PVR Limited Right Issue (July 2020) Review

Published on Tuesday, July 21, 2020 by Dilip Davda

PVR Ltd is the market leader in terms of screen count in India, as of January 2019, with a market share of 28% in total multiplexes based on the number of screens in India (Source: CRISIL Report). It is also the leader in terms of screens in seven out of eight key cities in India, which include Ahmedabad, Bengaluru, Chennai, National Capital Territory of Delhi, Hyderabad, Mumbai and Pune (Source: CRISIL Report). Further PVR is the market leader in three out of the four regions in India, i.e. north, south and west regions of India, in terms of screens among the multiplex operators in India (Source: CRISIL Report).

The company offers a diversified cinema viewing experience through its formats, including 'PVR Director's Cut', 'PVR Gold Class', 'PVR IMAX', 'PVR Superplex', 'PVR P[XL]', 'PVR Playhouse', 'PVR ECX', 'PVR Premiere', 'PVR ICON', 'PVR LUXE', 'PVR Cinemas' and 'PVR Utsav', and pursuant to its acquisition and amalgamation of SPI Cinemas, 'Escape', 'Sathyam' and 'Palazzo'.

PVR is offering 3823872 equity shares of Rs. 10 each at a price of Rs. 784 per share as rights issue in the ratio of 7 shares for every 94 shares held as on 10.07.2020. The issue has already opened for subscription on 17.07.20 and will close on 31.07.20. Full money it to be paid on application. The company mulls raising Rs. 299.79 cr. from this offer. From the funds so mobilized the company will utilize Rs. 224.85 cr. for repayment/prepayment of a portion of principle and interest, Rs. 72.51 cr. for general corpus funds needs and will spend Rs. 2.43 cr. as issue expenses.

While Axis Capital Ltd. is the sole lead manager to this offer, Kfin Technologies Pvt. Ltd. is the registrar. Post allotment, shares will be listed on BSE and NSE.

Post issue company's current paid up equity capital of Rs. 51.35 cr. will stand enhanced to Rs. 55.17 cr.

For the last two fiscals, on a consolidated basis PVR has reported turnover/net profits of Rs. 3118.70 cr. / Rs. 189.40 cr. (FY19) and Rs. 3452.23 cr. / Rs. 26.85 cr. (FY20). Thus it has suffered a setback for FY20, which is attributed to higher provisions for finance cost (Rs. 481.79 cr. v/s Rs. 128.01 cr.) and depreciation (Rs. 542.43 cr. v/s Rs. 191.28 cr.). As on 31.03.20 its NAV stood at Rs. 288.30 per share.

On share price movements, it was quoted at Rs. 1059.80 on the last cum-right trading day (08.07.20), Rs. 1042.85 on first ex-right trading day (09.07.20). Its last traded price is Rs. 1034.35 (20.07.20).

With this offer price, the company is aiming at a market cap of Rs. 4325.56 cr.

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. Above information is based on RHP and other documents available as of date coupled with market perception. The author has no plans to invest in these offers.

(SEBI registered Research Analyst-Mumbai).