PVR falls 2% after it announces buyout of majority stake in SPI Cinemas for Rs 633 crore

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IDBI Capital has maintained a buy rating on PVR with a target of Rs 1,406 per share.

The share of PVR slipped 2 percent intraday Monday as company approved the acquisition of 71.69 percent stake in SPI Cinemas.

The company board at its meeting held on August 12, has approved the acquisition of 71.69 percent of the paid-up share capital of SPI Cinemas.

It involves the acquisition of 1,91,534 equity shares constituting 61.65 percent of the paid up equity share capital of SPI from SS Theaters LLP and 31,177 equity share constituting 10.01 percent of the paid up equity share capital of SPI from S.V. Swaroop Reddy respectively for an aggregating consideration of Rs 633 crore.

IDBI Capital has maintained the buy rating on PVR with a target of Rs 1,406 per share.

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According to research house, the company to acquire of SPI Cinemas to strengthens its presence in the Southern market. PVR has paid premium valuation, but EV/screen similar to DT Cinemas acquisition.

SPI’s operating metrics and EBITDA margin better than that of PVR, while recent deals with Bookmyshow and PayTM to support internal accruals for the company, it added.

It believes that PVR’s FY18 EPS to increase by 2.3% post deal.

At 11:08 hrs PVR was quoting at Rs 1,297.05, down Rs 20.15, or 1.53 percent on the BSE.

Disclaimer:-The views and investment tips expressed by investment experts are their own. Ripples Advisory advises users to check with certified experts before taking any investment decisions.

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