PVR-Inox's merger proposal gets Sebi, stock exchange nods.  What's ahead?

PVR-Inox’s merger proposal gets Sebi, stock exchange nods. What’s ahead? – Mail Bonus

New Delhi: PVR and have received approval from Sebi and the stock exchanges regarding the proposed merger, three months after the merger announcement.

The next step for the two multiplex owners is to get permission from the National Company Law Tribunal (NCLT), which according to Nirmal Bang Institutional Equities could take another six months.

The Indian Competition Commission (CCI) has not objected to the merger in the last three months, something Street had feared.



As time goes on, the chances of CCI taking up cases decrease. However, CCI remains a key issue that can be monitored until the merger ends, as it has the power to step in at any time during the merger, the broker added.

“Our understanding is that CCI could potentially participate after the merger, if we look at the merged entity that abuses its significant position in the film ecosystem. This would mean that business practices, especially price increases in its various business segments and the relationship between landlord, tenant and buyer and suppliers, would not be abused, “said Nirmal Bang.

Sector outlook

Emkay Global said that the recent performance of Bollywood films has clearly been unmatched, as some medium to high-cost films have not left a mark on ticket sales. Bollywood accounted for 60 percent of the film industry’s total collection in the 16 quarters before the pandemic.

On the other hand, regional (southern) films have managed to attract viewers to the theaters. This, it said, raises some key questions: Is Bollywood struggling with weak content? Are campaigns against Bollywood on social media affecting performance, or is it just volatile as seen in the past?

“In our opinion, the success of films such as The Kashmir Files and Bhool Bhulaiyaa 2 indicates that there is no hostility to the industry and viewers are willing to support the quality material that has been lacking so far. “Given the strength of the line, we expect Bollywood to drop again, leading to an improvement in overall ticket sales,” said Emkay Global, suggesting that the target was Rs 2,165 on PVR and Rs640 on Inox.

The key risks include the escalation of a recent revival in the Covid case and the continuing sad ticket sales of Bollywood films, Emkay said.

“We believe that a turnaround in Bollywood’s assets is important in sustaining the growth of ticket sales, as the performance of regional films (south and not south) outside their core markets is generally scarce,” the broker added.

Nirmal Bang said gross average target price (ATP), F&B spending per capita (SPH) and advertising revenue per screen rose by 3.3 percent, 10 percent and 15 percent, respectively, on FY14-FY20 for PVR.

It states that the increase in ATP has been below inflation in consumer prices during this period, despite the increase in premiums. SPH has shown higher growth than the consumer price index, she said, due to a low base, a richer mix of F&B products and the overvalue of screens.

CAGR on-screen advertising revenue, it said, appears to be higher due to a very low base, on-screen premiums and an increase in advertising minutes.

“We expect that ATP growth will probably accelerate only in the FY20-FY24 time frame to catch up with inflation, but we believe that both SPH and the advertising ratio will probably mix at a slower pace than before. We believe that the advertising rate can rise the fastest of the three, “said Nirmal Bang.

What’s next for PVR, stocks?

Nirmal Bang’s target is Rs 1,788 on PVR and Rs 482 on Inox Leisure.

Edelweiss said the merged company would have an overwhelming presence of 1,546 monitors in the multimedia industry. Players number three and four – Cinepolis and Carnival – are much smaller in terms of screens (420 to 450 each) and have a weaker market, he said.

“With a renewed demand for cinemas, regional films that draw attention to India and a vacuum created by the closure of 1,000 unique screens, the united party will come at the right time to take advantage of the positive in the industry. The recent poor performance of Hindu images is a cause for concern. “Buy” with a goal of 2,106 Rs, “it said.

The average price target for PVR at Rs 2,008 indicates a possible 11 percent increase. The average target for Inox, which is 611.50 rupees, however, indicates a possible 25 percent increase, according to information available from Trendlyne.

(Disclaimer: The opinions, suggestions, opinions and opinions of the experts are their own. This does not represent the views of the Economic Times)

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