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PVR to buy back PE fund L Capital’s stake in the company

MUMBAI: Multiplex major PVR Ltd has entered in a share purchase agreement with private equity fund L Capital Asia, the PE arm of Louis Vuitton Moët Hennessy (LVMH), to buy back its entire investment in PVR.

In August 2012, L Capital Eco Ltd, a subsidiary of L Capital Asia, had invested Rs 108 crore (Rs 1.08 billion) in PVR for around 10 per cent stake in the company under the preferential allotment route. This included investment of Rs 57.7 crore (Rs 577 million) to subscribe to 2.88 million equity shares in PVR at a price of Rs 200 per equity share, and Rs 50.1 crore (Rs 501 million) into a new subsidiary PVR Leisure, which looked after the retail business, including in-mall entertainment, gaming, food and leisure business.

Incidentally, PVR has not disclosed the buyback price, but as of end of trading on 30 January, the market cap of PVR stood at 2,816.64 crore (Rs 28.17 billion), while the shares were at Rs 680.40 apiece.

Q3 Net profit up 127%

Buoyed with the strong box office collections of multiple films in the third quarter (October – December 2014), PVR Ltd’s net profit has seen a 127 per cent jump to Rs 31.59 crore (Rs 315.9 million), compared to Rs 13.91 crore (Rs 139.1 million) in the year ago period.

Its consolidated revenue saw a 24 per cent jump year-on-year to Rs 421.18 crore (Rs 4.21 billion), as against Rs 338.76 crore (Rs 3.39 billion) in Q3FY14.

PVR’s operating profit (EBITDA) stood at 83.99 crore (Rs 839.9 million), up 63 per cent compared to Rs 51.41 crore (Rs 514.1 million) in the year ago period. EBITDA margin was at 19.9 per cent, up from 15.2 per cent in the year ago period.

The quarter saw strong box office successes from films like ‘Bang Bang’, ‘Haider’, ‘Happy New Year’ and ‘PK’. The footfalls increased by 12 per cent to 16 million in the quarter (from 14.3 million), while average ticket prices (ATP) rose by 5 per cent to Rs 184 (from Rs 175).

The company followed a differentiated pricing strategy with a mix of premium weekend blockbuster pricing along with an affordable weekday pricing and also introduced recliners in selected premium cinemas to up sell, which helped in increasing ATP.

The food and beverage revenues also showed a strong growth of 35 per cent over corresponding quarter of previous year driven by increase in average spend per person of 23 per cent, highest growth in PVR history.

While the net revenue from F&B business was at Rs 98.78 crore (Rs 987.8 million), compared to Rs 73.13 crore (Rs 731.3 million), average spend per head was at Rs 67, up from Rs 54.

The company said that it witnessed a 28 per cent growth in sponsorship revenues during the quarter to Rs 53.85 crore (Rs 538.5 million), compared to Rs 41.95 crore (Rs 419.5 million).

PVR chairman & MD Ajay Bijli said, “Revenues and profitability in the quarter has shown a robust growth over the same period last year. We were able to leverage the strong box office across a growing cinema network. While the film slate varies from quarter-to-quarter, our growing circuit of high quality cinemas and our company-wide emphasis on customer service excellence remain critical factors in our ability to generate positive operating results over the long-term. We have maintained the position as the leading multiplex player in India and soon will pass the 500 screens mark in next few months.”

In the current fiscal (first 10 months), PVR has added 41 screens across various cities and currently operates a network of 462 screens spread over 104 properties in 44 cities across the country.

In the last quarter of the current fiscal, the company intends to add another 21 screens in five cities (Bengaluru, Delhi, Bokaro, Chennai and Pathankot), which will take the total screen count to 483 screens by end of FY15.