In this screen test, Street prefers Inox over PVR

ET Intelligence Group: This year, the stock of India's second-largest multiplex by screen capacity, Inox LeisureNSE -0.45 %, has gained 28 per cent.




During the same period, the stock of the segment leader PVRNSE -0.52 % rose 2.8 per cent, reflecting the broader optimism about Inox.

Year-to-date, Bloomberg’s consensus earnings estimates show, that the estimated earnings per share (EPS) of Inox for FY20 has seen upgrades of 4 per cent, compared with 1.3 per cent for PVR.

But in the past one year, Inox has spelt out a clear strategy of adding 60-70 screens every year. Year-to-date, it has added 71 screens. At present, Inox has 570 screens, with a pipeline for an additional 857 screens in the coming years. This expansion is in strategic locations that can help boost average ticket prices in the coming quarters.

Properties at Atria Mall, Worli, and R-City, Ghatkopar, in Mumbai are examples of the location-focused expansion strategy.

Furthermore, advertising revenues have shown higher growth in the past three years after Inox raised advertising rates. Inox’s advertising revenue per admit in FY19 is estimated to be close to Rs 30, climbing from Rs 18 in FY17. Also the company’s spend per head on food and beverage has shown improvement and according to CLSA, its average spend on this count is higher than that for PVR. F&B spend per head grew in the range of about 6 per cent in the December 2018 quarter.

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