PVR Inox shares in focus on report 2.33% stake to change hands for Rs 404 crore

Shares of PVR Inox Ltd will be in focus on Friday morning after a media report suggested Plenty Private Group and Multiples Private Group may divest a combined 2.33 per cent stake in the multiplex owner for Rs 404 crore on Friday.

CNBC-TV18 quoting sources suggested that the offer is expected to be priced at Rs 1,750-1,769.50 per share, which would be a potential 1.12 per cent discount to Thursday's closing price. Kotak Securities is believed to be the banker for the deal.

The selling, if it does, is seen at a time when PVR Inox shares have gained 18 per cent in the six-month period and that there is optimism over the counter given a slew of hit movies and strong pipeline ahead.

"Spending on entertainment is on the rise and PVR Inox is the largest premium player in the segment. Consolidation, a strong line-up and a diverse mix of content coupled with opportunities to expand margins render the company the best play in this segment," Anand Rathi said in its Consumption strategy released on Thursday.

Also read: PVR Inox, SAMIL, India Cements among stocks that analysts picked for short-term trade

Anand Rathi said with its primary focus on the movie exhibition, the combined entity (PVR+Inox) will continue to ramp up margin-accretive segments such as F&B and advertising revenues, which would drive margin expansion in future.

"With rising income levels and outdoor entertainment gaining significant wallet-shares, we expect cinemas to be one of the prime beneficiaries. PVR-Inox is the best listed play to ride this growth momentum," it said.

Some brokerages though have concerns. Exhibitors could face challenges over occupancy from January 2024 to June 2024, as a mere seven large budget Hindi films, including Fighter, Production No. 27, Yodha, Chandu Champion are slated to release so far against twelve large budget Hindi films released in the past six months, said Elara Securities.

“Large budget films hold key for BO performance as they contribute 80-85 per cent of Hindi BO in the post-COVID era; further there is a sharp reduction in the number of Hollywood films in 2024, due to the four-month strike, which ended in November, and will negatively affect occupancy levels. We estimate an occupancy level of 25 per cent in FY24," Elara Securities said in a December 1 note, as it suggested a target price of Rs 1,900 on the stock.

Also read: SAIL, J&K Bank, Hindustan Aeronautics: Trading Strategies for these buzzing stocks

Also read: Stock recommendations by market analyst for December 15, 2023: Adani Ports, Bank of Baroda and Hero MotoCorp