pvr ltd result update...cinemas in october for customers booking through pvr web/app and bookmyshow....

October 25, 2018 Analysts: Harshit Patel (+91-9825406497)/Depesh Kashyap, CFA (+91-7228934327) of 12

Before reading this report, you must refer to the disclaimer on the last page.

PVR Ltd Absolute : LONG

Relative : Overweight

2QFY19 Result: Estimate (), TP (), Rating () Regular Coverage 17% ATR in 17 Months

SPI Cinemas to accelerate growth trajectory for PVR — maintain LONG Media & Entertainment

© 2018 Equirus All rights reserved

Rating Information

Price (Rs) 1,284

Target Price (Rs) 1,594

Target Date 31st Mar'20

Target Set On 25th Oct'18

Implied yrs of growth (DCF) 15

Fair Value (DCF) 1,541

Fair Value (DDM) NA

Ind Benchmark NSEMED

Model Portfolio Position NA

Stock Information

Market Cap (Rs Mn) 60,015

Free Float (%) 79.75 %

52 Wk H/L (Rs) 1568.45/1062.8

Avg Daily Volume (1yr) 3,70,634

Avg Daily Value (Rs Mn) 495

Equity Cap (Rs Mn) 467

Face Value (Rs) 10

Bloomberg Code PVRL IN

Ownership Recent 3M 12M

Promoters 20.3 % 0.0 % 0.0 %

DII 30.2 % 1.0 % 3.8 %

FII 39.5 % -1.5 % -1.9 %

Public 10.0 % 0.4 % -1.9 %

Price % 1M 3M 12M

Absolute 2.4 % 12.8 % -7.5 %

Vs Industry 8.6 % 29.8 % 15.5 %

Inox Leisure -10.7 % -0.3 % -11.3 %

Mukta Arts -9.6 % -12.3 % -60.3 %

Consolidated Quarterly EPS forecast

Rs/Share 1Q 2Q 3Q 4Q

EPS (18A) 9.2 5.3 6.0 5.4

EPS (19E) 10.8 6.8 11.3 6.8

PVRL’s 2QFY19 revenues grew ~28% yoy to ~Rs 7.1bn (+4% vs. EE) driven by box-office

(+25% yoy), F&B (+37% yoy) and advertising (+18% yoy) revenues. Overall footfalls at

21.4mn grew ~25% yoy on a 9% growth in comparable footfalls and addition of 2mn

footfalls from the acquisition of SPI Cinemas (SPI). EBITDA at Rs 1.24bn was up ~35% yoy

(+8% vs. EE) as EBITDAM expanded by ~100bps mainly due to the consolidation of SPI with

standalone EBITDAM remaining flattish. PVRL is set to benefit from (a) its unmatched

presence in tier-1 cities, (b) expansion in the South and (c) an improved content pipeline.

We expect revenue/EBITDA/PAT CAGR of 21%/28%/38% over FY18-FY21E and broadly

maintain our FY19/FY20 estimates. Reiterate LONG with a Mar’20 TP of Rs 1,594 set at a

32x TTM P/E (TP, P/E multiple unchanged).

New screen additions, SPI acquisition to keep up growth momentum: PVRL completed

the SPI acquisition in mid-Aug, with 2QFY19 thus reflecting ~1.5 months of the latter’s

contribution. Given the higher occupancy ratios of SPI and a strong content pipeline

(Thugs of Hindostan, Fantastic Beasts, 2.0, Simba) for the rest of FY19, we expect

acceleration in footfall growth. Along with SPI, PVRL has already added 7 properties and

34 screens YTD. Management stated it is on track to achieve 99 screen additions for full-

year FY19 (91 screens for base business, 8 for SPI).

F&B revenues solid despite price cuts in some markets: F&B revenues for the base

business increased ~25% yoy despite a ~3% yoy decline in SPH as (a) the conversion ratio

improved and (b) the GST rate on F&B products came down to 5% from 18% earlier.

Contribution margin for F&B declined to ~73.3% in 2QFY19 vs. 73.9% in 2QFY18 mainly due

to unavailability of input tax credit and rationalization of F&B pricing. Although

advertising revenue growth for the base business slowed down in 1HFY19 (+10% yoy),

management has guided for >15% growth for full-year FY19 as it plans to get the

maximum out of its strong pipeline in the next two quarters.

Maintain LONG with a Mar’20 TP of Rs 1,594: Management reassured that SPH would

soon be back on the growth track and has guided for SPH growth of ~5% in 2HFY19. Also,

it is confident about adding 22 screens in 3QFY19 and 43 in 4QFY19 to achieve full-year

guidance of 99 screens. We expect revenue/EBITDA/PAT CAGR of 21%/28%/38% over

FY18-FY21E and broadly maintain our FY19/FY20 estimates. Reiterate LONG with a Mar’20

TP of Rs 1,594 set at a 32x TTM P/E (TP, P/E multiple unchanged). Key risk: Prolonged

slowdown in mall development across the country.

Change in Estimates

Rs. Mn FY19E Chg (%) FY20E Chg (%)

Sales 29,840 2% 36,504 3%

EBITDA 5,513 4% 6,929 2%

EPS 36.9 -1% 49.8 0%

Consolidated Financials

Rs. Mn YE Mar FY18A FY19E FY20E FY21E

Sales 23,341 29,840 36,504 41,433

EBITDA 4,018 5,513 6,929 8,412

Depreciation 1,537 1,838 2,194 2,476

Interest Expense 837 1,108 1,306 1,226

Other Income 313 187 219 242

Reported PAT 1,247 1,724 2,408 3,268

Recurring PAT 1,253 1,724 2,408 3,268

Total Equity 10,754 12,478 17,466 20,735

Gross Debt 8,305 12,805 13,305 12,505

Cash 339 821 1,395 1,584

Rs Per Share FY18A FY19E FY20E FY21E

Earnings 26.8 36.9 49.8 67.6

Book Value 230 267 361 429

Dividends 2.0 2.6 3.5 4.7

FCFF 20.2 -121.8 46.0 62.5

P/E (x) 47.9 34.8 25.8 19.0

P/B (x) 5.6 4.8 3.6 3.0

EV/EBITDA (x) 16.9 13.5 10.6 8.5

ROE (%) 12 % 15 % 16 % 17 %

Core ROIC (%) 9 % 10 % 10 % 12 %

EBITDA Margin (%) 17 % 18 % 19 % 20 %

Net Margin (%) 5 % 6 % 7 % 8 %

PVR Ltd Absolute – LONG Relative – Overweight 17% ATR in 17 months


Quarterly performance, consolidated

2QFY19 2QFY19E 1QFY19 2QFY18 % Change

Comments 2QFY19E 1QFY19 2QFY18

Net Sales 7,086 6,788 6,963 5,554 4% 2% 28%

Movie Exhibition Cost 1,650 1,519 1,663 1,335 9% -1% 24%

Consumption of Food and Beverages 543 505 508 385 8% 7% 41%

Employee Benefits Expense 770 805 742 587 -4% 4% 31%

Other Expenses 2,882 2,811 2,678 2,332 3% 8% 24%

Total Operating Expenses 5,845 5,639 5,591 4,638 4% 5% 26%

EBITDA 1,240 1,149 1,372 916 8% -10% 35%

Depreciation 448 458 401 357 -2% 12% 25%

EBIT 792 691 971 558 15% -18% 42%

Interest 298 241 208 207 24% 43% 44%

Other Income 61 43 43 42 41% 43% 47%

PBT 555 493 805 393 13% -31% 41%

Tax 212 168 283 140 26% -25% 51%

PAT before MI & Associates 344 325 522 253 6% -34% 36%

Minority Interest -12 -10 1 5 21% -1173% -362%

Profit from Assoc. -2 0 -2 0 NA -17% NA

Recurring PAT 330 316 522 258 5% -37% 28%

Extraordinaires 0 0 0 6 NA NA -100%

Reported PAT 330 316 522 252 5% -37% 31%

EPS (Rs) 6.8 6.5 10.8 5.3 5% -37% 28%

Gross Margin 69.0% 70.2% 68.8% 69.0% -115 bps 22 bps 0 bps

EBITDA Margin 17.5% 16.9% 19.7% 16.5% 57 bps -220 bps 102 bps

EBIT Margin 11.2% 10.2% 13.9% 10.1% 100 bps -276 bps 113 bps

PBT Margin 7.8% 7.3% 11.6% 7.1% 57 bps -373 bps 76 bps

PAT Margin 4.7% 4.6% 7.5% 4.5% 1 bps -283 bps 13 bps

Tax Rate 38.1% 34.0% 35.2% 35.6% 412 bps 296 bps 254 bps

Key Operational Metrics

Footfalls (mn) 23.4 22.1 22.7 18.7 6% 3% 25%

Average Ticket Price (Rs) 206 204 217 204 1% -5% 1%



Earnings call takeaways

Box-office highlights

▪ Top-5 films accounted for ~44% of GBOC for 2QFY19 vs. ~29% for 2QFY18. Sanju,

Stree, Gold and Mission Impossible: Fallout were the major hits for 2QFY19.

▪ Overall footfalls for the quarter grew ~25% yoy to 23.4mn. Growth was mainly led by

~9% growth in comparable footfalls in the standalone business and addition of ~2mn

footfalls from SPI Cinemas.

▪ Overall occupancies for 2QFY19 stood at ~34.6%, standalone business occupancy at

~33.4% (+380bps yoy) and SPI occupancy at ~54.7% (weaker than FY18 occupancy of

58%).

▪ Average Ticket Price (ATP) for the standalone business grew ~3% yoy to Rs 211

whereas blended ATP came in at Rs 206 due to SPI Cinema’s lower ATP of Rs 154.

▪ Share of content in 2QFY19: Bollywood 61%, Hollywood 20% and Regional 19%. For

2QFY18, the share of content was as follows: Bollywood 57%, Hollywood 22% and

Regional 21%.

▪ Footfalls increased only slightly due to issues between an aggregator and a major

multiplex player in Sep’18.

▪ Overall online admissions have touched 54.5-55% as of now. GBOC contribution would

be to the tune of 57.5-60%.

F&B updates

▪ Standalone SPH for 2QFY19 declined to ~Rs 88 (-3% yoy). However, the company was

able to grow F&B revenues by ~25% yoy mainly due to a higher conversion ratio. Net

revenue looks higher due to a downward revision in GST rates to 5% from 18% earlier.

▪ Standalone contribution margin for F&B declined to ~73.3% in 2QFY19 vs. ~73.9% in

2QFY18 and 75.1% in 1QFY19 mainly due to unavailability of input tax credit in the

new regime (effective Nov’17) and rationalization of F&B pricing.

▪ Prices were severely (30-40%) cut only in MH, while several F&B promotions were

introduced. However, this strategy did not work in non-peak hours. Water has been

subsidized across screens.

▪ SPH for SPI Cinemas is also in the range of PVRL’s standalone business.

▪ SPH would grow by ~5% in 2HFY19.

Other highlights

▪ PVRL added 3 properties and 13 screens in 2QFY19. YTD, it has added 7 properties

and 34 screens (including 1 property and 4 screens for SPI Cinemas).

▪ Management has guided to add a total of 99 screens in FY19 (including 8 screens of

SPI Cinemas). The company would add 22 screens in 3QFY19 and 43 in 4QFY19.

▪ Acquisition of SPI Cinemas was completed on 17 Aug’18 (71.7% stake). By FY19-end,

the company would be able to close the merger process (entire 100% stake).

▪ To encourage early booking, PVRL has launched a seat cancellation feature across all

cinemas in October for customers booking through PVR web/app and BookMyShow.

Cancellation fees vary from 25-50%, depending on the time of ticket cancellation.

▪ Bulk of growth in advertising revenues would come in 3Q and 4QFY19. Management

has guided for 15-17% growth in advertising revenues for FY19.

▪ About 20% of advertising revenues are local in nature whereas rest are corporate.

Delhi, Mumbai and Bangalore are the most ad-revenue generating markets.

▪ Currently, Local Body Tax is applicable in TN only (more specifically in Chennai,

Coimbatore and another city). Recently, Bhopal and Indore municipal councils have

announced the levy of LBT. The Multiplex Association of India is in constant

engagement with the Government of MP and local officials to withdraw LBT. The

contribution of MP in PVRL’s overall footfalls is insignificant.

▪ Capex for FY19 would be Rs 4.25bn-4.5bn (without SPI). SPI capex would be

Rs 200mn-250mn.

▪ Post GST, the company has not reported any subsidy; FY19 subsidy should be

Rs 100mn-120mn but the company has not been accounting any of this.

▪ As of now, the total no of premium screens stands at 62.



Exhibit 1:Proportion of F&B and advertising has been increasing in the revenue mix

Source: Company, Equirus Securities; for Standalone business

Exhibit 2:Occupancy for 2QFY19 expanded by ~380bps yoy


Exhibit 3: Comparable footfalls grew at a healthy 9% during 2QFY19


Exhibit 4:On an average, ATP growth has been in line with inflation


57% 55% 53% 55% 56% 56% 53% 55% 56% 54%

27% 27% 26% 27% 27% 27% 26% 28% 30%27%

10% 12% 15% 11% 11% 13% 16% 13% 11%12%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2017 2017 2017 2017 2018 2018 2018 2018 2019 2019

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

Net Box Office Food & Beverages Advertising/Sponsorship

Convenience Income Other Operating Income

20.7 18.5 17.9 18.2 21.0 18.7 17.4 19.0 22.7 21.4

36.2%

31.9% 32.0% 31.6%

35.1%

29.6%29.1%

31.5%

35.9%

33.4%

15%

20%

25%

30%

35%

40%

0

5

10

15

20

25

2017 2017 2017 2017 2018 2018 2018 2018 2019 2019

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

Footfalls (mn) Occupancy (%)(RHS)

1% 1%

-3%

4%

8%

14%

-7%

-5%-6%

-3%

2%

9%

-10%

-5%

0%

5%

10%

15%

20%

2018 2018 2018 2018 2019 2019

Q1 Q2 Q3 Q4 Q1 Q2

Overall Footfalls Growth (%) Comparable Footfalls Growth (%)

195 202 199 190 214 204 212 209 217 211

7%

8%

-1%

4%

10%

1%

7%

10%

1%

3%

-2%

0%

2%

4%

6%

8%

10%

12%

50

70

90

110

130

150

170

190

210

230

2017 2017 2017 2017 2018 2018 2018 2018 2019 2019

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

ATP (Rs) Growth (Yoy%)(RHS)



Exhibit 5: SPH as a percentage of ATP came down to ~42% in 2QFY19


Exhibit 6: F&B contribution margin contracted by ~60bps in 2QFY19


Exhibit 7: Distributor share would be in the range of 44-45% going ahead


Exhibit 8: Trend in advertising and other operating revenues/screen


79 84 82 78 87 91 92 87 94 88

40.5% 41.6% 41.2% 41.1% 40.7%

44.6%43.4%

41.6%43.3%

41.7%

10%

15%

20%

25%

30%

35%

40%

45%

50%

40

50

60

70

80

90

100

2017 2017 2017 2017 2018 2018 2018 2018 2019 2019

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

F&B SPH (Rs) % of ATP (RHS)

76.8%76.1% 75.8%

75.2%76.1%

73.9% 74.2%73.8%

75.1%

73.3%

65%

67%

69%

71%

73%

75%

77%

79%

2017 2017 2017 2017 2018 2018 2018 2018 2019 2019

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

F&B Contrubution Margin

41.1%

45.0% 45.0%

43.3% 43.5%

46.2% 45.8%

42.8%

44.4% 44.7%

30%

32%

34%

36%

38%

40%

42%

44%

46%

48%

2017 2017 2017 2017 2018 2018 2018 2018 2019 2019

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

Distributor Share on NBOC (%)

1.01.1

1.4

0.91.2 1.2

1.5

1.2 1.1 1.2

0.4

0.4

0.3

0.4

0.4 0.4

0.4

0.50.4

0.6

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

2017 2017 2017 2017 2018 2018 2018 2018 2019 2019

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

Other Operating Revenue per Screen (Rs. mn) Advertising Revenue per Screen (Rs. mn)



Company Snapshot

How we differ from Consensus

- Equirus Consensus % Diff Comment

EPS FY19E 36.9 37.9 -3 % Consensus numbers may not be updated

after 2QFY19 results FY20E 49.8 48.7 2 %

Sales FY19E 29,840 27,859 7 %

FY20E 36,504 32,655 12 %

PAT FY19E 1,724 1,781 -3 %

FY20E 2,408 2,308 4 %

Key Estimates:

Revenue (Rs mn) FY17 FY18 FY19E FY20E FY21E

Box Office 11,249 12,471 15,716 19,288 21,832

Food & Beverages 5,781 6,243 8,598 10,591 12,231

Advertising 2,518 2,969 3,581 4,368 4,992

Other Operating Revenue 1,647 1,658 2,017 2,258 2,378

Operational Metrics FY17 FY18 FY19E FY20E FY21E

Footfalls (mn) 75.2 76.1 97.1 116.9 128.0

Occupancy Rate (%) 33% 31% 34% 36% 36%

Average Ticket Price (Rs) 196 210 208 211 218

F&B Spend Per Head (Rs) 81 89 91 94 99

Ad Revenue/Screen (Rs. mn) (SA) 4.5 5.0 5.2 5.6 6.0

Key Triggers

a) Improvement in quality of content to result into higher comparable footfalls

b) Favorable judgement on the F&B issue by the Supreme Court of India

c) Higher share of in-cinema advertising in the overall advertising pie

Key Downside Risks

a) Prolonged slowdown in mall development across the country can hamper

expansion plans

b) Any regulations on ticket/F&B pricing can have adverse effect on revenues

c) Rise of OTT platforms could narrow the theatrical release window in the long

term

DCF Valuations & Assumptions

Rf Beta Ke Term. Growth Debt/IC in Term. Yr

8.0 % 1.0 13.8 % 4.0 % 35.0 %

- FY19E FY20E FY21-23E FY24-28E FY29-33E

Sales Growth 28 % 22 % 14 % 13 % 11 %

NOPAT Margin 8 % 9 % 10 % 10 % 11 %

IC Turnover 0.99 1.15 1.40 1.86 2.52

RoIC 9.7 % 10.1 % 14.1 % 19.8 % 28.1 %

Years of strong growth 1 2 5 10 15

Valuation as on date (Rs) -22 132 490 923 1,281

Valuation as of Mar'20 -27 159 590 1,110 1,541

Based on DCF, we derive a fair value of Rs 1,281 as on today and Rs 1,541 as on 31

Mar’20.

Company Description:

PVR Ltd (PVRL), started in 1997, is India’s largest multiplex cinema chain. PVR has

introduced various movie screening formats across the country to cater to all kinds of

customers. PVR currently has 154 theatres and 715 screens spread across 60 Indian cities.

To enhance presence in the underpenetrated South Indian market, it recently acquired

SPI Cinemas with an existing circuit of 76 screens in 10 cities. Other complementary

businesses of the company include movie distribution (PVR Pictures), Gourmet Popcorn

Manufacturing (Zea Maize) and movie-on-demand (Vkaao).

Comparable valuation Mkt Cap

Rs. Mn.

Price

Target Target Date

EPS P/E BPS P/B RoE Div Yield

Company Reco. CMP FY18A FY19E FY20E FY18A FY19E FY20E FY18A FY19E FY18A FY19E FY20E FY18A FY19E

PVR Cinemas LONG 1,284 60,015 1,594 31st Mar'20 26.8 36.9 49.8 47.9 34.8 25.8 230.1 4.8 12 % 15 % 16 % 0.2 % 0.2 %

Inox Leisure LONG 202 19,449 275 31st Mar'20 7.2 9.6 11.4 28.0 21.0 17.7 69.6 2.6 11 % 13 % 13 % 0.0 % 0.0 %

Mukta Arts NA 38 865 NA NA -2.1 - - -18.0 - - 15.0 - -14 % - - 0.0 % -



Consolidated Quarterly Earnings Forecast and Key Drivers

Rs in Mn 1Q18A 2Q18A 3Q18A 4Q18A 1Q19A 2Q19A 3Q19E 4Q19E 1Q20E 2Q20E 3Q20E 4Q20E FY18A FY19E FY20E FY21E

Revenue 6,366 5,554 5,573 5,849 6,963 7,086 8,044 7,747 9,378 8,939 9,346 8,841 23,341 29,840 36,504 41,433 Movie Exhibition Cost 1,449 1,335 1,323 1,271 1,663 1,650 1,783 1,671 2,179 2,065 2,089 1,935 5,377 6,767 8,268 9,376

Consumption of Food and Beverages 413 385 379 414 508 543 604 591 722 677 690 665 1,591 2,246 2,754 3,160

Employee Benefits Expense 679 587 622 653 742 770 854 886 989 934 980 1,006 2,541 3,252 3,908 4,395

Other Expenses 2,682 2,332 2,234 2,567 2,678 2,882 3,189 3,312 3,681 3,696 3,591 3,676 9,815 12,061 14,644 16,089

- - - - - - - - - - - - - - - - - EBITDA 1,144 916 1,015 944 1,372 1,240 1,614 1,287 1,808 1,566 1,995 1,559 4,018 5,513 6,929 8,412 Depreciation 399 357 386 394 401 448 494 494 549 549 549 549 1,537 1,838 2,194 2,476 EBIT 744 558 629 550 971 792 1,120 793 1,260 1,018 1,446 1,011 2,482 3,675 4,735 5,936 Interest 208 207 212 210 208 298 301 301 326 326 326 326 837 1,108 1,306 1,226 Other Income 164 42 32 75 43 61 42 42 55 55 55 55 313 187 219 242 PBT 700 393 449 415 805 555 860 534 988 746 1,175 739 1,958 2,754 3,648 4,952 Tax 258 140 154 153 283 212 293 181 336 254 399 251 704 969 1,240 1,684 PAT bef. MI & Assoc. 443 253 296 262 522 344 568 352 652 492 775 488 1,253 1,786 2,408 3,268 Minority Interest -2 -5 3 -3 -1 12 24 24 0 0 0 0 -7 58 0 0 Profit from Assoc. 0 0 -4 -3 -2 -2 0 0 0 0 0 0 -7 -3 0 0 Recurring PAT 445 258 289 262 522 330 544 328 652 492 775 488 1,253 1,724 2,408 3,268 Extraordinaries 0 6 0 0 0 0 0 0 0 0 0 0 6 0 0 0 Reported PAT 445 252 289 262 522 330 544 328 652 492 775 488 1,247 1,724 2,408 3,268

EPS (Rs) 9.20 5.33 5.97 5.42 10.79 6.83 11.25 6.80 13.49 10.18 16.04 10.09 26.81 36.89 49.81 67.62

Key Drivers

Footfalls (mn) - - - - - - - - - - - - 76.1 97.1 116.9 128.0 Occupancy (%) - - - - - - - - - - - - 31 % 34 % 36 % 36 % Average Ticket Price (Rs) - - - - - - - - - - - - 210 208 211 218 F&B Spend Per Head (Rs) - - - - - - - - - - - - 89 91 94 99 Ad Revenue/Screen (Rs. mn) - - - - - - - - - - - - 5.0 5.2 5.6 6.0

- - - - - - - - - - - - - - - - -

Sequential Growth (%)

Revenue 32 % -13 % 0 % 5 % 19 % 2 % 14 % -4 % 21 % -5 % 5 % -5 % - - - - Movie Exhibition Cost 30 % -8 % -1 % -4 % 31 % -1 % 8 % -6 % 30 % -5 % 1 % -7 % - - - - EBITDA 145 % -20 % 11 % -7 % 45 % -10 % 30 % -20 % 40 % -13 % 27 % -22 % - - - - EBIT 612 % -25 % 13 % -13 % 77 % -18 % 41 % -29 % 59 % -19 % 42 % -30 % - - - - Recurring PAT 2,966 % -42 % 12 % -9 % 99 % -37 % 65 % -40 % 99 % -25 % 57 % -37 % - - - -

EPS 2,966 % -42 % 12 % -9 % 99 % -37 % 65 % -40 % 99 % -25 % 57 % -37 % - - - -

Yearly Growth (%)

Revenue 13 % 2 % 5 % 21 % 9 % 28 % 44 % 32 % 35 % 26 % 16 % 14 % 10 % 28 % 22 % 14 % EBITDA 7 % 14 % 27 % 102 % 20 % 35 % 59 % 36 % 32 % 26 % 24 % 21 % 28 % 37 % 26 % 21 % EBIT 1 % 22 % 38 % 426 % 30 % 42 % 78 % 44 % 30 % 28 % 29 % 28 % 42 % 48 % 29 % 25 % Recurring PAT -2 % -12 % 21 % 1,707 % 17 % 28 % 88 % 25 % 25 % 49 % 43 % 49 % 25 % 38 % 40 % 36 %

EPS -2 % -12 % 21 % 1,707 % 17 % 28 % 88 % 25 % 25 % 49 % 43 % 49 % 25 % 38 % 35 % 36 %

Margin (%)

EBITDA 18 % 16 % 18 % 16 % 20 % 18 % 20 % 17 % 19 % 18 % 21 % 18 % 17 % 18 % 19 % 20 % EBIT 12 % 10 % 11 % 9 % 14 % 11 % 14 % 10 % 13 % 11 % 15 % 11 % 11 % 12 % 13 % 14 % PBT 11 % 7 % 8 % 7 % 12 % 8 % 11 % 7 % 11 % 8 % 13 % 8 % 8 % 9 % 10 % 12 %

PAT 7 % 5 % 5 % 4 % 7 % 5 % 7 % 4 % 7 % 6 % 8 % 6 % 5 % 6 % 7 % 8 %

* Ad revenue/screen pertains to standalone screens (ex-SPI Cinemas)



Consolidated Financials

P&L (Rs Mn) FY18A FY19E FY20E FY21E Balance Sheet (Rs Mn) FY18A FY19E FY20E FY21E Cash Flow (Rs Mn) FY18A FY19E FY20E FY21E

Revenue 23,341 29,840 36,504 41,433 Equity Capital 467 467 483 483 PBT 1,958 2,754 3,648 4,952

Op. Expenditure 19,323 24,326 29,575 33,020 Reserve 10,286 12,010 16,983 20,251 Depreciation 1,537 1,838 2,194 2,476

EBITDA 4,018 5,513 6,929 8,412 Networth 10,754 12,478 17,466 20,735 Others 802 921 1,087 984

Depreciation 1,537 1,838 2,194 2,476 Gross Debt 8,305 12,805 13,305 12,505 Taxes Paid 417 969 1,240 1,684

EBIT 2,482 3,675 4,735 5,936 Def Tax Liability 106 2,655 1,533 340 Change in WC 582 -542 -864 -997

Interest Expense 837 1,108 1,306 1,226 Minority Interest 8 2,565 0 0 Operating C/F 4,463 4,002 4,825 5,731

Other Income 313 187 219 242 Account Payables 2,511 2,914 3,564 4,053 Capex -3,385 -10,599 -3,679 -3,759

PBT 1,958 2,754 3,648 4,952 Other Curr Liabi 1,805 1,805 1,805 1,805 Change in Invest -278 0 0 0

Tax 704 969 1,240 1,684 Total Liabilities & Equity 23,488 35,221 37,672 39,437 Others -390 187 219 242

PAT bef. MI & Assoc. 1,253 1,786 2,408 3,268 Net Fixed Assets 11,554 17,185 18,670 19,953 Investing C/F -4,054 -10,412 -3,460 -3,517

Minority Interest -7 58 0 0 Capital WIP 1,017 1,017 1,017 1,017 Change in Debt 255 4,500 500 -800

Profit from Assoc. -7 -3 0 0 Others 7,940 13,565 13,565 13,565 Change in Equity 0 145 219 275

Recurring PAT 1,253 1,724 2,408 3,268 Inventory 198 277 340 390 Others -914 2,246 -1,508 -1,501

Extraordinaires 6 0 0 0 Account Receivables 1,556 1,472 1,800 2,043 Financing C/F -660 6,892 -790 -2,026

Reported PAT 1,247 1,724 2,408 3,268 Other Current Assets 885 885 885 885 Net change in cash -251 482 575 188

FDEPS (Rs) 26.8 36.9 49.8 67.6 Cash 339 821 1,395 1,584 RoE (%) 12 % 15 % 16 % 17 %

DPS (Rs) 2.0 2.6 3.5 4.7 Total Assets 23,488 35,221 37,672 39,437 RoIC (%) 10 % 10 % 10 % 11 %

CEPS (Rs) 59.7 76.2 95.2 118.8 Non-cash Working Capital -1,677 -2,085 -2,343 -2,539 Core RoIC (%) 9 % 10 % 10 % 12 %

FCFPS (Rs) 20.2 -121.8 46.0 62.5 Cash Conv Cycle -26.2 -25.5 -23.4 -22.4 Div Payout (%) 9 % 8 % 8 % 8 %

BVPS (Rs) 230.1 267.0 361.3 428.9 WC Turnover -13.9 -14.3 -15.6 -16.3 P/E 47.9 34.8 25.8 19.0

EBITDAM (%) 17 % 18 % 19 % 20 % FA Turnover 1.9 1.6 1.9 2.0 P/B 5.6 4.8 3.6 3.0

PATM (%) 5 % 6 % 7 % 8 % Net D/E 0.7 1.0 0.7 0.5 P/FCFF 63.5 -10.5 27.9 20.5

Tax Rate (%) 36 % 35 % 34 % 34 % Revenue/Capital Employed 1.2 1.2 1.1 1.2 EV/EBITDA 16.9 13.5 10.6 8.5

Sales Growth (%) 10 % 28 % 22 % 14 % Capital Employed/Equity 1.8 2.1 2.2 1.9 EV/Sales 2.9 2.5 2.0 1.7

FDEPS Growth (%) 25 % 38 % 35 % 36 % Dividend Yield (%) 0.2 % 0.2 % 0.3 % 0.4 %

TTM P/E vs. 2 yr forward EPS growth TTM EV/EBITDA vs. 2 yr forward EBITDA growth TTM P/B vs. 2 yr forward RoE

30x

40x

50x

60x

70x

-40%

-20%

0%

20%

40%

60%

80%

100%

120%

0

500

1000

1500

2000

2500

3000

3500

4000

Mar

/14

Jun/1

4

Sep/1

4

Dec/

14

Mar

/15

Jun/1

5

Sep/1

5

Dec/

15

Mar

/16

Jun/1

6

Sep/1

6

Dec/

16

Mar

/17

Jun/1

7

Sep/1

7

Dec/

17

Mar

/18

Jun/1

8

Sep/1

8

Dec/

18

Mar

/19

Jun/1

9

Sep/1

9

Dec/

19

Mar

/20

EPS Growth

0%

5%

10%

15%

20%

25%

30%

35%

40%

0

20000

40000

60000

80000

100000

120000

140000

160000

Mar

/14

Jun/1

4

Sep/1

4

Dec/

14

Mar

/15

Jun/1

5

Sep/1

5

Dec/

15

Mar

/16

Jun/1

6

Sep/1

6

Dec/

16

Mar

/17

Jun/1

7

Sep/1

7

Dec/

17

Mar

/18

Jun/1

8

Sep/1

8

Dec/

18

Mar

/19

Jun/1

9

Sep/1

9

Dec/

19

Mar

/20

9x

12x

15x

18x

21xEBITDA Growth

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

0

500

1000

1500

2000

2500

3000

Mar

/14

Jun/1

4

Sep/1

4

Dec/

14

Mar

/15

Jun/1

5

Sep/1

5

Dec/

15

Mar

/16

Jun/1

6

Sep/1

6

Dec/

16

Mar

/17

Jun/1

7

Sep/1

7

Dec/

17

Mar

/18

Jun/1

8

Sep/1

8

Dec/

18

Mar

/19

Jun/1

9

Sep/1

9

Dec/

19

Mar

/20

RoE

3x

4x

5x

6x

7x



Historical Consolidated Financials

P&L (Rs Mn) FY15A FY16A FY17A FY18A Balance Sheet (Rs Mn) FY15A FY16A FY17A FY18A Cash Flow (Rs Mn) FY15A FY16A FY17A FY18A

Revenue 14,771 18,496 21,194 23,341 Equity Capital 415 467 467 467 PBT 146 1,569 1,569 1,958

Op. Expenditure 12,763 15,571 18,058 19,323 Reserve 3,677 8,345 9,183 10,286 Depreciation 1,168 1,151 1,384 1,537

EBITDA 2,008 2,924 3,136 4,018 Networth 4,092 8,812 9,650 10,754 Others 924 804 820 802

Depreciation 1,168 1,151 1,384 1,537 Gross Debt 7,470 6,600 8,196 8,305 Taxes Paid 69 202 331 417

EBIT 840 1,773 1,752 2,482 Def Tax Liability 94 67 80 106 Change in WC -617 222 -246 582

Interest Expense 783 840 806 837 Minority Interest 383 401 405 8 Operating C/F 1,553 3,543 3,196 4,463

Other Income 89 635 623 313 Account Payables 1,529 1,716 1,976 2,511 Capex -1,691 -2,343 -6,324 -3,385

PBT 146 1,569 1,569 1,958 Other Curr Liabi 720 1,376 1,950 1,805 Change in Invest -139 -513 499 -278

Tax 8 467 570 704 Total Liabilities & Equity 14,288 18,972 22,257 23,488 Others -224 -136 -496 -390

PAT bef. MI & Assoc. 138 1,102 999 1,253 Net Fixed Assets 7,766 9,139 10,750 11,554 Investing C/F -2,054 -2,992 -6,321 -4,054

Minority Interest -11 5 1 -7 Capital WIP 611 759 1,056 1,017 Change in Debt 1,337 -522 1,439 255

Profit from Assoc. 0 0 0 -7 Others 4,342 4,515 7,647 7,940 Change in Equity 100 3,522 10 0

Recurring PAT 149 1,097 999 1,253 Inventory 126 205 190 198 Others -949 -831 -847 -914

Extraordinaires 22 116 41 6 Account Receivables 767 901 1,021 1,556 Financing C/F 488 2,168 602 -660

Reported PAT 128 981 958 1,247 Other Current Assets 415 775 1,284 885 Net change in cash -14 2,720 -2,523 -251

EPS (Rs) 3.2 23.5 21.4 26.8 Cash 261 2,680 309 339 RoE (%) 4 % 17 % 11 % 12 %

DPS (Rs) 1.0 2.0 2.0 2.0 Total Assets 14,288 18,972 22,257 23,488 RoIC (%) 8 % 12 % 9 % 10 %

CEPS (Rs) 31.7 48.2 51.0 59.7 Non-cash Working Capital -942 -1,212 -1,431 -1,677 Core RoIC (%) 7 % 10 % 7 % 9 %

FCFPS (Rs) 5.7 24.5 -55.9 20.2 Cash Conv Cycle -23.3 -23.9 -24.6 -26.2 Div Payout (%) 39 % 11 % 12 % 9 %

BVPS (Rs) 98.5 188.8 206.5 230.1 WC Turnover -15.7 -15.3 -14.8 -13.9 P/E 402.0 54.7 60.1 47.9

EBITDAM (%) 14 % 16 % 15 % 17 % FA Turnover 1.8 1.9 1.8 1.9 P/B 13.0 6.8 6.2 5.6

PATM (%) 1 % 6 % 5 % 5 % Net D/E 1.8 0.4 0.8 0.7 P/FCFF 224.5 52.5 -23.0 63.5

Tax Rate (%) 6 % 30 % 36 % 36 % Revenue/Capital Employed 1.3 1.3 1.2 1.2 EV/EBITDA 33.5 21.9 21.7 16.9

Sales growth (%) 10 % 25 % 15 % 10 % Capital Employed/Equity 2.8 2.2 1.9 1.8 EV/Sales 4.6 3.5 3.2 2.9

FDEPS growth (%) -72 % 635 % -9 % 25 % Dividend Yield (%) 0.1 % 0.2 % 0.2 % 0.2 %



Equirus Securities

Research Analysts Sector/Industry Email Equity Sales E-mail

Abhishek Shindadkar IT Services [email protected] 91-22-43320643 Vishad Turakhia [email protected] 91-22-43320633

Ashutosh Tiwari Auto, Metals & Mining [email protected] 91-79-61909517 Subham Sinha [email protected] 91-22-43320631

Bharat Celly Healthcare [email protected] 91-79-61909524 Viral Desai [email protected] 91-22-43320635

Depesh Kashyap Mid-Caps [email protected] 91-22-43320671 Viraj Mehta [email protected] 91-22-43320634

Dhaval Dama FMCG, Mid-Caps [email protected] 91-79-61909518 Ruchi Bhadra [email protected] 91-22-43320601

Manoj Gori Consumer Durables [email protected] 91-79-61909523 Cash Dealing Room E-mail

Maulik Patel Oil and Gas [email protected] 91-79-61909519 Ashish Shah [email protected] 91-22-43320662

Pranav Mehta Building Materials [email protected] 91-79-61909514 IleshSavla [email protected] 91-22-43320666

Praful Bohra Healthcare [email protected] 91-22-43320611 Manoj Kejriwal [email protected] 91-22-43320663

Rohan Mandora Banking & Financial Services [email protected] 91-79-61909529 Dharmesh Mehta [email protected] 91-22-43320661

Associates E-mail Sarit Sanyal [email protected] 91-22-43320666

Ankit Choudhary [email protected] 91-79-61909533 Vikram Patil [email protected] 91-22-43320677

Dhairya Dhruv [email protected] 91-79-61909528 Gaurav Mehta [email protected] 91-22-43320680

Harshit Patel [email protected] 91-79-61909522 Compliance Officer E-mail

Meet Chande [email protected] 91-79-61909513 Jay Soni [email protected] 91-79-61909561

Nishant Bagrecha [email protected] 91-79-61909526 Corporate Communications E-mail

Prateeksha Malpani [email protected] 91-79-61909532 MahdokhtBharda [email protected] 91-22-43320647

Ronak Soni [email protected] 91-79-61909525 Quant Analyst

Rushabh Shah [email protected] 91-79-61909520 Kruti Shah [email protected] 91-22-43320632

Shreepal Doshi [email protected] 91-79-61909541 F&O Dealing Room

Varun Baxi [email protected] 91-79-61909527 Kunal Dand [email protected] 91-22-43320678

Vikas Jain [email protected] 91-79-61909531 Dhananjay Tiwari [email protected] 91-22-43320668

Mukesh Jain [email protected] 91-22-43320667

Rating & Coverage Definitions: Absolute Rating • LONG : Over the investment horizon, ATR >= Ke for companies with Free Float market cap >Rs 5 billion and ATR >= 20% for rest of the companies • ADD: ATR >= 5% but less than Ke over investment horizon • REDUCE: ATR >= negative 10% but <5% over investment horizon • SHORT: ATR < negative 10% over investment horizon Relative Rating • OVERWEIGHT: Likely to outperform the benchmark by at least 5% over investment horizon • BENCHMARK: likely to perform in line with the benchmark • UNDERWEIGHT: likely to under-perform the benchmark by at least 5% over investment horizon Investment Horizon Investment Horizon is set at a minimum 3 months to maximum 18 months with target date falling on last day of a calendar quarter. Lite vs. Regular Coverage vs. Spot Coverage We aim to keep our rating and estimates updated at least once a quarter for Regular Coverage stocks. Generally, we would have access to the company and we would maintain detailed financial model for Regular coverage companies. We intend to publish updates on Lite coverage stocks only an opportunistic basis and subject to our ability to contact the management. Our rating and estimates for Lite coverage stocks may not be current. Spot coverage is meant for one-off coverage of a specific company and in such cases, earnings forecast and target price are optional. Spot coverage is meant to stimulate discussion rather than provide a research opinion.

Registered Office:

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Tel. No: +91 – (0)22 – 4332 0600

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Disclosure of Interest statement for the subject Company Yes/No If Yes, nature of such interest

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