Friends, if we talk about PVR so on Thursday's trading session, the company went above Rs. 1300 trading session.
and in one day it went over 7%
If I talk about Inox, then on Thursday's trading session, Inox went up to approx 6.14% and closed around Rs. 287
the reason for this positive momentum is the Unlock 5.0 guidelines in which it was declared that Multiplexes
can operate its 50% of their total seating capacity.
After that, we have seen a positive impact on these two companies' share price
A lot of investors have been asking whether to invest in these companies directly
just with a thought that after some days it will recover.
I contradict on these point and advice that short term always welcome loss
Based on this, I gave it a thought and came up with this analysis video in which, we will
compare both the companies fundamentally
After that, you yourself will be able to analyze which company is better and if you think that
post covid, there will be a substantial recovery then which one would you choose in that case?
Let's talk about PVR vs INOX and all those parameters that are very important for this industry
I, Jagdeep Singh welcome you all to Groww
Let's start today's video.
But friends, before starting the video, do watch this video until the end as in the end,
we talk about last video's comments
We discuss those questions here and then answer them and
also while watching the video, you can comment anytime wherever you are facing any doubts
and I will try to pick up those comments in the next video so that I can clear your doubts
Let's start today's video
Friends, before delving deeper into the details, firstly, you sho uld know that PVR is way bigger than INOX in size
If I talk about its market capitalization, it's around 7100 crores and if we talk about Inox
Its market capitalization is around 2900 crores
so this should be in your mind, if we talk about any parameter, PVR is already a big company and apart from that
there are some parameers that are in % terms and where size of the company doesn't matter
Let's talk about these two companies from multiplex sector and their major source of revenue
So, friends, whenerver you go for a movie in a cinema, you should try to understand your journey
and you will understand how these multiplexes earn money from you
firstly, you book a ticket for a movie and while booking the tickets, you have to pay a convenience fee
this convenience fee is an income source for both these companies
You pay for a ticket.
Just assume you paid Rs. 250 for a movie ticket and that payment will be added directly to these companies income
because this is a major income source for them which is called income from the sale of movie tickets
after that you go inside the multiplex to watch the movie
and after that if you buy any sort of food or beverages, and pay for that to these companies
so, the income from food and beverages is an income source for these companies too
and then your jorney startes, you go inside, take your seat and start watching the movie
and you come across a lot of advertisements in between
and the income from these advertisements is again a source of income for these companies
so, you might have gotten an idea that there are mainly 4 income sources for both these companies
first is convenience fee which is charges during online ticket booking
second is their major revenue source which comes from the sale of movie tickets
third is from the sale of food and beverages
and fourth is the advertisements you see while watching the movie
So, friends let's try to understand as I just said that these companies have 4 major source of income
So we need to understand first how much % or the total revenue is earned from which which of sources by these companies
As I have said in the starting that the major source of income for these companies is from the sale of movie tickets
Let's talk about PVR first
As you can see on the screen,
The total revenue of PVRin FY2019 was Rs. 3118 Cr
and Rs 1635 of the revenue was from sale of movie tickets
which means almost 52% of the total revenue was coming from income from sale of movie tickets
Secondly, the source of income is from sale of food and beverages
and the revenue from this source was Rs. 858 Cr which is almost 27% of the total revenue
so first 52% revenue is from sale of movie tickets
and then 27% of revenue is coming from the sale of food and beverages inside the cinemal hall
next is their advertisement income which is totally in FY2019 is Rs. 353 Cr
and if we calculate this in %terms, it comes around 11.3% of the total revenue
Now as you can see on the screen, it will be clear how is PVR's total revenue breakup
and a little bit of revenue comes from the convenience fee also
as the customers have a lot of options to book their movie tickets
so for that, convenience fee is a small income source
So, in the same screen Iam showing you the income breakup of Inox for the FY2019
So that you will understand that both the companies come from the same segment
and the revenue breakup for both is almost similar
So, as you can see on the screen, left side shows you the PVR share in % terms
right side shows you the Inox
sale of movie tickets for Inox is 57% which is bit higher than PVR as it has 52%
If we talk about food and beverages, Inox has a revenue of 25% which is almost same to PVR, slight less
If we talk about advertisement, Inox gets a revenue of 10.3%
So, now you will have a good understanding that both these companies have similar revenue breakup in the last few years
Now that you have understood about the revenue breakup, let me tell you a small things to focus on
Both these companies had fully focussed on increasing their screen size in the last 3-4 years
and also focussed on increasing the revenue from the sale of movie tickets
If we talk about PVR, it tried to diversify its portfolio
and they did really good in the sale from food and beverages and the numbers increased in good % in the last 1-2 years
Now let's talk about beta margin which is also called as operating profit margin.
now what is operating margin?
now you understand that how the sales for these companies work and how these companies earn revenue
But after earning the revenue, there are multiple expenses to take care of
I we talk about multiplexes, they have employee cost, the costing to run the movie
after paying off these expenses, the money remaining with the company is calculated in terms of %
which tells us that how effeciently the company is using the money and increasing their revenue and cutting off their expenses
So, beta margin is utmost important for any company.
