4QFY2013 Result Update | Media

May 31, 2013

PVR
Performance Highlights
Quarterly Performance (Consolidated)
(` cr) Net Sales EBITDA OPM (%) PAT 4QFY13 242 14 5.8 13 4QFY12 117 4 3.6 2 % yoy 106.6 238.3 227bp 499.5 3QFY13 202 34 16.7 9 % qoq 19.9 (58.2) (1,091)bp 45.0

NEUTRAL
CMP Target Price
Investment Period
Stock Info Sector Market Cap (` cr) Net Debt (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code Media 1,339 527 0.8 375/147 51,745 10 19,760 5,986 PVRL.BO PVRL@IN

`338 -

Source: Company, Angel Research, Note: Cinemax financials consolidated in 4QFY2013

PVRs top-line performance was below our estimates, coming in at `242cr. With fourth quarter being a traditionally weak quarter due to prevalence of the examination season, the companys operating performance was weak with OPM coming in at 5.8% and the same resulting in a loss at the PBT level. However, the net profit stood at `13cr, on account of tax write-back (related to entertainment tax). Cinemax financials have been consolidated in the fourth quarter and hence, the numbers are not comparable. Footfalls flat; however, ATP rises: PVR reported a flat yoy growth in footfalls to 5.5mn for comparable properties. However, the average ticket price (ATP) recorded a healthy growth of 13% yoy to `175. Consequently, ticket sales grew by 9% yoy to `73cr. In case of Cinemax, ticket sales grew by 14% to `50cr for comparable properties on back of 20% yoy growth in footfalls and 4% yoy growth in ATP. Strong organic expansion set to continue: The acquisition of Cinemax and robust organic expansion (added 59 screens in FY2013) has made PVR the largest multiplex operator in India with more than 350 screens. The robust organic expansion is set to continue with the company planning to add ~90 screens over FY2014. Outlook and valuation: PVR is expected to register robust revenues on incremental earnings from its newly opened properties, Cinemax acquisition and an impressive movie pipeline. At the CMP of `338, the stock is trading at 15.7x FY2015E EPS. We believe the stock is fairly valued and offers limited upside from the CMP. Hence, we maintain a Neutral view on the stock. Key financials (Consolidated)
Y/E March (` cr) Net sales % chg Net profit (Adj.) % chg EBITDA margin (%) EPS (`) P/E (x) P/BV (x) RoE (%) RoCE (%) EV/Sales (x) EV/EBITDA (x)
Source: Company, Angel Research

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 31.0 25.2 11.8 31.9

Abs. (%) Sensex PVRL

3m 4.8

1yr 21.1

3yr 16.6

26.8 125.4 129.2

FY2012

FY2013

FY2014E

FY2015E

521 13.4 27 236.2 15.2 9.7 34.9 3.1 8.0 7.9 1.8 13.0

810 55.4 46 67.3 15.0 11.3 30.0 2.1 9.6 7.2 1.6 11.9

1,359 67.9 68 48.7 17.3 17.2 19.6 2.0 10.3 12.4 0.9 6.2

1,540 13.3 85 25.0 17.4 21.5 15.7 1.8 12.0 14.2 0.8 5.4
Amit Patil 022-39357800 Ext: 6839 amit.patil@angelbroking.com

Please refer to important disclosures at the end of this report

PVR | 4QFY2013 Result Update

Exhibit 1: Quarterly Performance (Consolidated)

Y/E March (` cr) Net Sales Film Distributor Share (% of Sales) Movie Dist/Print Chgs (% of Sales) Consumption of F&B (% of Sales) Staff costs (% of Sales) Rent (% of Sales) Other expenditure (% of Sales) Total Expenditure Operating Profit OPM Interest Depreciation Other Income PBT (excl. Ext Items) Ext Income/(Expense) PBT (% of Sales) Provision for Taxation (% of PBT) Recurring PAT Minority Interest Reported PAT PATM Equity shares (cr) FDEPS (`)
Source: Company, Angel Research

4QFY13 242 60 24.7 4 1.8 16 6.7 27 11.1 49 20.1 72 29.7 228 14 5.8 17 17 4 (17) (1) (18) (7.3) (29) 165.5 13 0 12 4.9 4 3.0

