Motilal Oswal Securities has maintained 'Buy' on PVR with target price of Rs 670 as against current market price (CMP) of Rs 578 in its report.

Commenting on the investment rationale, the stock broker said, ''PVRL's 4QFY14 revenue grew 28% YoY to Rs 3.14 billion against our estimate of Rs 2.99 billion, primarily driven by strong performance of low budget films like Queen and Two States. EBITDA margin expanded 3.8pp YoY to 10.5% against our estimate of 8.3%, mainly due to higher operating leverage. PAT declined 93% YoY to Rs 8 million against our estimate of a loss of Rs 118 million due to exceptional gain of Rs 85 million largely on account of sale of Anupam Multiplex property.

The PAT decline was primarily due to lower tax credit of Rs 40 million in 4QFY14 against Rs 294 million in 4QFY13. The management has also taken a write off of Rs 3 billion of goodwill from reserves and will amortise balance Rs 1 billion over next 10 years. 

We remain excited about the long term growth prospects of PVR given its leadership position in movie loving nation and long term growth opportunities which the multiplex industry offers given lower screen density in the country.

Post the write-off of goodwill from net worth, ROE and ROCE will improve from 10.8% in FY14 to 23.0% in FY16E and 11.1% in FY14 to 22.7% in FY16E respectively, which will further drive re-rating going forward. The stock is trading at 10.2x and 8.1x FY15E and FY16E EV/EBITDA respectively. We maintain a Buy and value PVRL at 9x FY16E EV/EBITDA and arrive at a target price of Rs 670.''

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