Why are brokerages bullish on this BSE500 stock that hit 46-month low today

Shares of PVR Inox hit a 46-month low of Rs 968, falling 3 per cent on the BSE in Tuesday's intra-day trade in an otherwise firm market

Shares of multiplex chain PVR Inox hit a 46-month low of ₹968, falling 3 per cent on the BSE in Tuesday’s intraday trade in an otherwise firm market. The stock of the film exhibitor, which was trading at its lowest level since April 2021, ended the day with a loss of 1.9 per cent. It has corrected 44 per cent from its 52-week high of ₹1,748, touched on September 27, 2024.

 

PVR Inox is the market leader in the multiplex space in India. It currently operates 1,728 screens in 111 cities across India and Sri Lanka. Its revenue primarily comes from box-office (BO) ticket sales, along with high-margin food and beverage sales, on-screen advertising, and convenience fees from online bookings.

 

 

While the stock is under pressure, brokerages are positive about the outlook for the multiplex major, given its strong movie pipeline, asset-light strategy, valuations, and margin improvement as operating leverage kicks in.

 

In the 2024-25 (FY25) October–December quarter (Q3), PVR Inox recorded the highest BO collections of this financial year, driven by multiple blockbuster releases. This strong performance led to the highest quarterly average ticket price and spend per head, which reached ₹281 and ₹140, respectively. Advertising revenues touched '149 crore, the highest since the pandemic.

 

Analyst Vaibhav Muley of Yes Securities says, “Q3FY25 marked a turnaround for the company, with net profit turning positive after three consecutive quarters of net losses. Q3 net profit materially beat estimates, led by better-than-expected operating margins, while revenue was broadly in line.”

 

The content lineup for 2025, according to the brokerage, looks robust and much better year-on-year, with Hollywood movies making a comeback. The Bollywood and regional film lineup is also strong. The brokerage is optimistic about the revival of the movie exhibition industry and maintains a ‘buy’ rating on the company with a target price of ₹1,875. 

 

Calendar year (CY) 2025 got off to a good start, with four movies grossing ₹100 crore in BO collections in January. For Bollywood, movies like Chhaava, Sikandar, and Shankara are expected to drive fourth quarter performance. The BO is also expected to see a star-studded pipeline across all languages, with Hollywood featuring three Marvel releases, including Mission: Impossible — The Final Reckoning, F1, and a few other major titles. On the regional front, Thunder, Kantara: Chapter 2, and Thalapathy 69 are expected to boost footfall in CY 2025.

 

Accordingly, analysts at ICICI Securities expect footfall to reach 179 million in 2026-27 (FY27), driving a 7.2 per cent/11.3 per cent compound annual growth rate in BO/food and beverage revenues over 2023-24 through FY27 to ₹4,039 crore/₹2,689 crore in FY27. The brokerage firm expects margins to recover as content performance and ad recovery-led operating leverage kicks in. Analysts have factored in operating profit margins (ex-Ind AS) of 8.6 per cent/14.4 per cent/15.6 per cent in FY25/2025-26/FY27, respectively. The brokerage firm sees multiplexes as a proxy play on consumption recovery and maintains a ‘buy’ rating on PVR Inox, with a target price of ₹1,390 per share.

 

Analysts at JM Financial Institutional Securities said the content lineup for CY 2025 looks promising. Hollywood anticipates a strong rebound with movies such as Captain America: Brave New World, The Fantastic Four: First Steps, Avatar: Fire and Ash, and Jurassic World Rebirth.

 

For Bollywood, the lineup includes Sitaare Zameen Par, Chhaava, Shankara, The Diplomat, and Sikandar. The regional cinema pipeline is also strong. Management is optimistic about the increased number of movies lined up, as this aids occupancy. Re-releases, which the company is improving at, provide an additional buffer, the brokerage firm said.

 

The company expects to add 31 screens under the management contract model and 69 screens under the asset-light model. This shift promises to improve cash generation and aid net debt reduction. Controlling fixed costs bodes well for margin expansion, JM Financial analysts said in their Q3 results update. The firm has a ‘buy’ rating on the stock with a target price of ₹1,610 per share, citing attractive valuations.