4QFY12 117 28 23.8 3 2.5 8 7.0 13 11.5 27 23.4 33 28.2 113 4 3.6 5 8 2 (6) (14) (21) (17.5) (8) 40.1 2 (1) (13) (11.3) 3 (3.3)

% yoy 106.6 114.7 45.2 96.2 100.1 77.8 117.4 101.7 238.3 272.3 122.0 86.8 (13.6) 256.8 499.5

3QFY13 202 52 25.8 3 1.7 14 6.8 19 9.3 30 15.0 50 24.7 168 34 16.7 9 12 2 14 0 14 7.2 6 38.5 9 0 9 4.5 3 3.2

% qoq 19.9 15.2 18.1 43.5 61.2 43.9 35.6 (58.2) 89.6 48.4 164.6

FY2013 805 200 24.9 21 2.6 55 6.8 80 9.9 130 16.1 203 25.2 688 117 14.5 37 56 9 33 (1)

FY2012 518 125 24.2 15 2.8 34 6.6 56 10.9 81 15.7 130 25.2 442 76 14.7 18 36 12 33 (2) 31 6.0 6 18.4 28 0 25 4.9 3 9.8

% chg 55.5 60.1 44.7 61.5 41.5 59.5 55.5 55.9 53.2 98.9 53.6 (24.7) (0.6) 3.0 -

(222.8) (627.8) 45.0 30.3

32 4.0 (12) (38.7) 46 0 45 5.5 4

75.1

(5.0)

11.2

14.5

May 31, 2013

PVR | 4QFY2013 Result Update

Exhibit 2: Top-line trend

300 250 107 45 120 100

200
(` cr)

45
2 15 1

37

80
60

150

100
50 -

40
117 139 117 169 202 242
138 189

88

20 -

4Q11

1Q12

3Q12

4Q12

1Q13

3Q13

Top-line (LHS)

YoY growth (RHS)

Source: Company, Angel Research, Note: Cinemax financials consolidated from Q4FY2013

Subdued top-line, however, profit up on tax write-back

PVRs top-line performance was below our estimates, coming in at `242cr. With fourth quarter being a traditionally weak quarter due to examination season, operating performance was weak with OPM coming in at 5.8%. The rise in interest cost (on account of increase in debt to fund Cinemax acquisition) resulted in a loss at the PBT level. However, Net profit stood at `13cr, in spite of higher interest, on account of tax write-back (related to entertainment tax). Cinemax financials have been consolidated in the fourth quarter and hence, the numbers are not comparable.

Exhibit 3: EBITDA and EBITDA Margin

40

Exhibit 4: Profit up on tax write-back

25.0 16.7 20.0 5.8 18 16 14 12 10 8 6 4 2 (2) (4) 16

35
30 25
( ` cr)

19.4

17.1

20.2 16.3

20.0

19.0

14

4Q13

2Q12

2Q13

13 9 9

(%)

15.0
10.0

20 15

( ` cr)

10
20 28 23
17

3.6

2 (2)

36

34

14

34

5.0 -

1Q12

2Q12

3Q12

4Q12

2Q13

3Q13

4Q13

4Q11

1Q13

4Q11

1Q12

3Q12

1Q13

2Q13

3Q13

EBITDA (LHS)

OPM (RHS)

Source: Company, Angel Research

Source: Company, Angel Research

May 31, 2013

4Q13

2Q12

4Q12

(%)

33

PVR | 4QFY2013 Result Update

Exhibit 5: Segmental revenue

(` cr) Segment Revenues Movie Exhibition Movie Prodn and Dist Bowling Alleys Inter Segment Total Income Segment Results Movie Exhibition Movie Prodn and Dist Bowling Alleys Inter Segment Total Finance Cost(Net)/Dividend Exceptional Items Profit/(Loss) before tax
Source: Company, Angel Research

4QFY13

4QFY12

% yoy

3QFY12

% qoq

214.7 17.9 13.8 (2.0) 244.4 (4.8) 0.4 (0.8) 4.2 (1.0) 15.7 1.3 (17.9)

