PVR Inox gains from stronger footfalls, pricing and asset-light expansion

Investment View

Prabhudas Lilladher retained its BUY rating on PVR Inox following what it described as the company’s best first-quarter operating performance in four years. The broker believes the combination of an improved price-volume mix, cost control, stronger balance-sheet health and increasing adoption of the asset-light FOCO model should support cash flow, capital efficiency and return ratios.

Q1 FY27 Operating Performance

Consolidated revenue increased 11.9% year on year and 4.8% quarter on quarter to Rs 16,222 million in Q1 FY27, slightly below Prabhudas Lilladher’s estimate of Rs 16,523 million. Footfalls rose 7.6% year on year to 36.6 million, supported by Bhoot Bangla, Cocktail-2, Michael, Obsession and collection spill-over from Dhurandhar: The Revenge.

Margin Expansion and Profitability

The stronger operating outcome was principally margin-led. Pre-Ind AS adjusted EBITDA more than doubled year on year to Rs 2,092 million, while the margin expanded to 12.9% from 7.1% in Q1 FY26 and exceeded the broker’s expectation of 11.3%. Lower-than-expected other expenses of Rs 4,529 million, against the estimate of Rs 5,200 million, and lower food and beverage expenses of Rs 1,180 million, versus Rs 1,240 million estimated, supported the beat.

Ind AS adjusted PAT was Rs 705 million, compared with a loss of Rs 264 million in Q1 FY26 and the broker estimate of Rs 433 million. Reported PAT stood at Rs 565 million, against a reported loss of Rs 474 million a year earlier.

Balance Sheet and Asset-Light Expansion

Management indicated that PVR Inox had moved to a net cash position of Rs 807 million as of June 2026, supported by consistent free-cash-flow generation and disciplined capital allocation.

The company expects to open 100 screens in FY27E, representing 80 net additions. FY27E capex has been reduced to about Rs 3,500 million as the company adopts a capital-light model and prioritises renovation of high-value assets. Screen additions are expected to accelerate from FY28E through expansion in underpenetrated Tier 2 and Tier 3 cities using the FOCO model. Prabhudas Lilladher estimates that 79% of FY27E screen additions will follow an asset-light route.

Pricing, Monetisation and Alternate Programming

• Management attributed ticket-price growth to AI-enabled dynamic pricing, premium formats and differentiated pricing by show time.
• Food and beverage spend growth reflected a 70:30 contribution from pricing and volume.
• Online ticket penetration reached about 69%, although further growth is expected to moderate as penetration matures.
• Web and app monetisation has been launched, with initial annual revenue potential of about Rs 20–30 million.
• Alternate programming generated an average ticket price of about Rs 409 in Q1 FY27. However, content costs can range from 35% to 70% of ticket revenue depending on the event and artist.

Financial Outlook

Prabhudas Lilladher expects a modest footfall CAGR of 4.7% over FY26–FY28E. Pre-Ind AS EBITDA margins are forecast at 14.1% in FY27E and 15.7% in FY28E, driven by cost discipline and screen churn.

FY27E and FY28E EPS estimates were reduced by 1.2% and 1.6%, respectively.

Valuation

The broker’s Rs 1,307 target price is based on 9.5 times FY28E pre-Ind AS EBITDA, with no change in the target multiple. The stock trades at 10 times FY27E and 8 times FY28E pre-Ind AS EBITDA, according to Prabhudas Lilladher.