Buy

Post Covid, PVR Inox’s stock performance has been tracking box office collections/upcoming pipeline. After a dull H1CY24, box office collections have picked up and are expected to further improve in Q3FY25.

After a muted Q1, PVR Inox is set for sequential improvement from Q2FY25. Plus, advertising income, which has been lagging pre-Covid levels should get a boost.

We have believed that a weak content pipeline is to be blamed for the weak performance of the movie exhibition industry over the last year and not a structural shift in consumer behaviour towards OTTs, etc.

We attended Saregama’s analyst meet (as part of RPSG investor day) where the management reiterated its revenue guidance (excluding Carvaan) of 25-26% over the next 3 years.

Quarterly Update Q1FY25

In Q1FY25, ZEEL’s EBITDA margin expanded 306bps QoQ, beating our estimates. This was driven by cost optimisation efforts such as right-sizing its tech team for the OTT offering and reducing marketing costs.

We expect H2CY24 to be meaningfully better for movie exhibition business compared to H1CY24. We note many producers delayed the scheduled releases, which has now led to a pent-up content pipeline.

PVR Inox’s results reflect the subpar box-office collections during the quarter due to a weak slate of movie-lineup, given the general elections happening over an extended period, and the IPL and T20 World Cup held during Q1.