Buy PVR Inox shares, say stock analysts as they bet on Bhool Bhulaiya 3, Pushpa 2

The worst might be behind for PVR Inox Ltd shares after September quarter results, with the management commentary indicating Q3 could be the best quarter in FY25, as November and December look poised to deliver smashing numbers, following a soft October.

PVR narrowed its quarterly losses to Rs 11.80 crore in the September quarter compared with a loss of Rs 179 crore in the June quarter. Analysts noted that footfalls at 3.88 crore were the second-highest for any quarter, boosted by the National Cinema Day on September 20 that alone saw 10 lakh footfalls on that single day. 

"Strong content line up for Q3 includes ‘Bhool Bhulaiya 3’, ‘Singham Again’, ‘Pushpa 2’ which will release in 5 languages and is expected to be a mega blockbuster. Others included ‘Gladiator 2’, ‘Venom: The last dance’ and ‘Mufasa: The Lion King’. This gives optimism of a strong quarter which will get a further boost from the festival season, lack of sporting and global events and smooth flow of Hollywood releases as the strike is in the past now," Nirmal Bang said.

This brokerage noted that PVR Inox has also been working on fixed tight cost control, strategic capital allocation, asset light model, closure of underperforming cinemas, gross debt reduction and recovery in advertisement revenue.  The brokerage suggested a ‘Buy’ on the stock with a higher target price of Rs 1,863.

Emkay Global noted that occupancy at PVR Inox increased to 25.7 per cent in Q2 from 20.3 per cent in Q1. Although Hindi cinema NBOC saw a rebound in box office collections sequentially, it was largely led by single movie performance, it said adding that the growth in regional NBOC was more broad-based and the Hollywood slate remained weak. 

"Looking ahead, the upcoming pipeline is healthy, which provides comfort for strong box office collections for Q3. Movies starring mega stars should pick-up in the next calendar year. The management is also optimistic on producers churning out more movies, which should aid occupancies. On the cost front, the management is taking multiple steps to improve profitability, though most of these should bear fruit over the medium term," Emkay said.

This brokerage suggested a 'Buy' with a target price of Rs 1,850 per share.

Nuvama said PVR Inox holds a strong share in re-released films (50–95 per cent). The average ticket price (ATP) of re-released films rose to Rs 151 from Rs 115 during initial re-release days. 

The company expects to open 110–120 new screens in FY25 with net screen addition of 50. A total of 35–50 per cent of new screens would be added via an asset-light model, while the balance through a structured lease model. 

"Q3FY25 might potentially match Q2FY24 (best-ever quarter) performance on the back of a strong Bollywood pipeline," it said while suggesting a target price of Rs 1,935 on the stock.