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Q1FY21 Result Review

TP Rs1,520 Key Stock Data PVR (PVRL) BUY CMP Rs1,265 Bloomberg / Reuters PVRL IN /PVRL.BO Potential upside / downside +20% Sector Media Excellent cost management amid shutdown Previous Rating BUY Shares o/s (mn) 51

Summary V/s Consensus Market cap. (Rs mn) 69,794 PVRL has demonstrated strong cost management in Q1FY21 amid the shutdown of EPS (Rs) FY21E FY22E Market cap. (US$ mn) 1,008 Cinemas. Its EBITDA loss of Rs1.16bn was lower than our forecast of Rs1.3 bn. IDBI Capital (Ex-IndAS) (60.9) 59.0 3-m daily avg Trd value (Rs mn) 622.7 PVRL expects the cash-burn in Q2FY21 to be even lower QoQ. Further, it is confident Consensus 28.5 32.4 52-week high / low Rs2,083/707 that part of the cost optimization initiatives to be sustainable. PVRL is hopeful of % difference N.M. N.M. Government providing the date for reopening of Cinemas towards the end- September Sensex / Nifty 39,044 / 11,522 in ‘Open-up 5.0’. It is hopeful of Cinemas being allowed to be reopened in October. We factor shutdown in Q2FY21 and addition of 24 screens in FY21 vs. 40 earlier. We Shareholding Pattern (%) Relative to Sensex (%)

factor addition of these towards the end of Q4FY21 and factor utilization of additional Promoters 18.6 135.0 capacity only in FY22. We trim FY22 EBITDA by 3.6%. We see high probability of FII 37.0 Cinemas being allowed to be opened in October which coupled with capital 115.0 DII 15.3 augmentation and excellent cost management execution makes us increase our target 95.0 Public 29.1 EV/EBITDA to 13x FY22E vs. 12x earlier. We maintain BUY with new TP of Rs1,520. 75.0

Key Highlights and Investment Rationale Price Performance (%) 55.0  Strong cost management amid shutdown of Cinemas in Q1FY21 35.0

Adjusted for CAM provision and inventory write-off, the avg. monthly cash-burn in Q1 -1m -3m -12m

Jul-19 Jul-20

Jan-20

Jun-19 Jun-20

Oct-19

Apr-20

Sep-19 Feb-20 Sep-20

Dec-19 Aug-20

Absolute 1.8 27.4 (18.7) Aug-19

Nov-19 Mar-20 was at Rs327 mn vs. guidance of Rs400-450 mn. PVRL expects avg. monthly employee May-20 cost decline to Rs130-140 mn in Q2FY21 vs. avg. Rs227 mn in Q1. Importantly, PVRL Rel to Sensex (1.3) 9.9 (23.2) PVR Ltd. Sensex expects part of the cost optimization initiatives to sustain in H2FY21 and beyond.  Raising capital has never been a problem for PVRL; not now either Financial snapshot (Rs mn) PVRL has raised Rs3 bn from rights issue (subscribed 2.24x) and now has cash of Rs4 Year FY18 FY19 FY20 FY21E* FY22E* bn and un-drawn banking lines of Rs1.5 bn. This places it in extremely comfortable Revenue 23,341 30,856 34,144 14,246 37,908 position amid the shut-down of Cinemas and for transitioning to normal operations. EBITDA 4,018 5,863 5,761 407 6,895  Positive response from property owners, as expected EBITDA (%) 17.2 19.0 16.9 2.9 18.2 PVRL has reached out to all its property owners for invocation of Force Majeure Adj. PAT 1,247 1,843 273 (3,269) 3,168 clause and has got positive response from almost all of them. It might have to pay EPS (Rs) 26.7 39.4 5.3 (60.9) 59.0 small part of the CAM charges as malls have reopened and which would increase EPS Growth (%) 30.2 47.8 (86.5) N.M. N.M. when Cinemas reopen. Further, it is also engaging them for lowering rentals through PE (x) 47.4 32.1 237.9 N.M. 21.5 revenue-sharing model till end-FY21 and beyond. We expect PVRL to leverage its Dividend Yield (%) 0.2 0.2 0.2 - 0.2 market leadership and get positive response from property owners. EV/EBITDA (x) 16.7 12.2 13.0 N.M. 10.8  Factor addition of 24/60 screens for FY21/22 RoE (%) 12.2 15.9 1.6 N.M. 14.1 For FY21 we have factored addition of 24 screens where 90%+ work has already been RoCE (%) 13.3 16.9 11.1 N.M. 13.1 completed. Additionally, PVRL has another 28 screens which are under fit-out. Source: Company; IDBI Capital Research.*Adjusted for Ind-AS impact

