PVR Inox Stock Rating Revised to Buy with a Target Price of Rs 1309 by Prabhudas Lilladher

PVR Inox Reports Better-Than-Expected Performance

PVR Inox has reported a better-than-expected performance, with its pre-IND AS EBITDA margin standing at 9.0% in the recent period. This is a notable improvement over the previous estimate of 8.0%. The company's performance was driven by a 22.1% year-over-year (YoY) growth in Average Ticket Price (ATP) to Rs315 and a 32.0% YoY growth in Screen Patron Hours (SPH) to Rs165. The success of movies like Dhurandhar: The Revenge and Border-2 contributed to this growth.

The company's financial performance has also led to a significant improvement in its balance sheet strength. PVR Inox has generated a free cash flow of Rs7,901 million, resulting in a decline in net debt to Rs1,619 million in fiscal year 2026. Furthermore, the company is shifting its focus towards a capital-light model, with 138 screens signed under the FOCO/asset-light model. This pivot is expected to aid in cash preservation, maintain balance sheet strength, and improve capital efficiency.

Outlook and Valuation

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PVR Inox trades at an attractive valuation of 9x/7x our fiscal year 2027E/fiscal year 2028E pre-IND AS EBITDA estimates. We expect modest footfall growth of 4.7% over fiscal year 2026-fiscal year 2028E, with pre-IND AS EBITDA margins of 14.0%/15.7% in fiscal year 2027E/fiscal year 2028E, driven by tight cost control and disciplined screen churn.

Recommendation

We retain a BUY rating on PVR Inox with a target price of Rs1,309 (9.5x fiscal year 2028E pre-IND AS EBITDA; no change in target multiple).