2 Multiplex Stocks To Buy Post Strong Recovery In December Quarter

It has been a sixth straight day of Nifty's losing run though on an intraday basis the headline indices have pared sharp losses with Nifty holding above 17,050 points at around 12:03 pm. There is however seen resilience in the Nifty Bank and the broader markets with both of them trading in the green.

Meanwhile, brokerage firm ICICI Direct has placed its 'buy' call on two multiplex stocks for decent gains in 1 year:

PVR: Buy PVR for 17% Gains in 1-year

The multiplex scrip is recommended as a buy for a target of Rs. 1870 in 12 months. At the current price of Rs. 1598, potential investors in the scrip can earn returns to the tune of 17%. In today's session (January 25, 2022), despite the overall subdued market trend, the scrip of PVR is up by close to 5%.

PVR Q3Fy22 Results:

PVR logged healthy recovery on the back of robust content flow

Sequentially the company's revenue jumped 4 times to Rs. 614.2 crore. Footfalls at cinema also logged a substantial jump of 3.5 times sequentially at 14.5 million. EBITDA (ex- Ind AS116) was at Rs. 38 crore (margin 6.2%) against EBITDA loss of Rs. 115.1 crore in Q2. The reported net loss was lower at Rs.10.2 crore due to other income of Rs. 67.4 crore with respect to rental waivers received (net of rent paid). The company reported net loss (without impact of Ind AS116) at Rs. 21.9 crore.

Target price and valuation:

We value PVR at | 1870 i.e. 13x FY24E EV/EBITDA. Over a 5 year period, the stock of PVR has jumped by just 23% from Rs. 1253 levels in January 2017 to around Rs. 1537 levels in October 2021.

What will drive stock price action in PVR going ahead?

There is expected recovery in footfalls and hence revenues as big budget movies are lined up for release following Omicron normalisation. Also, the company has planned for permanent cost savings of between 8-10%. Furthermore, consolidation in the segment will also boost the future outlook for multiplexes.

Inox Leisure:

Buy Inox Leisure for a target of Rs. 495
The brokerage has suggested a Buy on the media and entertainment scrip for a target price of Rs. 495 to be realised in 12 months. Given the stock's last traded price of Rs. 384.6, this means a potential upside of 28.7 percent.

Inox Leisure’s Q3Fy22 results:

The company's revenue during the December ended quarter has been at Rs. 296.5 crore, registering 5 times gains sequentially. The company also logged healthy gains in footfall with a 4 times jump QoQ. EBITDA (ex- Ind AS116) came in at around Rs. 49.6 crore (margin of 16.7%). The company received Rs.47.8 crore as rent concessions. On a reported basis, PAT loss was lower at Rs. 1.3 crore, largely due to rent concession recognition.

Valuations:

The brokerage values Inox at Rs. 495 i.e. 11.5x FY24E EV/EBITDA. The scrip over the last 5 years has gained around 67% from Rs. 227 in January 2017 to Rs. 380 in January 2022.

Some industry specific measures will help drive the company's future and stock performance going ahead.

Disclaimer:

The stocks in the story are taken from ICICI Direct report dated January 24, 2022. Investing in stocks is risky. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions taken based on the article.