A bigger script awaits PVR in 2018-19
Firm plans to add 90 screens as against 49 in FY18; ad sales, higher ticket prices will fuel growth
After a strong end to FY18, India’s largest film exhibitor is looking at aggressive screen additions this financial year to maintain the revenue growth momentum in future. PVR plans to add over 90 screens in FY19, compared to the 49 it added in FY18.
Across India, the company has about 625 screens till FY18. Analysts at Motilal Oswal Securities believe that aggressive screen additions in FY19 and 20, coupled with increasing average ticket prices, and healthy movie pipeline are positive for PVR. Rising incomes and the company’s premium location is expected to rub off on ticket collections, while good quality content will keep the footfalls higher. Ticket prices in the March quarter were higher on account of premium screen additions, as well as price hikes in screens that were renovated in some locations. What should add to overall revenue growth is the strong momentum in ancillary revenues.
In the March quarter, what aided the 19 per cent top line growth was a 37 per cent gain in advertising revenues, and a 22 per cent jump in food and beverage consumption at the theatres. Strong advertising performance in the quarter helped the company achieve its 20 per cent advertising growth guidance in FY18. Theatre collections account for 55 per cent of revenues, while food and beverages add 27 per cent to the top line.
Though overall footfalls were higher by five per cent, footfalls on a comparable basis, however, fell by 2 per cent on account of a strike by South Indian film producers and issues concerning the release of Padmavat in certain states. Had it not been for the two issues, comparable footfalls would have been up 8 per cent.
Despite the positives, analysts at Emkay Research say the stock is unlikely to be re-rated as valuations are discounting healthy content performance and the stock has already run up by 14 per cent over the last month. PVR is trading at 45 times its FY19 earnings estimates.