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MUMBAI: The partial lockdown by Maharashtra state government recently dealt a blow to multiplex operators which had just started to regain footing after a tough 2020. However, Investec believes the two largest multiplex operators-PVR and Inox Leisure to survive through the pain due to sharp cost rationalisation and aggressive capital infusion. It has initiated coverage on PVR and Inox with a buy rating.
The brokerage has a target price of Rs 374 on Inox Leisure while setting a target of Rs 1,559 on PVR.
"While the next 3-6 months will depend on how soon the COVID case count in India comes under control, we expect both PVR and Inox to report FY23E (estimated) revenue growth of 16%/ 23% over FY20 and FY23E EBITDA (earnings before interest, taxes, depreciation and amortisation) growth of 21%/ 26% over FY20 as occupancies return to normal, screen count expands, and companies retain a portion of the fixed cost reduction that they had managed during FY21E," said Investec in a note on Friday.
Investec expects these companies will sustain their screen count with a lower cost base and minimal capital expenditure and post that, soar on account of material industry consolidation, a large movie pipeline, and a lack of out-of-home entertainment options for Indian consumers.
The brokerage said the risk of OTT platforms damaging the medium-term economics of multiplexes is low given that variables of the Indian market are different from that of the US.
This is evidenced by the seeming reluctance of most movie producers to directly release films on the OTT platform in the financial year ended March 2021, said Investec.
The brokerage has a target price of Rs 374 on Inox Leisure while setting a target of Rs 1,559 on PVR.
"While the next 3-6 months will depend on how soon the COVID case count in India comes under control, we expect both PVR and Inox to report FY23E (estimated) revenue growth of 16%/ 23% over FY20 and FY23E EBITDA (earnings before interest, taxes, depreciation and amortisation) growth of 21%/ 26% over FY20 as occupancies return to normal, screen count expands, and companies retain a portion of the fixed cost reduction that they had managed during FY21E," said Investec in a note on Friday.
Investec expects these companies will sustain their screen count with a lower cost base and minimal capital expenditure and post that, soar on account of material industry consolidation, a large movie pipeline, and a lack of out-of-home entertainment options for Indian consumers.
The brokerage said the risk of OTT platforms damaging the medium-term economics of multiplexes is low given that variables of the Indian market are different from that of the US.
This is evidenced by the seeming reluctance of most movie producers to directly release films on the OTT platform in the financial year ended March 2021, said Investec.
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