Company
Exhibit 20: Upcoming Content
Source: MOSL, Company
1 August 2016
6

PVR Ltd
Exhibit 21: Upcoming Content
Source: MOSL, Company
Exhibit 22: Upcoming Content
Source: MOSL, Company
Exhibit 23: Upcoming Content
Source: MOSL, Company
1 August 2016
7

PVR Ltd
Financials and Valuations
Y/E Mar
Operating
Net Sales
matrices
Change
Location (%)
EBITDA
Screens
EBITDA Margin (%)
Screens additions during the quarter
Depreciation
Seats
EBIT
Footfalls (m)
ATP (INR)
Interest
Other(INR)
SPH Income
Extraordinary items
PBT
Tax
Consolidated revenues (INR mn)
Tax Rate (%)
Ticket sales (INR m)
Min. Int. & Assoc. Share
Sale of Food
Reported PAT
and beverages (INR m)
Income Statement
Key operating metrics
2011
2012
2013
2014
2015
Q3FY15
8,053
Q4FY15
13,475
1QFY16
14,771
2QFY16
4,593
Q2FY15
5,171
107
37.5
102
12.6
102
55.7
105
67.3
106
9.6
886
454
761
454
1,169
467
2,117
474
2,008
477
19.3
13.6
9
14.7
0
14.5
13
15.7
7
3
674
365
560
944
1,168
107,809 107,292 110,524 111,278 112,499
212
396
609
1,173
840
15.7
16.0
12.2
19
19
2016
3QFY16
18,688
109
26.5
3,299
491
17.7
14
1,252
114,634
2,047
17
2017E
4QFY16
22,472
114
20.2
4,270
524
19.0
33
1,600
119,673
2,670
(INR Million)
2018E
1QFY17
26,725
120
18.9
5,217
551
19.5
27
1,906
126,377
3,311
15.3
20.7
162
181
185
185
368
168
107
91
62
63
120
67
0
-22
-12
157
310
320
154
57
-124
Q2FY15
Q3FY15
Q4FY15
97.9
18.5
-38.7
1,579
-79
2,282
-1
2,307
-2
82
908
254
1,006
445
692
Adjusted PAT
and royalty income (INR m)
82
407
272
539
463
381
Advertisement
Change (%)
505.1
116
232.1
124
70.3
83
Other income
3,712
2011
2012
3,975
Y/E Mar
2,735
2013
795
183
113
74
32
523
19
1QFY16
3.7
2,667
-57
1,298
560
530
457
14.5
224
4,645
2014
187
783
89
68
-22
125
8
2QFY16
6.5
2,746
-11
1,196
128
148
461
-72.1
208
4,611
2015
200
839
283
74
-67
1,425
232
3QFY16
16.3
2,512
0
1,136
1,193
1,248
693
744.2
209
4,550
2016
182
805
198
72
0
2,063
516
4QFY16
25.0
2,144
0
1,037
1,547
1,547
455
23.9
234
195
733
238
78
0
2,816
704
1QFY17
25.0
3,056
0
1,475
2,112
2,112
515
36.5
379
Total revenues
Balance Sheet
(INR mn)
Share Capital
Reserves
Revenue mix
Net Worth
Ticket
Debt sales
Deferred Tax and beverages
Sale of Food
Total Capital Employed
Advertisement and royalty income
Gross Fixed Assets
Other income
Less: Acc Depreciation
Total revenues
Net Fixed Assets
Capital WIP
Investments
Current Assets
Key Assumptions
Inventory
Number of Screens
Debtors
Screen additions
Cash & Bank
Number& Adv, Others
Loans of seats
Occupancy
Provns
Curr Liabs &
rate
Curr. Liabilities
Number of shows per day
Provisions
Total footfalls (m)
Net Current Assets
Average ticket price (INR)
Total Assets
ATP growth (YoY)
Spend per head (INR)
SPH growth (YoY)
Ad revenue per screen (NR/m)
3,869
5,425
(INR Million)
2017E
2018E
271
259
396
2,996
2,304
5,658
Q2FY15
Q3FY15
Q4FY15
3,268
2,563
6,054
1,615
61%
2,033
58%
6,566
58%
314
24%
106
25%
-10
25%
5,741
11%
4,842
14%
13,465
14%
5,489
4,271
7,955
3%
3%
3%
1,812
1,569
2,066
100%
2,701
100%
5,888
100%
3,677
430
876
1,541
5
6
380
2,298
2,248
3,597
FY14
53
79
421 107
300
270
425
70
790
216
368
101,095
1,155
1,683
2,696
31%
670
1,017
2,014
614
918
1,888
5.4
56
99
60 126
1,628
1,231
1,583
168
5,740
4,842
13,465
3%
54
15%
3.7
411
415
3,323
3,483
1QFY16
2QFY16
3,734
3,899
60%
6,133
57%
7,470
4
28%
11
26%
10,643
10%
11,762
10%
11,889
13,356
5%
5%
3,723
4,784
100%
8,572
100%
8,166
806
611
235
19
4,035
4,862
FY15
FY16E
106
126
464
524
523
767
43
60
273
267
110,524
119,673
3,134
3,702
30%
35%
2,631
2,333
2,392
2,161
5.0
5.0
239
172
59
64
1,404
2,529
177
188
10,643
11,762
5%
6%
64
19%
3.8
72
13%
4.2
467
467
467
8,228
9,656
11,632
3QFY16
4QFY16
1QFY17
8,695
10,123
12,099
55%
55%
56%
6,623
7,373
5,373
93
93
93
25%
27%
27%
15,812
17,990
17,966
15%
12%
9%
16,639
22,389
24,089
5%
6%
7%
6,036
7,636
9,542
100%
100%
100%
10,603
14,753
14,547
0
449
534
2,446
0
0
6,007
FY17E
6,547
FY18E
7,413
205 611
137 661 161
901
924
1,098
55
50
244
363
518
137,540 5,123 147,790
4,658
5,636
3,296
34%
3,811
35%
4,580
3,051 5.1
3,554
5.2 4,269
245 76
257
87 311
2,711
2,736
2,833
197
207
15,812
17,990
17,967
5%
5%
82
14%
4.4
94
14%
4.7
1 August 2016
8

