Bank of America Securities recently adjusted its outlook on PVR-Inox Ltd., a leading name in India’s entertainment sector formed from the merger of PVR Cinemas and INOX Leisure. The firm has maintained an ‘underperform’ rating for the company while lowering its target price from Rs 990 to Rs 945. This adjustment comes on the heels of a disappointing fourth-quarter performance that fell short of expectations, even as revenues remained steady.
Fourth Quarter Performance Highlights
In the fourth quarter of fiscal year 2025, PVR-Inox reported a significant Ebitda loss of Rs 105 crore, which exceeded the expectations set by both Bank of America and market analysts. Here are some key figures from this quarter:
- Total admissions: 30.5 million
- Average ticket price: Rs 258 (an 11% increase year-on-year)
- Spend per head: Rs 125 (a 3% decrease year-on-year)
- Occupancy rate: 20.5% (a decline of 2 percentage points year-on-year)
- Ebitda margin: -0.8% compared to an anticipated 3.3%
The company’s net loss for the quarter was also more pronounced than expected, coming in at Rs 105 crore, versus the projected Rs 66 crore loss. Despite opening five new screens, the net screen count decreased by 1% quarter-over-quarter, resulting in a total of 1,723 screens.
Future Plans and Capex Strategy
Looking ahead, PVR plans to expand its footprint by opening 100 to 110 new screens during fiscal year 2026, primarily employing a capital-light model. The projected capital expenditure for this year is set between Rs 3.5 billion and Rs 4.4 billion, representing a slight increase from the previous fiscal year.
- Key Focus Areas:
- Selective capex for high-value asset renovations and maintenance
- Asset-light expansion through new leases, including partnerships with FOCOL
However, it’s worth noting that while this model may enhance cash flows, it may not significantly improve margins due to existing revenue-sharing agreements with developers.
Impact of Direct-to-OTT Releases
The emergence of direct-to-OTT releases has not yet drastically affected theatrical releases. While some films, such as Bholaa Shankar, shifted to OTT at the last minute, others like Sitaare Zameen Par remain committed to theatrical launches. The company does not anticipate any major screen closures in the near future, despite ongoing challenges.
Conclusion
PVR-Inox continues to navigate a complex landscape, with margin pressures and an unpredictable content pipeline posing substantial risks. Following the underwhelming fourth-quarter results, Bank of America has revised its earnings projections and reiterated a cautious approach toward the stock. Investors will be watching closely to see how the company adapts its strategies in the evolving entertainment market.
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