PVR share price turned Rs 1 lakh into Rs 10 lakh in 10 years, did you miss the rally?

PVR Ltd, engaged in the business of movie exhibition, distribution and production, has delivered strong returns to investors during the last ten years. PVR share price has zoomed from Rs 183.75 on January 7, 2010 to Rs 1,866 on January 7, 2020 on BSE. An investment of Rs 1 lakh in PVR Ltd stock ten years ago would have grown to Rs 10.15 lakh today. PVR Ltd share price gained 15.38% in the last one year. However, the share has seen some weakness in 2020 logging a fall of 2.49% during the period.

The stock hit its all-time high of Rs 1,928.70 on January 1, 2020. It touched 52-week low of Rs 1345.80 on August 13, 2019.

PVR share price has outperformed its closest competitor Inox Leisure by a huge margin in last 10 years. While PVR stock logged a gain of 925% in last 10 years, Inox Leisure share price could manage a rise of 424% during the same period. Mumbai-based Inox Leisure is among the country's largest multiplex chain.

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PVR Ltd's strong earnings performance has helped the stock rise during the period. PVR logged Rs 190.52-crore net profit in last fiscal compared to a loss of Rs 9 lakh for the fiscal ended March 2010. Total revenue rose to Rs 3,118.70 crore for fiscal ended March 2019 compared to Rs 341.33 crore for the fiscal ended March 2010.

Earnings per share rose to Rs 39 for fiscal ended March 2019 compared to Rs 1 for the fiscal ended March 2010. Return on capital employed ratio rose to 14.99% for fiscal ended March 2019 compared to 0.28% for the fiscal ended March 2010. Return on equity ratio also rose to 14.78% for fiscal ended March 2019 compared to 0.53% for the fiscal ended March 2010. Return on assets stood at 4.68% for fiscal ended March 2019 compared to 0.25% for the fiscal ended March 2010.

The movieplex  operator reported a 34.98 per cent jump in consolidated net profit at Rs 47.88 crore for the quarter ended September 30, 2019 compared to net profit of Rs 35.47 crore during the same period of the previous fiscal. Total income of the firm for the quarter ended September went up by 37.04 per cent to Rs 979.4 crore as against Rs 714.65 crore in the July-September quarter last fiscal. Apart from the financial performance, the outlook for multiplexes (particularly PVR) remains bright.

According to a report by Nirmal Bang, the movie exhibition business has two large players: PVR Ltd and Inox Leisure who can deliver at least  5%-10%  annual volume growth in the next 10 years. This would result in compounded annual growth rate (CAGR) of 10%-15% with profit after tax growing a tad faster.

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Edelweiss Securities in November last year said, "PVR and Inox posted blockbuster performances with strong double-digit revenue and EBITDA growth, and highest advertising revenue growth in our coverage (16 per cent for PVR and 6 per cent for INOX)."

Geojit upgraded rating for the PVR stock after Q2 earnings were announced. The brokerage said, "We revise upward our FY20E & FY21E earnings before interest tax depreciation and amortisation (EBITDA) estimates by 6% & 10% respectively and raise the profit after tax (PAT) estimates by 5% and 12% respectively." The brokerage gave a Buy call for the midcap stock with a revised target price of  Rs 2,115 at 2.8 times FY21 estimated enterprise value-to-sales."

ICICI Securities has a positive stance on multiplex stocks.

"We continue to believe that the multiplex industry is the best placed media segment for growth driven by traction in content performance. Both PVR and Inox remain key beneficiaries of a flourishing multiplex business, which is one of the proxies on rising urban discretionary consumption spends," the brokerage said in a report dated December 30.

Currently, PVR operates 821 screens at 172 properties in 70 cities  across India and Sri Lanka. Major income segments for the firm are box office (ticket revenue), food and beverage and advertisement.

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By Aseem Thapliyal