106.3 7.2 6.8 (0.1) 120.2 (4.8) 1.7 0.5 (0.6) (3.2) 2.9 14.5 (20.6)

102.1 147.7 104.6 0 103.4 0.2 (75.3)

187.4 7.2 10.0 (2.2) 202.4 26.9 0.0 (0.6) (3.7) 22.6

14.6 148.7 38.2 0 20.8 (118.0)

442.4

8.1 0.0 14.5

94.2

Footfalls flat, however, ATP and SPH rises:

PVR reported a flat yoy growth in footfalls to 5.5mn for comparable properties. However, the average ticket price (ATP) recorded a healthy growth of 13% yoy to `175. Consequently, ticket sales grew by 9% yoy to `73cr. In case of Cinemax, ticket sales grew by 14% to `50cr for comparable properties on back of 20% yoy growth in footfalls and 4% growth in ATP. Food and Beverages (F&B) revenue for PVR and Cinemax grew by 6% yoy (to `24) and 20% yoy (to `17cr) respectively, driven by 12% (to `51.2) and 8% (`43.2) growth in Spend per head (SPH).

Exhibit 6: Operational Parameters (PVR)

4QFY13 4QFY12 % yoy 3QFY12 % qoq

Footfalls (Mn) Average Ticket Price, ATP (`) F&B Spend Per Head, SPH (`)
Source: Company, Angel Research

5.5 175 51.2

5.5 155 45.8

(0) 13 12

6.9 181.0 49.4

(20) (3) 4

May 31, 2013

PVR | 4QFY2013 Result Update

Investment rationale
Cinemax acquisition to enhance scale and reach
The acquisition of Cinemax has made PVR the biggest player in the multiplex business with 350 plus screens. PVR already had a strong presence in the NCR region with ~94 screens (almost half of the total multiplex screens in NCR region). Post the acquisition, PVR has now established a strong presence in the Mumbai region (which contributes 15% to the box-office) with ~92 screens. Although the deal has resulted in a significant increase in companys debt, thereby increasing the interest cost, the company is expected to benefit from the sheer scale and reach of the combined entity. Set for expansion: PVR added 59 screens in FY2013. The robust organic expansion is set to continue with the company planning to add ~50 screens in 1HFY2014 and another 100 screens over the next 18 months taking the total tally to 500 screens. PVR is expected to register robust revenues on incremental earnings from its newly opened properties, its recent foray into retail entertainment through PVR Blu-O, and an impressive movie pipeline.

Outlook and valuation

PVR is expected to register robust revenues on incremental earnings from its newly opened properties, cinemax acquisition and an impressive movie pipeline. At the CMP of `338, the stock is trading at 15.7x FY2015E EPS. We believe the stock is fairly valued and offers limited upside from the CMP. Hence, we maintain a Neutral view on the stock.

May 31, 2013

PVR | 4QFY2013 Result Update

Exhibit 7: Return of PVR vs Sensex

250% 230% 210% 190% 170% 150% 130% 110% 90% 70% 50% 30% 10% -10% Sensex PVR

Exhibit 8: One-year forward P/E band

420
370 320
10x 14x 18x 22x

Share Price ( `)
Feb-12 Dec-10 Dec-11 Aug-10 Aug-11 Aug-12 Dec-12 Feb-13
Feb-11

270 220
170 120

70
Jun-10 Jun-11 Apr-10 Apr-11
Jun-12

Oct-10

Oct-11

Oct-12

Apr-13

Apr-12

Jun-11

Aug-11

Jun-12

20
Apr-11 Oct-10 Feb-11
Dec-10

Aug-12

Apr-12

Oct-12

Oct-11

Feb-12

Dec-11

Source: Company, Angel Research

Source: Company, Angel Research

Company Background
PVR is one of India's leading multiplex cinema operators. The company is the pioneer of the multiplex culture in the country, as it was the first to establish a multiplex cinema in India, PVR Anupam, in Saket, Delhi, in 1997. The company is also present in the entertainment space through PVR Blu-O bowling alleys.