Urmil Shah | [email protected] | +91-22- 2217 1861  Jayalaxmi Gupta | [email protected] | +91-22- 2217 1842 September 16, 2020

PVR | Q1FY21 Result Review

Exhibit 1: Financial snapshot (Rs mn)

Year to March (Rs mn) Q1FY21 Q1FY20 YoY (%) Revenue 127 8,804 N.M. COGS 969 5,174 N.M. Gross profit (842) 3,630 N.M. Other Expenses 317 2,043 N.M. EBITDA (1,159) 1,587 N.M. Depreciation & amortization 603 549 9.8 EBIT (1,762) 1,038 N.M. Other income (1) 68 N.M. Interest cost 353 415 N.M. PBT (2,116) 690 N.M. Tax (707) 248 N.M. Minority interest (0) 0 N.M. Adjusted net profit (1,410) 443 N.M. Ind-AS 116 impact (847) (267) N.M. Reported net profit (2,256) 176 N.M. Recurring EPS (Rs) (27.5) 9.5 N.M. As % of net revenue Gross profit (663.0) 41.2 SG&A 249.7 23.2 EBITDA (912.7) 18.0 EBIT (1,387.7) 11.8 Reported net profit (1,776.5) 8.1 Tax rate 33.4 35.9 Source: Company; IDBI Capital Research.

PVR | Q1FY21 Result Review

Exhibit 2: Actual vs. estimates

Year-end: March Q1FY21 Q1FY21E Variance (%) Revenue (Rs mn) 127 38 N.M. EBITDA* (Rs mn) (1,159) (1,308) (11.4) EBITDA margin* (%) N.M. N.M. N.M. PAT *(Rs mn) (1,410) (2,133) (33.9) PAT margin* (%) N.M. N.M. N.M. EPS* (Rs) (27.5) (41.6) (33.9) Source: Company; IDBI Capital Research; *Adjusted for Ind-AS impact

Exhibit 3: Earnings revision Year to March FY21E* FY22E* New Old Ch (%) New Old Ch (%) Revenue (Rs mn) 14,246 22,535 (36.8) 37,908 40,970 (7.5) EBITDA* (Rs mn) 407 1,016 (59.9) 6,895 7,154 (3.6) EBITDA margin* (%) 2.9 4.5 (165)bps 18.2 17.5 73bps Net Profit (Rs mn) (2,423) (2,597) N.M. 3,168 2,831 11.9 EPS* (Rs) (45.1) (48.0) N.M. 59.0 52.3 12.7 Source: Company; IDBI Capital Research; *Adjusted for Ind-AS impact

Exhibit 4: One-year forward EV/EBITDA trend 150,000 130,000 110,000 90,000

70,000 (Rs) 50,000 30,000 10,000

(10,000)