The better is the beta margin the stronger is the financials for any company
If I talk about FY2019, the beta margin for PVR was around 19.8%
If we talk about last few years, ths company continously worked hard to improve the margin starting from 14% and due to that 19.8% was a healthy operating profit margin in FY2019
Friends, I am not talking about the FY2020 number as Covid had impacted the industry and the numbers will distorted because of that
If I talk about Inox and the quarter 4 of FY2019, their operating profit margin was around 21%
If we compare both as per FY2019, both had almost the same operating profit margin
But if we talk about FY2020, there might be some delta in both the results
because there is an accounting standard IND AS116 which was included by Inox in its financial statements
owing to that it has a high operating profit margin
but you can exclude this impact as you can calculate both the companies operating profit margin without it
and if not excluded, it won't be an apple to apple comparison
I am just saying this in case you are calculating the operating profit margin for PVR and INOX for FY2020
You can directly pick the Operating profit margin for PVR but for Inox there will be two operating profit margins
first will be directly around 31% but they have included one more which is 'operating profit margin after the removal of IND 116 AS impact'
so, you need to compare the final operating profit margin after excluding that
and if we calculate for both for FY2019, they are almost the same, however, Inox had a little bit higher margin as compared to PVR
Lets now talk about the total number of screens and discuss which company has how many screens where people can go watch the movie
If we talk about Inox, it has a total of 626 screens
and if we talk about PVR, it has more that 850 screens
So, PVR has one more intersting thing which is it has 80 such screens that come under premium category
which means for these seats, PVR charges a hefty amount per ticket
You might know that when you go to big PVR cinemas, they charge 400-500 per ticket
But Inox charges normal in majority of their screens
which is why PVR is trying to diversify itself in premium sector in the coming times
due to which they have converted 11% of their total screens into premium sector
and in the near future, they plan to increase their screens to premium sector as it will increase their beta margin and net profit efficiently
The average ticket price in this industry matters a lot
which company is charging how much for a ticket on an average
If I talk about Inox, the average ticket price of Inox is Rs 200 and PVRs average price is around Rs. 204
After the average ticket price, one more important factor is 'spend per head'
this means when you go to watch a movie, how much do you spend on an average for food or anything else
Here we get a big difference whenever we compare both the companies
The spend per head is Rs. 80 for Inox whereas, for PVR, it is almost Rs. 99
which means that there is a delta of more than 20% here if we compare Inox and PVR and PVRs spend per head outperforms that of Inox
Owing to this, you must have noticed that the PVRs overall diversification in terms of revenue is better as compared to Inox
Friends, if we talk about debt both the companies have a substantial debt but in the case of Inox, it has more debt to equity ratio
which means it has more debt as compared to PVR
So, if you compare both in terms of debt, PVR is better, as it has less debt as compared to its revenue
If we talk about shareholding, then the promoter's ownership from the total shareholding is around 18.5% in the case of PVR
It has dropped in the last few years
If we talk about Inox, then promoters have a holding of 51% in the total ownership which is a good thing
but this should not be the only parameter for investment
In the last few quarters, promoters have increased their ownership in Inox
So, friends, we compared both the companies in terms of revenue and financials and I tried to explain their business through their revenue
and being a customer, you might as well know their business very well!
So, you can know about the business of any company by mapping your customer journey
like how you invest money in that company and how you avail the services and apart from that what and all you buy
so you will understand the complete business model
here again, there are two types of investments - first is long term investment
If you are sure that the company will perform in the long run then you invest in it.
In the recent times, when this Covid situation started
what I have noticed is people have started speculating and investing based on some news of any company to project its growth
But in these times, market is very volatile and stocks are also very volatile
which means it is very risky
So, during these times when you get into speculation you might end up making loss
Now you might be thinking that I am deviating from the main topic
I just want to say that may be both the companies are good enough based on the parameters I have told you
If you compare then you might be able to get it clearly that which one is better
So, you just need to analyze your risk and then invest accordingly if you are thinking to invest.
I will again remind that don't invest with a thinking that in the next 10 days you will get a good return
Return always comes after a long term investment
Never think that you are buying a share of any company instead think like you are getting some part of ownership of that company
and if you want to b uy ownership of any of the companies discussed today, then you can watch this video as a factcheck
You can research more about these companies on the basis and read company's annual reports
Apart from that you can also go to Groww and check the financial statements of these companies
Only after analyzing all these things, take the decision of investment
I hope you have liked today's video. If yes, then hit the like button now!!
Now I will move to the second part of the video and discuss some of the questions which were asked in the last video by our viewers
So as you can see below the first question was asked by Sai Praneeth
he asked where can we put our emergency fund's money apart from savings account?
So, friends, if you want to put your emergency fund apart from savings account then Liquid mutual funds is one of the best options
As on an average, it gives more returns than savings account
Liquid fund is a type of fund which invests in short term debt instruments and here risk is almost negligible
I won't say that risk is zero but is usually very low and you can keep your emergency fund there
Second question is from Fresher King and he asks that 'I don't have my aadhar linked to my mobile number and he is not able e-sign'
So, friends, if you want to open an account with Groww to investing stocks and you don't have your mobile number linked to Aadhar card
You can download the account opening form and sign the mentioned boxes and then you can courier your form
After that your stocks account will be opened soon.
The last question has been asked by Prashant which is regarding when is LIC IPO coming
So, friends, there has been a lot of news regarding this but dates have not been finalized yet
Whenever the LIC IPO comes, I will make a video on it for sure and explain all the important dates so that you don't miss on any opportunities
On this note, i will end today's video and hope that you learned a lot of things from this video
If yes, then comment down how we can we improve our videos and which one is your favourite company from today's video
where you are thinking to invest
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Happy investing!