The merger of PVR Ltd and Inox Leisure into PVR Inox Ltd was a strategic move to combat the challenges faced by the cinema exhibition industry post-Covid and the rise of OTT platforms. With occupancies hitting all-time lows due to lackluster film content, PVR underwent a significant business model transformation to adapt to the changing landscape.
The company shifted from a COCO-FOCO setup to predominantly FOCO and O&M formats, which are more asset-light and help improve profitability. This restructuring has helped PVR weather the storm and position itself for future growth. Currently, PVR has a screen count of 1,700, which is expected to increase to 1,900 by FY27 with a total capex of ₹400-450 crore.
The success of recent films like Stree-2 and Pushpa-2 indicates a positive trend in audience interest and bodes well for the future of the industry. Analysts believe that the worst is over for the sector and are optimistic about PVR’s prospects.
As a result, analysts have initiated coverage on the stock with a price target of ₹2,657, representing a 4.4x FY 27 EV/EBITDA multiple over the next 24 months. The model assumptions indicate a significant margin of safety, making PVR an attractive investment opportunity.
Overall, the merger of PVR and Inox, along with the strategic business model changes undertaken by PVR, have positioned the company well for future growth and success in the evolving cinema exhibition industry. Investors are advised to consider the long-term potential of PVR and the positive outlook for the sector when making investment decisions.
