Yep, I bought it at slightly higher level I guess. Would have to wait on it. Have added some more during the price fall.
The story looks promising with an experienced promoter.
Every quarter, they are paying 10 Cr on interest cost, which is equivalent to 2 screens (5 Cr capex on each screen). If the company reduces debt after hotel sale, they should be opening 10 more screens in an year (at max).
Looking at PVR’s past acquisitions, each sceeen gets a valuation of 7-10 Cr. So each year, additional 70-100 Cr value unlock will be there post debt repayment.
However, growth is difficult in such a Capex heavy business without additional debt or equity dilution. Even with assumption of 5 Cr profit every quarter, the RoE of company will be 12.5% (book value - 160 Cr)
Given RoE is lesser than growth, looks difficult to sustain growth with profits only. However, RoE should expand slowly with each screen increase. Have to patiently wait, till RoE becomes 20% or more.
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