PVR Ltd
Financials and Valuations
Ratios
Y/E Mar
Basic (INR)
EPS
Cash EPS
Book Value
DPS
Payout (incl. Div. Tax.)
Valuation(x)
P/E
Price / Book Value
EV/Sales
EV/EBITDA
Dividend Yield (%)
Profitability Ratios (%)
RoE
RoCE
RoIC
Turnover Ratios (%)
Asset Turnover (x)
Debtors (No. of Days)
Inventory (No. of Days)
Creditors (No. of Days)
Leverage Ratios (%)
Net Debt/Equity (x)
2011
5.9
27.8
125.7
1.1
40.7
2012
9.9
24.6
109.3
6.0
70.7
2013
11.3
25.8
162.2
1.5
10.4
2014
15.0
35.8
97.1
4.0
21.5
2015
3.3
31.7
98.5
1.6
39.5
289.0
9.8
3.5
26.0
0.2
4.9
0.1
0.1
0.8
22
4
49
0.2
2011
886
82
-254
-9
-54
653
-806
-153
1,195
59
448
26
-227
-179
-138
-518
582
208
790
8.2
8.5
7.4
1.0
19
6
65
0.6
2012
761
73
-152
-108
-82
491
-560
-68
-502
31
-1,031
-66
427
-207
-188
-34
-574
790
216
9.7
10.9
10.8
0.6
19
5
86
0.9
2013
1,169
37
556
-233
1
1,530
-2,372
-841
-5,712
11
-8,073
3,820
3,278
-425
22
6,695
151
216
368
11.8
10.7
10.7
1.2
14
3
65
1.4
2014
2,117
93
91
-154
-15
2,132
-1,273
859
193
14
-1,065
121
-434
-812
-37
-1,162
-95
368
272
3.4
8.0
7.6
1.2
19
3
53
1.8
2015
2,008
67
-863
-69
163
1,307
-1,691
-384
-131
14
-1,808
100
1,337
-827
-114
496
-6
272
267
2016
25.5
53.6
186.2
3.1
7.7
37.8
5.2
2.8
15.6
0.3
18.7
14.5
14.2
1.2
18
4
60
0.5
2016
3,299
216
-12
-232
81
3,353
-2,672
680
-2,427
0
-5,099
3,502
-847
-839
-92
1,724
-23
267
243
2017E
33.1
67.4
216.8
4.0
7.7
29.2
4.5
2.3
12.2
0.4
16.4
13.1
13.2
1.2
13
2
58
0.7
2017E
4,270
198
95
-516
0
4,047
-6,199
-2,153
2,446
0
-3,753
0
750
-805
-119
-174
119
243
363
2018E
45.2
86.0
259.1
4.5
6.4
21.4
3.7
1.9
9.6
0.5
19.0
15.2
14.6
1.5
13
2
58
0.4
2018E
5,217
238
58
-704
0
4,808
-1,785
3,023
0
0
-1,785
0
-2,000
-733
-135
-2,868
155
363
518
Cash Flow Statement
Y/E Mar
Adjusted EBITDA
Non cash opr. exp (inc)
(Inc)/Dec in Wkg. Cap.
Tax Paid
Other operating activities
CF from Op. Activity
(Inc)/Dec in FA & CWIP
Free cash flows
(Pur)/Sale of Invt
Others
CF from Inv. Activity
Inc/(Dec) in Net Worth
Inc / (Dec) in Debt
Interest Paid
Divd Paid (incl Tax) & Others
CF from Fin. Activity
Inc/(Dec) in Cash
Add: Opening Balance
Closing Balance
(INR Million)
1 August 2016
9

