*Sales Note*
*# PVR INOX | THE MULTIPLEX COMEBACK NOBODY IS FULLY PRICING IN*
*April 24, 2026 | TP: ₹1,920 | Outperform — CLSA*
> *Pitch line:* *"18% EBITDA margins at 28% occupancy. ₹13,400 crore all-India box office — a record. Net debt down ₹1,000 crore since merger. The bear case is the consensus. The data is the contrarian."*
*## The Contrarian Thesis*
The street has spent three years discounting PVR Inox as a structural OTT casualty. The operating data from 9MFY26 argues the opposite — admissions, revenue, EBITDA, and PAT are all at their highest post-pandemic levels simultaneously.
CLSA's Outperform with a ₹1,920 target captures a meaningful re-rating opportunity that consensus has been slow to acknowledge.
*## The Numbers Are Unambiguous*
Every key operating metric has inflected higher across all three quarters of FY26. Q3 FY26 total revenue came in at *₹1,908 crore* (vs. ₹1,739 crore in Q3 FY25), EBITDA at *₹344 crore* (vs. ₹258 crore), EBITDA margin at *18%* (+310 bps YoY), and consolidated PAT at *₹95.7 crore* (vs. ₹36 crore in Q3 FY25 — a 167% jump).
Q2 FY26 delivered *₹1,843 crore revenue (+12% YoY)* and *44.5 million admissions* — the highest in two years.
The punchline: H1 FY26 PAT was *₹92.9 crore* against a *loss of ₹114.2 crore in H1 FY25.*
Free cash flow for 9MFY26 stood at *₹587 crore.*
This is not a one-quarter story — it is a three-quarter clean sweep.
*## Anti-Consensus: What the Bears Are Missing*
*Bear 1 — "OTT has structurally capped theatrical growth"*
Calendar 2025 was the strongest year ever for the Indian theatrical business — all-India gross box office collections of *₹13,400 crore, up 13% YoY and 32% above pre-pandemic levels*, with *37 films crossing the ₹100 crore mark* — the highest ever in a single year.
Hindi box office delivered its best year ever at *₹5,500 crore (+18% YoY)*; Hollywood staged its best post-pandemic year in India at *₹1,400 crore (+49% YoY)*. Dhurandhar became the *highest-grossing Hindi film of all time at ₹1,000 crore cumulative box office*, and Dhurandhar 2 is currently extending that momentum into Q4 FY26.
Management stated explicitly on the Q3 concall that *2026 and 2027 will each surpass 2025* in terms of box office collections.
*Bear 2 — "ATP and F&B growth is capped"*
Q3 FY26 ATP was *₹293 (+4.1% YoY)*; F&B SPH was *₹146 (+4.2% YoY)* — both directly from the regulatory filing.
Management guided a steady *3.5–4% annual increase in both ATP and SPH* going forward, underpinned by growing premium format screen mix.
PLF and premium screens are running *500–1,000 bps higher occupancy than regular screens*, and their share of the portfolio is expanding with every new multiplex that opens. F&B annual revenue has already crossed *₹1,800 crore* — a structural compounding engine that flows through at high contribution margins.
*Bear 3 — "Margins are cyclical, not structural"*
PVR Inox has held *18% EBITDA margins for two consecutive quarters at ~28% occupancy* — levels at which pre-merger economics would have required materially higher occupancy to generate the same margins.
Management attributed this explicitly on the Q3 concall to structural post-merger improvements: *solar energy deployment driving electricity costs lower, rental renegotiations to revenue-share structures, and sustained merger synergies.*
Occupancy at 28–29% remains meaningfully below pre-pandemic levels of 33–35%, meaning every incremental admission from here drops through to EBITDA at a disproportionately high rate.
As management stated verbatim on the concall: EBITDA margin improvement is *"sustainable at lower occupancies due to cost optimisation."*
*## The Balance Sheet Inflection*
Net debt has been reduced by *over ₹1,000 crore since the PVR-Inox merger to ₹365 crore as of December 2025* — a 72% reduction.
The divestiture of non-core 4700BC / Zea Maize business to Marico for *₹226.8 crore* in Q3 FY26 further sharpened the balance sheet and the strategic focus.
