PVR's FY17 profit after tax dips 4% on higher costs, despite revenue growth

Despite posting a 14 per cent revenue growth in FY17, the Ajay Bijli-led multiplex chain PVR Ltd's profit after tax (PAT) has gone down by 4 per cent due to escalated costs (15 per cent growth year-on-year).

Company’s revenue stood at Rs 2,181.68 crore in FY17 as compared to Rs 1,913.04 crore in the previous financial year.

Expenditure saw a 15.29 per cent jump to Rs 2,024.77 crore from Rs 1,756.18 in the previous financial year. Meanwhile, its operating profit remained almost falt at Rs 156.91 crore from Rs 156.86 crore in FY16. PAT for the year under review stood at Rs 94.3 as against Rs 98.31 in FY16.

Nitin Sood, CFO, PVE Ltd explains that the reduction in PAT is mostly on account of change in accounting practices. During FY17, PVR added a total of 63 screens to taking the the total number of screens to 579. At present, the multiplex chain is located 50 cities across the country. 

Consolidated revenues for the fourth quarter stood at Rs 500 crores, up by 18 per cent, as against Rs 424 crores in the corresponding period last year. While, consolidated earnings before interest, tax, depreciation and amortization (EBITDA) for the quarter was up by 22 per cent at Rs 64 crores as against Rs 52 crores in the same period last year. Consolidated PAT for the quarter was Rs 1 lakh as against a loss of Rs 6 crore in same period last year.

The company has delivered a strong financial and operational performance in the quarter under review on the back of a couple of box office hits including Dangal, Jolly LLB 2, Badrinath Ki Dulhania, Raees and Kabil, among others. Footfall increased by 18 per cent to 18.2 million in the fourth quarter, while average ticket prices rose by 4 per cent as against the correspoding quarter last year. 

Annual footfall increased by 8 per cent to 75.2 million, while average ticket prices rose by 4 per cent in FY17.

Revenues from the food and beverages segment stood at 24 per cent, reflecting strong performance on a year-on-year basis. Advertising revenues, on the other hand, grew 16 per cent as compared to the same quarter in FY16. 

Sood, however, feels growth in the food and beverages segement could have been better, if not for the lingering effects of demonetisation in January. 

“Our strong thrust on innovation and delivering the best movie-viewing experience, besides our customer-centric approach and a growing circuit of high quality cinemas remain critical factors in our ability to generate positive operating results over the long-term. We are the leading multiplex player in India and will surpass the 600 screens mark in current financial year.”

During FY18, the company intends to add up to 70 screens and has earmarked a capex of Rs 250 to Rs 300 crore. Most of this will be spent on organic expansion since the company does not see any lucrative buyout options in the near future. 

“At the start of the year, the content pipeline did look a bit dicey on the local front (domestic releases). However, Baahubali has changed all that and now we’re actually seeing FY17 shape up into a good year. The impact of the (higher) GST rate on movie tickets will be seen for sure. But despite that, we don’t see a big jump in ATP (average ticket pricing) since our pricing is decided by the ability to pay and not only by taxation rates,” adds Sood. 

Movie tickets have been put in the highest tax bracket of 28 per cent under the new GST regime. Other businesses included in the bracket are 5-star hotels, racing and casinos, besides the luxury goods and services segment.

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel