PVR - Multiplex Behemoth Arrives: Prabhudas Lilladher
Synergy benefits of Rs 2.25 billion to accrue over next 12-24 months at Ebitda level.
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Prabhudas Lilladher Report
We increase our pre-Indian Accounting Standard Ebitda estimates for merged entity by 7.0%/7.5% for FY24E/FY25E, as we expect synergy benefits of ~Rs 2 billion to accrue over next two years. The PVR Ltd.-INnox Leisure Ltd. merger is expected to-
lend invincible size advantage to combined entity (18%/30% screen/box office share respectively),
enhance balance sheet strength (Inox had net cash balance sheet as of January end) enabling rapid expansion into new markets and
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.
Though there are concerns over Bollywood underperformance, we believe it is not a structural issue (NBOC of Pathaan stood at ~Rs 5.4 billion despite high decibel negative campaigns); but a problem of content, as over-the-top proliferation has raised the bar of audience expectations from big screen.
We expect merged entity to report footfalls of 170 million/185 million and pre-IND AS Ebitda margin of 19.7%/21.0% in FY24E/FY25E respectively.
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