PVR Inox Shares Continue Slump After Q4: Why Brokerages Remain Upbeat

Shares of PVR Inox were deep in the red as the company’s March quarter results disappointed investors.

What Happened: The multiplex chain reported a decrease in its net losses to ₹129.5 crore for the March quarter, compared to ₹333 crore in the same period last year. Meanwhile, the company’s revenue from operations rose to ₹1,256.4 crore, marking a 9% increase from the ₹1,143 crore posted in the same quarter last year.

Analyst Reactions: Besides the market reaction to the Q4 numbers, brokerages remain cautiously upbeat on the stock’s prospects. Kotak Securities maintained its “add” rating for the stock but cut its price target to ₹1,480 from ₹1,500. The brokerage said that the company’s performance during the quarter was subdued but expected. The analysts added that the April-June period is likely to be weak as well due to general elections and the ICC Cricket T20 World Cup. The brokerage also pointed out that the company’s footfalls increased to 3.26 crore which was in line with its estimates.

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Emkay Global also maintained its “buy” rating for the stock with a price target of ₹1,650. Emkay’s analysis of PVR Inox’s Q4 results highlights a subpar performance attributed to a weak movie lineup lacking tentpole films. The report notes a sequential decline in footfalls, average ticket price (ATP), and spend per head (SPH), which can be attributed to the weak performance of movies and promotional offers during the period.

Motilal Oswal also maintained its “neutral” rating for the stock with a price target of ₹1,400. The brokerage firm said that the 2024 general elections and T20 Cricket World Cup are likely to weigh on the June quarter movie pipeline, which could lead to lower occupancy. Taking that into account the analysts cut their EBITDA estimates by 24% and 13% for FY25 and FY26.

On the other hand, HSBC downgraded the stock’s rating to “hold” from “buy” revising the price target to ₹1,520 from ₹1,870. The brokerage said that the company reported its weakest quarter for FY24. The brokerage said that it expects any meaningful recovery to happen only in the second half od the year ending March 2024.

Price Action: PVR Inox’s share price was down 1.48% to trade at ₹1,278.30 in early trade on Wednesday.

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