Jul-18 Jul-19 Jul-20

Jan-19 Jan-20

Jun-16 Jun-17 Jun-18 Jun-19 Jun-20

Oct-18 Oct-19

Apr-19 Apr-20

Feb-18 Sep-15 Feb-16 Sep-16 Feb-17 Sep-17 Sep-18 Sep-19 Sep-20

Dec-15 Dec-16 Dec-17 Dec-18 Dec-19

Aug-15 Aug-16 Aug-17

Nov-15 Nov-16 Nov-17

Mar-16 Mar-17 Mar-18 Mar-19 Mar-20

May-16 May-17 May-18 6x 10x 14x 18x Source: Company; IDBI Capital Research

PVR | Q1FY21 Result Review

Exhibit 5: Content pipeline Bollywood Movie Cast Director Sandeep aur Pinky faraar Arjun Kapoor, Parineeti Chopra Dibakar Banerjee Mimi Kriti Sanon, Pankaj Tripathi Laxman Utekar Chhalang Rajkummar Rao, Nushrat Bharucha Hansal Mehta Ram Prasad ki tervi Naseeruddin Shah, Vinay Pathak Seema Pahwa Sooryavanshi Akshay Kumar, Katrina Kaif Rohit Shetty Jhund Amitabh Bachchan Nagraj Manjule 83 Ranveer Singh, Deepika Padukone Kabir Khan Toofan Farhan Aktar, Paresh Rawal Rakeysh Omprakash Mehra Mumbai Saga John Abraham, Emraan Hashmi Sanjay Gupta Rooh-afza Rajkummar Rao, Janhvi Kapoor Hardik Mehta Sardar Udham Singh Vicky Kaushal Shoojit Sircar Jayesh Bhai Jordaar Ranveer Singh, Boman Irani Krishna Bhatt Shamshera Ranbir Kapoor, Sanjay Dutt Karan Malhotra Bunty aur Babli 2 Saif Ali Khan, Rani Mukherji Varun V Sharma Hungama 2 Shilpa Shetty,Paresh Rawal Priyadarshan Haseen Dilruba Taapsee, Vikrant Massey Vinil Matthew Jersey Shahid Kapoor, Pankaj Kapur Gowtham Tinnanuri Indoo ki jawani Kiara Advani, Aditya Seal Abir Sengupta 99 songs Lisa Ray, Ehan Bhat Dibakar Banerjee Bad Boys Namashi Chakraborty, Amrin Quershi Rajkumar Santoshi Badnaam Mohit Sehgal, Priyanka Ghor Krishna Bhatt Aadhar Saurabh Shukla, Raghubir Yadav Suman Ghosh Hollywood Wonder woman 1984 Gal Gadot, Kristen Wiig Patty Jenkins Unhinged Russell Crowe Derrick Borte Black Widow Scarlett Johansson,Robert Downey Jr Cate Shortland No time to die Daniel Craig, jeffrey wright Cary Joji Fukunaga Peter Rabbit 2 James Corden, Lennie James Will Gluck Dune Zendaya, Jason Momoa Denis Villeneuve The King's man Aaron Taylor-Johnson, Gemma Arterton Matthew Vaughn

PVR | Q1FY21 Result Review

Movie Cast Director Ghostbusters Afterlife Finn Wolfhard, Mckenna Grace Jason Reitman Tom & Jerry Chloë Grace Moretz, Michael Peña Tim Story Morbius Daniel Craig, Jeffrey Wright Cary Joji Fukunaga The boss baby 2 Alec Baldwin, John Flanagan Tom McGrath Regional Ghye Double Mahesh Manjrekar, Nana Patekar Vishwas Joshi Daddy cool munde fool 2 Jassi Gill, Ranjit Bawa Simerjit Singh Jodi Diljit Dosanjh, Nimrat Khaira Amberdeep Singh Puaada Sonam Bajwa, Ammy Virk Rupinder Chaha Qismat 2 Sargun Mehta, Ammy Virk Jagdeep Sidhu Yaar anmulle returns Rana Jung Bahadur, Navpreet Banga Harry Bhatti Posti Surilie Gautam, Babbal Rai Rana Ranbir Roberrt Jagapathi Babu, Darshan Thoogudeep Tarun Sudhir KGF 2 Sanjay Dutt, Yash Prashanth Neel Kotigobba 3 Kichacha Sudeep, Nithya Memen K.S. Ravikumar Phantom Kichacha Sudeep, Anup Bhandari Rangi Taranga 777- Charlie Charlie, Rakshit Shetty Kiranraj K Acharaya Chiranjeevi, Keerthy Suresh Koratala Siva Karnan Jdhanush, Rajisha Vijayan Mari Selvaraj Ponniyin Selvan Trisha Krishnan, Aishwarya Rai Mani Ratnam Pushpa Allu Arjun, Rashmika Mandhana Sukumar Thalaivar 169 Rajnikanth, Kushboo Siva Cobra Vikram, Irfan Pathan R. Ajay Gnanamuthu Vakeelsaab Prakash Raj, Pawan Kalyan Venu Sriram Ayyappanum Koshiyum Prithviraj Sukumaran, Biju Menon Sachy Seeti maar Tamannaah Bhatia, Bhoomika Chawla Sampath Nandi Golgappe Rajat Bedi, Binnu Dhillon Smeep Kang Bhoomi Niddhi Agerwal, Jayam Ravi Lakshman Love Story Naga Chaitanya , Sai Pallavi Sekhar Kammula Jagame Thanthiram Dhanush, James Cosmo Karthik Subbaraj Source: Company; IDBI Capital Research

