Business of PVR Ltd.
PVR Cinemas is the largest multiplex cinema operator in the country by number of screens. This consists of 10 cinemas with a total of 39 screens. The credit for the first multiplex cinema in India goes to PVR, which established PVR Saket in Delhi in 1997. PVR also has the largest multiplex cinema in India, which is PVR Bangalore, which is an 11-screen theatre. PVR stands for Priya Village Road Show and the company was incorporated in 1995 as a result of coming together of Priya Exhibitors Pvt. Ltd. And Village Roadshow Ltd., which is one of the largest non-US cinema exhibition companies in the world and has over a thousand screens worldwide. In 2002 however the entire stake was transferred to Priya Exhibitors.
Financials
The total revenue for PVR was Rs.706.66 million in the fiscal 2005, which was up from Rs.497.37 million in fiscal 2004. In the current fiscal it has already achieved a revenue of Rs.373.42 million in the four months ended July. Out of this the sale of tickets or box office revenues constituted for 66.3% of the revenues while the sales of food and beverages constituted 20.8% of the revenues. Advertising contributed 8.3% and royalty 1%. Of the total revenues and these two have a higher margin than that of the box office sales or food or beverages.
The PAT for fiscal 2005 was Rs.36.49 million up from Rs.15.61 million in the fiscal before that. In the four-month period so far the company has already achieved a PAT of Rs.31.03 million.
Objects of the Issue
The primary objective of the IPO is to raise funds to set up new cinemas and plans have been drawn so far to establish cinemas in Mumbai, Hyderabad, Delhi, Indore, Gurgaon, Lucknow, Chennai, Ludhiana, Aurangabad and Latur. The estimated cost for this is Rs. 1380 million. This outlay is expected to result in an addition of 10 cinemas and two lower cost digital cinemas till fiscal 2008. Apart from this Rs.300 million is earmarked for equity investment in CR Retail a wholly owned subsidiary to set up a mulitplex and another 70 million for equity investment in PVR pictures another subsidiary for film distribution business.
Conclusion
The company is well established and given the trend is also favourable for multiplexes in India given the change in preferences and the demographic mix in the country. However the issue is priced between Rs. 200 and Rs. 240. Last year the EPS was Rs.2.64 and it was Rs.1.24 the year before. Though there is a strong growth in both top and bottom line of the company the issue is priced pretty expensively and only people with a very high risk appetite must invest in it.
The following table shows the upcoming IPO that have been covered under this section and their status. You can click on any of these to read more about them.
