Warburg Pincus-backed affiliate exits PVR for ₹380 cr via block deal, SBI MF major buyer

US-based global private equity firm, Warburg Pincus has exited Indian multiplex giant PVR by selling its entire stake of 2.49% through its affiliate in a block deal on Monday. The transaction aggregated more than 380 crore. However, major domestic mutual funds were among top buyers in PVR in the open market. 

As per the block deal, on BSE, Warburg-backed Berry Creek Investment sold 24,39,301 equity shares at a price of 1,559.35 per share in PVR, aggregating to 380.37 crore. This would be its entire stake of 2.49% in the Ajay Bijli-led company.

While Berry Creek exited PVR, domestic mutual funds invested in the company. SBI Mutual Fund is the major buyer in PVR to 1,469,650 equity shares at 1,559.35 apiece — aggregating to 229.17 crore.

Also, ICICI Prudential Mutual Fund picked up 641,300 equity shares at 1,559.35 apiece amounting to 100 crore. French-based financial services company Societe Generale also bought 328,351 equity shares in PVR through the block deal.

On Monday, PVR share price closed at 1,546.60 apiece down by 1.81% on BSE. The company’s market cap is nearly 15,150 crore.

Prabhudas Lilladher in its research report dated March 15 retained its ‘Buy’ recommendation on PVR.

Jinesh Joshi – Research Analyst, at Prabhudas Lilladher in the report, said, «we increase our pre-IND AS EBITDA estimates for a merged entity by 7.0%/7.5% for FY24E/FY25E, as we expect synergy benefits of ~Rs2 billion to accrue over next 2 years.»

According to Joshi, the PVR-INOX merger is expected to 1) lend invincible size advantage to a combined entity (18%/30% screen/BO share respectively) 2) enhance BS strength (Inox had net cash BS as of Jan end) enabling rapid expansion into new markets and 3) improve bargaining power with various stakeholders in the value chain like film distributors, real estate developers, ad-networks and ticket aggregators resulting in material revenue/cost synergies.

Joshi’s note added, «though there are concerns over Bollywood underperformance, we believe it is not a structural issue (NBOC of Pathaan stood at ~Rs5.4 billion despite high decibel negative campaigns); but a problem of content, as OTT proliferation has raised the bar of audience expectations from the big screen. We expect the merged entity to report footfalls of 170 million/185 million and pre-IND AS EBITDA margin of 19.7%/21.0% in FY24E/FY25E respectively.»

Lastly, Joshi’s note said on PVR, to retain ‘BUY’ on the stock with a TP of 2,096 after assigning EV/EBITDA multiple of 15.5x (no change) to the merged entity.


Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

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