PVR | Q1FY21 Result Review

Exhibit 6: Cinemas have re-opened across 70+ countries globally Country Opening date Restrictions Response United States 4th September Varying between from 25% to 60% Tenet Global collections exceed US $200 mn across states Canada 26th June 50 persons per auditorium 'Unhinged' grosses $12.2mn in US/Canada China 20th July Initial capacity at 30%; increased to Eight Hundred' and 'Love You Forever' gross revenue 50% >USD 350mn & USD 70mn. BO collections jump ~3x in first 4 weeks since re-opening

Japan 1st June Alternate seating Fate/stay night earned 475mn yen to become the top grossing film of the weekend South Korea 29th April 50% capacity restriction Peninsula' doing a business of $33mn and 'Steel Rain 2' pocketing $5mn over the first weekend have been great successes

United Kingdom 4th July 50 people Tenet opens with GBP 5.4mn at UK-Ireland box office France 22nd June Alternate seating; capacity restricted France announced $196mn rescue package for France's to 50% National Cinema Centre

Source: Company; IDBI Capital Research

PVR | Q1FY21 Result Review

Financial Summary*

Profit & Loss Account (Rs mn) Cash Flow Statement (Rs mn)

Year-end: March FY19 FY20 FY21E FY22E Year-end: March FY19 FY20 FY21E FY22E

Net sales 30,856 34,144 14,246 37,908 Pre-tax profit 3,002 2,293 (3,129) 3,954

Growth (%) 32.2 10.7 (58.3) 166.1 Depreciation 1,913 2,324 2,193 2,403

Operating expenses (24,992) (28,383) (13,839) (31,013) Tax paid (99) (985) 707 (787)

EBITDA 5,863 5,761 407 6,895 Chg in working capital 5,552 (5,546) (806) 969 Growth (%) 45.9 (1.7) (92.9) 1,594.5 Other operating activities (2,143) 4,694 487 (1,825) Depreciation (1,913) (2,324) (2,270) (2,403) Cash flow from operations(a) 8,225 2,780 (548) 4,714 EBIT 3,951 3,437 (1,863) 4,493 Capital expenditure (15,213) (2,469) (720) (3,200) Interest paid (1,280) (1,522) (1,407) (1,287) Chg in investments 99 89 - - Other income 331 378 141 748 Other investing activities - - - - Pre-tax profit 3,002 2,293 (3,129) 3,954 Cash flow from investing(b) (15,114) (2,380) (720) (3,200) Tax (1,097) (1,077) 707 (787) Equity raised/(repaid) - 5,000 2,996 - Effective tax rate (%) 36.5 47.0 22.6 19.9 Debt raised/(repaid) 4,519 123 - (2,500) Minority Interest (61.8) 0.1 (0.4) - Dividend (incl. tax) (112) (123) - (107) Adjusted Net profit 1,843 1,216 (2,423) 3,168 Chg in minorities 2,496 (2,563) (3) - Ind-AS impact - 943 847 -

