Is PVR a Good Stock to Invest In?

As of 24/09/2021, it has been observed that the 1500 level has acted as a resistance level for PVR multiple times. This indicates repeated buying pressure at this price point, suggesting a positive sentiment towards the stock. Accumulating PVR near this level could be smart, as a breakout is likely to occur, leading to a significant but cautious move in the stock price.

Moreover, the government's positive move in opening all multiplexes soon is a positive sign for the company, further adding to the optimism around PVR. To get a more technical understanding of the current price level and its implications, I recommend checking out this short video of the technical analysis of PVR as of 24/09/2021.

Introduction to PVR

Did you know that PVR stands for Priya Village RoadshowPVR? This enigmatic company began as a joint venture between Priya Exhibitors Private Limited and Village Roadshow Limited in 1995, with Ajay Bijli at the helm as the chairman and managing director. Decades later, PVR has grown into a dominant force in the Indian multiplex cinema chain, with a significant presence across key cities in India and Sri Lanka.

About PVR

Founded by Ajay Bijli, PVR began its commercial operations in June 1997. Today, it is one of the largest multiplex cinema chains in India, with approximately 845 screens across 176 cinemas in 71 cities in India and Sri Lanka. The company's strong presence is evident in major cities such as Delhi, Mumbai, Chennai, Bengaluru, and Kolkata, among others.

PVR has taken the lead in the entertainment industry, thanks to its innovative business models and strategic acquisitions. Notably, the CineMAX cinema chain was acquired by Cine Hospitality Private Ltd, a subsidiary of PVR Cinemas, solidifying PVR's position as the largest cinema chain in India. The company also has several subsidiaries, including PVR Pictures, SPI cinemas, and PVR NEST, each contributing to its diverse range of business activities.

Business Model of PVR

PVR is a leading multifaceted multiplex cinema exhibition company, engaged in distribution, production, and in-house advertisement sales of food, beverages, gaming, and restaurant businesses. The company pioneered the multiplex revolution in India, establishing the country's first multiplex cinema.

Revenue-generating operations for PVR include the sales of movie tickets, which contribute to 52% of the total revenue, followed by the sale of food and beverages at 27%. Additionally, the company benefits from advertisement income, convenience fees, and other miscellaneous revenues. Despite the challenges posed by the pandemic, PVR is constantly looking to improve its ticket sales to maximize profits.

Strengths of PVR

Advanced Technologies: PVR uses advanced sound systems like Dolby stereo sound, digital cinema technology, and xenon technology for their screenings. More Screens: PVR has a significantly higher number of screens compared to other multiplex competitors, resulting in a market leadership position. Quality Ambiance: Creating state-of-the-art multiplex venues to ensure customers enjoy a superior experience. Bigger Screens: Larger screens compared to other multiplexes, providing a fuller cinematic experience.

Weaknesses of PVR

High Ticket Costs: PVR's average ticket prices are higher than other multiplexes, which sometimes deter customers. Competition: Intense competition from similar multiplex operators is a significant challenge for the company.

Financials of PVR

The financial performance of PVR over the past five years reveals interesting insights. While sales and profit growth have shown a downward trend, the company’s operating profit margin has improved over the last five years. Net profit experienced a steep decline in March 2020, which is heavily influenced by the global pandemic. Despite this, the company’s balance sheet shows an increase in borrowings and reserves, indicating growth potential.

In conclusion, while PVR’s growth has been impacted by the pandemic, its strong footing in the industry suggests it will continue to show growth. The upcoming years are likely to bring significant changes, driven by technological advancements, expansions, and strategic acquisitions.