PVR INOX Shares Rise as Food and Beverage GST Reduction Boosts Revenue Prospects
PVR INOX, one of India’s leading multiplex chains, witnessed a positive uptick in its shares on Wednesday. The boost came in response to the recent announcement of a significant reduction in the Goods and Services Tax (GST) imposed on consumables in cinema halls, bringing it down from 18 percent to a mere 5 percent.
The Finance Minister, Nirmala Sitharaman, made the announcement during a press conference held following a productive GST Council meeting on Tuesday. This development is expected to have a considerable impact on PVR INOX’s financial performance, as food and beverage sales contribute approximately 30 percent to their total revenue, according to ICICI Securities.
The shares of PVR INOX experienced a modest 0.23 percent increase, reaching Rs 1,429.70, as of 10:53 am on the National Stock Exchange. It’s worth noting that the shares have witnessed a minor decline of 0.7 percent since the beginning of the year.
ICICI Securities, expressing optimism in the stock’s performance, has recommended a ‘buy’ call and set a target price of Rs 1,380. They anticipate that despite the subdued revenue prospects in the first quarter of FY24, largely due to the underwhelming performance of Adipurush, the merged entity will gradually exhibit signs of improved synergy, such as enhanced average ticket prices and increased spending per customer.
In a recent expansion endeavor, PVR INOX opened ten screens at Pacific City Mall in Delhi and an additional five screens at Satyamev Emporio in Ahmedabad on July 7. With these new additions, the company’s reach now spans across 144 cities, boasting a total of 16,697 screens.
The financial results for FY23 showcased PVR INOX’s robust growth, with a substantial 2.5-fold increase in revenue to Rs 3,829 crore. Moreover, the company managed to reduce its net loss by 34 percent to Rs 488 crore year-on-year during the same period. Encouragingly, the EBIDTA margins also experienced a noteworthy improvement of 812 basis points in FY23.
About PVR INOX:
Former competitors PVR and INOX Leisure successfully finalized their merger in February 2023, establishing themselves as the largest cinema multiplex chain in the country. They now operate a total of 1,689 screens, which accounts for a significant portion of India’s estimated 9,000 screens. The combined entity, known as PVR INOX, boasts an extensive presence with 361 cinemas located in 115 cities across India and Sri Lanka.
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