May 31, 2013

Dec-12

Feb-13

Apr-13

PVR | 4QFY2013 Result Update

Profit & loss statement (Consolidated)

Y/E March (` cr) Gross sales Less: Excise duty Net Sales Total operating income % chg Total Expenditure Direct Cost SG&A Expenses Personnel Others EBITDA % chg (% of Net Sales) Depreciation& Amortisation EBIT % chg (% of Net Sales) Interest & other Charges Other Income (% of PBT) Share in profit of Associates Recurring PBT % chg Prior Period & Extra Exp/(Inc.) PBT (reported) Tax (% of PBT) PAT (reported) Add: Share of earn of asso Less: Minority interest (MI) PAT after MI (reported) ADJ. PAT % chg (% of Net Sales) Basic EPS (`) Fully Diluted EPS (`) % chg
previous year numbers

FY2010 FY2011 FY2012 FY2013 FY2014E FY2015E 334 334 334 (5.1) 300 119 32 42 107 34 (27.5) 10.2 27 7 (43.0) 2.0 16 10 1,395.3 1 0.0 1 (0) (14.6) 1 (0.5) 1 1 (84.5) 0.4 0.5 0.5 (85.8) 459 459 459 37.5 371 156 49 47 118 89 159.0 19.3 67 21 213.0 4.6 16 11 67.8 16 0.0 16 15 98.0 0 (7.9) 8 8 503.9 1.8 3.0 3.0 469.9 521 521 521 13.4 442 175 52 56 159 79 (10.8) 15.2 36 43 100.8 8.2 18 9 29.0 31 95.4 2.4 31 6 18.6 25 0.1 25 25 204.0 4.8 9.7 9.7 222.0 810 810 810 55.4 688 276 84 80 248 121 53.5 15.0 56 65 53.4 8.1 37 5 14.7 32 4.7 1.3 32 (12) (38.5) 44 0.20 44 44 78.3 5.5 11.3 11.3 16.4 1,359 1,359 1,359 67.9 1,124 453 150 150 372 235 93.9 17.3 67 168 156.9 12.4 79 8 7.9 96 199.7 0.0 96 28 29.0 68 68 68 54.3 5.0 17.2 17.2 52.9 1,540 1,540 1,540 13.3 1,272 517 169 169 416 268 14.0 17.4 70 199 18.2 12.9 84 8 6.2 122 26.7 0.0 122 37 30.0 85 85 85 25.0 5.5 21.5 21.5 25.0

(93.6) 2,140.7

Note: Some of the figures from FY2011 onwards are reclassified; hence not comparable with

May 31, 2013

PVR | 4QFY2013 Result Update

Balance sheet (Consolidated)

Y/E March (` cr)
SOURCES OF FUNDS Equity Share Capital Preference Capital Reserves& Surplus Shareholders Funds Minority Interest Total Loans Deferred Tax Liability 26 283 309 60 180 17 566 386 107 132 21 93 18 59 73 0 566 27 314 341 54 162 31 589 421 1 234 79 119 35 67 167 0 589 26 259 285 14 174 11 483 387 1 224 21 167 35 128 96 1 483 40 603 643 85 601 (1) 1,329 1,187 38 346 37 255 54 257 89 14 1,329 40 644 684 85 601 0 1,371 1,238 8 395 24 279 93 285 111 14 1,371 40 703 743 85 601 0 1,429 1,281 1 436 30 300 106 302 134 13 1,429 FY2010 FY2011 FY2012 FY2013E FY2014E FY2015E

Total Liabilities
APPLICATION OF FUNDS Net Block (incl CWIP) Investments Current Assets Cash Loans & Advances Other Current liabilities Net Current Assets Mis. Exp. not written off

Total Assets
previous year numbers

Note: Some of the figures from FY2011 onwards are reclassified; hence not comparable with

Cash flow statement (Consolidated)

Y/E March (` cr) Profit before tax Depreciation Change in Working Capital Interest / Dividend (Net) Direct taxes paid Others Cash Flow from Operations (Inc.)/ Dec. in Fixed Assets (Inc.)/ Dec. in Investments Cash Flow from Investing Issue of Equity Inc./(Dec.) in loans Dividend Paid (Incl. Tax) Interest / Dividend (Net) Cash Flow from Financing Inc./(Dec.) in Cash Opening Cash balances Closing Cash balances
previous year numbers