PVR Ltd
Corporate profile
Company description
PVR, a pioneer in multiplex development in India, is
the largest cinema exhibition player in the country
today. Post the acquisition of Cinemax, PVR has
become India’s largest multiplex chain with 102
properties, 454 screens and 108k seats. Being the
only player that is still expanding aggressively, it is
further extending its leadership.
Source: MOSL/Bloomberg
Exhibit 1: Sensex rebased
Exhibit 2: Shareholding pattern (%)
Mar-16
25.7
31.2
28.0
15.1
Promoter
DII
FII
Others
Dec-15
26.0
34.5
24.8
14.7
Mar-15
29.5
7.7
23.5
39.3
Source: Capitaline
Exhibit 3: Top holders
Holder Name
Reliance Capital Trustee Co. Ltd A/C
Relianceequity Opportunities Fund
Baron Emerging Markets Fund
Plenty Private Equity Fii I Limited
Parvest Equity India
Morgan Stanley Asia (Singapore) Pte.
% Holding
5.1
3.2
3.0
2.8
2.8
Source: Capitaline
Note: FII Includes depository receipts
Exhibit 4: Top management
Name
Ajay Bijli
Sanjeev Kumar
N C Gutpa
Designation
Chairman & Managing Director
Joint Managing Director
Company Secretary
Exhibit 5: Directors
Name
Amit Burman
Sanjai Vohra
Vicha Poolvaraluk
Sanjay Kapoor
Name
Renuka Ramnath
Sanjay Khanna
Vikram Bakshi
Source: Capitaline
*Independent
Exhibit 6: Auditors
Name
KPMG
S R Batliboi & Co LLP
Internal
Statutory
Type
Exhibit 7: MOSL forecast v/s consensus
EPS
(INR)
FY17
FY18
MOSL
forecast
33.1
45.2
Consensus
forecast
28.3
36.9
Variation (%)
17.2
22.6
Source: Bloomberg
Source: Capitaline
1 August 2016
10

PVR Ltd
NOTES
1 August 2016
11

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12