PVR Inox’s Strong Q2 Performance and Merger Synergies Fuel Optimism

PVR Inox's Strong Q2 Performance and Merger Synergies Fuel Optimism
PVR Inox's Strong Q2 Performance and Merger Synergies Fuel Optimism
PVR Inox's Strong Q2 Performance and Merger Synergies Fuel Optimism
PVR Inox's Strong Q2 Performance and Merger Synergies Fuel Optimism

PVR Inox’s Strong Q2 Performance and Merger Synergies Fuel Optimism

PVR Inox’s Strong Q2 Performance and Merger Synergies Fuel Optimism

PVR Inox’s Strong Q2 Performance and Merger Synergies Fuel Optimism

PVR Inox Ltd recently unveiled its second-quarter financial performance while shedding light on the remarkable synergy benefits it has harnessed following the merger of PVR Limited and INOX Leisure Limited (INOX), which became effective on February 6, 2023. The company proudly stated that it’s well on track to realize a significant portion of merger synergies in FY’24.

Robust Ebitda Synergy and Operational Efficiency

During the first half of FY24, PVR Inox witnessed substantial Ebitda synergy, ranging from ₹124 Crore to ₹143 Crore. Ebitda, which stands for earnings before interest, tax, depreciation, and amortization, is a key financial metric indicating the company’s profitability.

PVR Inox expressed its satisfaction with the seamless progress of the integration process, emphasizing the substantial operational efficiencies that have emerged. Notably, overhead costs, including personnel, housekeeping, and security, yielded synergy benefits totaling ₹17-21 crore during the first half of FY24.

Maximizing Savings and Promising Growth

The per-screen savings for PVR Inox fell within the range of ₹1,04,000 – ₹1,28,000 during the same period, with an average screen count of 1,656 screens. While the overhead cost per screen experienced a modest year-on-year increase of 2.6% to ₹2.44 million (₹24.4 Lakhs) during the first half of FY24, it was significantly lower than the typical 7-8% increase in overhead costs the company would have encountered before the merger. Similarly, overall Box Office Ebitda synergy benefits amounted to ₹75-84 crore in the first half of FY24.

Impressive Financial Turnaround and Positive Outlook

Jinesh Joshi, a research analyst at Prabhudas Lilladher, lauded the encouraging synergy benefits reported by PVR Inox. The company showcased a robust performance for the quarter ending September, marked by impressive operating metrics. Notably, PVR Inox’s net profit for the second quarter of FY24 stood at Rs166.3 crore, a remarkable improvement from the ₹82 crore loss recorded in the first quarter of this fiscal. The company’s Q2 revenue soared by 53.3%, reaching ₹1,999.9 crore, compared to ₹1,305 crore in Q1.

PVR Inox’s growth momentum remains unwavering, with 37 new screens launched in 7 cinemas during the quarter and a total of 68 new screens in 12 cinemas in H1 FY’24. Exiting 33 underperforming screens during H1 FY’24 reflects the company’s commitment to profitable expansion.

Indian Ratings maintained a positive outlook for the merged entity, PVR INOX, foreseeing a recovery in Ebitda over the next 12-18 months and an enhancement in its credit profile. This positive sentiment is driven by the entity’s dominant market share in the Indian movie exhibition industry, anticipating improved revenue efficiencies and a more optimized cost structure. Additionally, the merged entity is poised to wield higher bargaining power in various aspects, including box office collections, rental rates, advertising rates, and convenience fees, contributing to the recovery of operating profitability for PVR Inox.

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