Reported net profit 1,843 273 (3,269) 3,168 Other financing activities - - - -

Growth (%) 47.8 (85.2) (1,297.5) (196.9) Cash flow from financing(c) 6,903 2,482 3,020 (2,607)

Shares o/s (mn nos) 46.7 51.4 53.7 53.7 Net chg in cash (a+b+c) 14 2,882 1,753 (1,093)

PVR | Q1FY21 Result Review

Balance Sheet (Rs mn) Financial Ratios

Year-end: March FY19 FY20 FY21E FY22E Year-end: March FY19 FY20 FY21E FY22E

Net fixed assets 30,216 30,360 28,887 29,685 Adj EPS (Rs) 39.4 5.3 (60.9) 59.0

Investments 100 11 11 11 Adj EPS growth (%) 47.8 (86.5) N.M. N.M.

Other non-curr assets 3,886 939 231 1,137 EBITDA margin (%) 19.0 16.9 2.9 18.2

Current assets 3,934 9,932 9,222 11,528 Pre-tax margin (%) 9.7 6.7 N.M. 10.4

Inventories 303 307 137 364 ROE (%) 15.9 1.6 N.M. 14.1

Sundry Debtors 1,839 1,893 1,171 2,181 ROCE (%) 16.9 11.1 N.M. 13.1

Cash and Bank 352 3,235 4,987 3,894 Turnover & Leverage ratios (x)

Loans and advances 333 2,482 1,561 2,804 Asset turnover (x) 1.0 0.9 0.4 0.9

Total assets 38,135 41,242 38,351 42,360 Leverage factor (x) 2.7 2.4 1.9 1.8

Net margin (%) 6.0 0.8 N.M. 8.4

Shareholders' funds 12,395 21,281 21,012 24,072 Net Debt / Equity (x) 1.0 0.5 0.4 0.3

Share capital 467 514 537 537 Working Capital & Liquidity ratio

Reserves & surplus 11,928 20,768 20,475 23,535 Inventory days 4 3 4 4

Total Debt 12,824 12,947 12,947 10,447 Receivable days 22 20 30 21

Secured loans 12,824 12,947 12,947 10,447 Payable days 55 40 41 40

Unsecured loans - - - - Valuation Other liabilities 2,566 3 - - Year-end: March FY19 FY20 FY21E FY22E

Curr Liab & prov 10,350 7,011 4,392 7,841 P/E (x) 32.1 237.9 N.M. 21.5

Current liabilities 10,136 6,832 4,295 7,582 Price / Book value (x) 4.8 3.1 3.2 2.8 Provisions 215 180 98 260 PCE (x) 15.7 25.0 N.M. 12.2

Total liabilities 23,174 19,958 17,339 18,288 EV / Net sales (x) 2.3 2.2 5.3 2.0

Total equity & liabilities 38,135 41,242 38,351 42,360 EV / EBITDA (x) 12.2 13.0 N.M. 10.8

Book Value (Rs) 265 414 391 448 Dividend Yield (%) 0.2 0.2 - 0.2

Source: Company; IDBI Capital Research; *Adjusted for Ind-AS impact

PVR | Q1FY21 Result Review

Notes

Dealing (91-22) 6836 1111 [email protected]

Key to Ratings Stocks: BUY: Absolute return of 15% and above; ACCUMULATE: 5% to 15%; HOLD: Upto ±5%; REDUCE: -5% to -15%; SELL: -15% and below.

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PVR | Q1FY21 Result Review

Analyst Disclosures

We, Urmil Shah and Jayalaxmi Gupta, hereby certify that the views expressed in this report accurately reflect our personal views about the subject companies and / or securities. We also certify that no part of our compensation were, are or would be directly or indirectly related to the specific recommendations or views expressed in this report. Principally, We will be responsible for the preparation of this research report and have taken reasonable care to achieve and maintain independence and objectivity in making any recommendations herein.

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