Brokerage Upbeat On Midcap Stock, Maintains Bullish Outlook On Merged Entity, Buy For 36% Gains

Prabhudas Lilladher (PL) has maintained its bullish outlook on PVR Ltd., suggests "Buy" for a target price of Rs 2,096/share. The stock has the potential to surge up to 36%, considering the given target price and the current market price of the stock. It is a midcap Media & Entertainment sector stock. The stock is in the process of a merger plan with INOX. Post-merger, the merged entity plans to open 180-200 screens per annum over the next 2 years.

PVR's Stock Performance Over the Past 5 Years

The stock of PVR gained 1.26% today, closed at Rs 1,547.05 apiece. However, the stock has given 2.5% negative return in the past 1 month. Whereas, it gained 5.84% in the past 3 months. It has given 22.96% positive return in 1 year and 20.33% in 5 years, respectively.

The stock hits the 52 week high on 4 August 2022 at Rs 2,214.85 apiece and 52 week low on 13 March 2023, respectively. Its market valuation is Rs 15,153.79 crore.

Multiplex behemoth arrives, Buy for a target price of Rs 2,096/share

Prabhudas Lilladher said, "We increase our pre-IND AS EBITDA estimates for merged entity by 7.0%/7.5% for FY24E/FY25E, as we expect synergy benefits of ~Rs2bn to accrue over next 2 years. The PVR-INOX merger is expected to 1) lend invincible size advantage to combined entity (18%/30% screen/BO share respectively) 2) enhance BS strength (Inox had net cash BS as of Jan end) enabling rapid expansion into new markets and 3) improve bargaining power with various stakeholders in the value chain like film distributors, real estate developers, ad-networks and ticket aggregators resulting in material revenue/cost synergies."

It added, "Though there are concerns over Bollywood underperformance, we believe it is not a structural issue (NBOC of Pathaan stood at ~Rs5.4bn despite high decibel negative campaigns); but a problem of content, as OTT proliferation has raised the bar of audience expectations from big screen. We expect merged entity to report footfalls of 170mn/185mn and pre-IND AS EBITDA margin of 19.7%/21.0% in FY24E/FY25E respectively. Retain 'BUY' on the stock with a TP of Rs2,096 after assigning EV/EBITDA multiple of 15.5x (no change) to merged entity."

Disclaimer

The stock has been picked from the brokerage report of Prabhudas Lilladher. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.