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Treat for movie patrons...

Q2FY13 has been an exceptional quarter for movie patrons on the back of blockbuster Ek Tha Tiger. Also, Raaz 3, Barfi, Bol Bachchan and Cocktail have chipped in with significant contributions to the box office. Our interaction with the management suggested that Q2FY13 was comparable to Q2FY12 when occupancy levels had increased to a whopping 36%. Also, Q3FY13 is expected to bring patrons in large numbers to multiplexes owing to the festive season and a slew of big starrer movies to be released like Talaash, Jab Tak Hain Jaan, Dabangg 2, Son of Sardar, Race 2 and Khiladi 786. We have revised our estimates for PVR to factor in a better-than-expected Q2FY13 and festive driven Q3FY13. Our EPS estimates for FY13 and FY14 stand at Rs.15.8 and Rs.20.0 against our previous estimates of Rs.13.9 and Rs.18.8. Consequently, we have upgraded the stock from HOLD to BUY with a revised target of Rs.220.

Big starrer movies to drive KPIs

We expect occupancy for PVR to stand at 33% in Q2FY13, down from the peak of 36% achieved in Q2FY12 primarily due to higher capacity addition during the period. We expect both footfalls and ATP to improve substantially this quarter. ATP is expected to rise YoY to Rs.160 from Rs.152. Occupancy is expected to witness a further upside in Q3FY13 owing to the festive season and release of six big starrer movies in Q3FY13. We expect average occupancy levels to remain stable at 32% in FY13 even on a higher capacity while ATP is expected to rise from Rs.156 to Rs.159.

Upgrade to BUY to capture subsequent star studded movies

To factor in a better-than-expected Q2FY13, festive driven Q3FY13 with six big starrer movies and rising ATP, we have revised our EPS estimates for FY13 and FY14 from Rs.13.9 and Rs.18.8 to Rs.15.8 and Rs.20.0, respectively. We have valued the stock at 11x FY14E EPS to arrive at a target price of Rs.220. We upgrade the stock from HOLD to BUY.

Source : Equity Bulls

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