PVR share price falls 3% post Q1 earnings, here's what brokerages say

Share price of leading multiplex chain operator PVR fell almost 3% in an otherwise positive market after the company reported a loss for the quarter ended June 31.

On Monday, PVR reported a consolidated net loss of Rs 225.73 crore for the June quarter against net profit of Rs 17.53 crore in the April-June quarter last year. Revenue from operations stood at Rs 12.7 crore for the June quarter compared to Rs 880.39 crore in the corresponding quarter a year ago.

Following the news, PVR stock opened at Rs 1,296 and later touched an intraday low of Rs 1,273, falling 2.82%. The stock also hit an intraday high of Rs 1,328 during the session.

On Monday, shares of PVR settled at Rs 1,309.95 apiece, up 4.37%  on BSE. PVR share price trades higher than 50 and 100-day moving averages but lower than 5, 20 and 200-day moving averages.

Although PVR shares have gained 3.6% in the last one month period, the share has declined 32% since the beginning of the year. Market capitalisation of mid-cap stock stood at Rs 7,105 crore as of today's session.

"The COVID-19 situation across the country continued to adversely affect the operations of the group, resulting in almost no operations revenue for the quarter. We are awaiting government directive and guidelines on the opening of cinemas," PVR said.

However, other income increased to Rs 42.65 crore from Rs 6.77 crore YoY. Company's total expenses also fell to Rs 397.12 crore in Q1 FY21 as against Rs 859.10 crore in the year-ago period.

"With cinemas remaining closed, we shifted our attention to cost control during the quarter," Chairman and Managing Director Ajay Bijli said.

"Our disciplined efforts on managing costs and liquidity significantly contributed to our ability to navigate the unprecedented challenges. The government has now started taking measures to bring the economy back on track and we hope that cinemas are allowed to reopen soon," he added.

Though the Centre has allowed open-air theaters to resume operations from 21 September as part of the unlock 4.0 guidelines, cinema halls, entertainment parks, and similar places will continue to remain closed.

Consolidated earnings before interest, taxes, depreciation and amortisation (EBITDA) loss for the quarter stood at Rs 73 crore as against a positive EBITDA of Rs 285 crore in the same period last fiscal.

Elara Capital, that downgraded PVR Cinemas and Inox Leisure in June said in its note posted on Sept 1 that, "PVRL and INOL are still trading 40% lower than their peak pre-COVID levels in January; we maintain our long-term stance as several risks can be offset if situations unfold in favour of cinemas."

"We retain our long-term structural positive view on cinema, however, expect volatility in the cinema stocks to continue due to uncertainty over cinema opening and recovery of occupancy." The brokerage upgraded PVRL to Accumulate from Sell and INOL to Buy from Sell and rollover to a September 2021E target price of Rs 1,520 and Rs 360.

While Kotak Institutional Equities has kept a Buy rating on the stock, Prabhudas Liladhar also maintained accumulate at a target price of Rs 1,107. Edelweiss has also given a hold rating to PVR with a target price of Rs 1257.

Emkay Research, that recommends 'Hold' for both PVR and Inox, said in its note," Both PVR and Inox have 78% of their screens present in states that have 89% of India's Covid-19 cases."

"Near-term pressure will continue, with no business and rise in debt to fund fixed costs. However, we continue to believe that long-term prospects are intact as Indians have limited out-of-the home entertainment and once world recovers from this pandemic, multiplexes will see a full rebound in footfalls. The industry structure is also in favour of 3 large players i.e. PVR, Inox and Cinepolis," it added.

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