FY2010 FY2011 FY2012 FY2013E FY2014E FY2015E 1 27 (7) 11 (0) (3) 29 (85) 8 (77) 41 33 3 11 60 12 8 21 16 67 (24) 11 15 (11) 44 (61) 89 28 20 (18) 3 11 (13) 58 21 79 31 36 (1) 14 6 (24) 50 14 17 31 (134) 12 5 14 (140) (58) 79 21 33 56 (6) 32 (12) 7 135 (855) (37) (893) 385.22 428 7 32 774 16 21 37 96 67 (3) 75 28 (50) 157 (119) 30 (89) 0 7 75 (82) (13) 37 24 122 70 (9) 80 37 (27) 199 (113) 7 (106) 0 7 80 (86) 7 24 30

Note: Some of the figures from FY2011 onwards are reclassified; hence not comparable with

May 31, 2013

PVR | 4QFY2013 Result Update

Key ratios
Y/E March Valuation Ratio (x) P/E (on FDEPS) P/CEPS P/BV Dividend yield (%) EV/Sales EV/EBITDA EV / Total Assets Per Share Data (`) EPS (Basic) EPS (fully diluted) Cash EPS DPS Book Value Dupont Analysis EBIT margin Tax retention ratio Asset turnover (x) ROIC (Post-tax) Cost of Debt (Post Tax) Leverage (x) Operating ROE Returns (%) ROCE (Pre-tax) Angel ROIC (Pre-tax) ROE Turnover ratios (x) Asset Turnover (Gross Block) Inventory / Sales (days) Receivables (days) Payables (days) WC cycle (ex-cash) (days) Solvency ratios (x) Net debt to equity Net debt to EBITDA Int. Coverage (EBIT / Int.)
previous year numbers

FY2010 FY2011 FY2012 FY2013E FY2014E FY2015E 640.5 30.1 2.8 0.3 2.8 30.2 1.8 0.5 0.5 11.2 1.0 120.6 2.0 1.1 0.9 2.1 0.1 0.1 2.3 1.3 1.5 0.5 0.9 4 16 59 57 0.2 1.5 0.4 112.4 12.1 2.7 0.3 1.9 10.8 1.6 3.0 3.0 27.8 1.1 125.7 4.6 0.0 1.2 0.1 0.1 0.2 0.1 3.7 4.2 2.5 1.2 4 22 44 121 0.2 0.9 1.3 34.9 14.2 3.1 0.4 1.8 13.0 2.1 9.7 9.7 23.8 1.5 109.9 8.2 0.8 1.3 8.6 0.1 0.4 11.8 7.9 9.2 8.0 1.3 4 18 75 61 0.5 1.9 2.3 30.0 13.3 2.1 0.4 1.6 11.9 1.1 11.3 11.3 25.4 1.5 162.2 8.1 1.4 1.5 16.7 0.1 0.7 28.4 7.2 5.1 9.6 1.2 4 17 97 35 0.9 4.7 1.8 19.6 9.9 2.0 0.4 0.9 6.2 1.1 17.2 17.2 34.3 1.5 172.7 12.4 0.7 1.9 16.4 0.1 0.9 30.4 12.4 12.5 10.3 1.8 4 18 65 26 0.8 2.5 2.1 15.7 8.6 1.8 0.4 0.8 5.4 1.0 21.5 21.5 39.2 1.5 187.4 12.9 0.7 1.9 17.2 0.1 0.8 31.0 14.2 14.2 12.0 1.8 4 18 61 28 0.8 2.1 2.4

Note: Some of the figures from FY2011 onwards are reclassified; hence not comparable with

May 31, 2013

PVR | 4QFY2013 Result Update

Research Team Tel: 022 - 39357800

E-mail: research@angelbroking.com

Website: www.angelbroking.com

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Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered

PVR No No No No

Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors

Ratings (Returns):

Buy (> 15%) Reduce (-5% to -15%)

Accumulate (5% to 15%) Sell (< -15%)

Neutral (-5 to 5%)

May 31, 2013

10