HDFC Securities research report’s outlook and valuations: “The YTD EPS upgrades (consensus) have been led by mid-tiers such as Tata Elxis, Mindtree, Mastek, and Persistent Systems, ranging from 20-40 percent and, within tier 1, by Wipro (~15%). We expect the sector (coverage universe) to post 13 percent and 14.5 percent USD revenue/APAT CAGR over FY21-24E compared to 6.5/7.5 percent over the past five years. The mid-tier valuation premium relative to tier 1s may sustain, based on its relative outperformance (>500bps growth outperformance over FY21-24E as compared to 250bps earlier). We roll over valuations to Sepemtember-23E and increase target multiples for most of the companies in our coverage universe. We remain broadly constructive across the sector and ahead of consensus on growth/EPS; our preferred picks are Infosys, HCLT, Mphasis and Zensar.”
Sharekhan’s research report on PVR
PVR is India’s premier multiplex player that leads with the most number of screens, clocks higher revenue per screen and has a premium screen portfolio. It has 98 luxury screens (12% of total) and is expected to grow going ahead. PVR is well-placed to capitalise on strong pent-up demand and is expected to report strong revenue growth over FY2023E-FY2024E. Further, PVR is expected to add screens aggressively post normalisation, which would aid revenue growth. With permanent savings of 10-15% on select pre-COVID fixed costs, we expect EBITDA margins to remain above pre-COVID operating profitability in FY2023E and FY2024E.
We initiate coverage on PVR Limited with a Buy rating and PT of Rs. 1,900. Stock trades at 9x/8x its FY2023E/FY2024E EV/EBITDA and 36x/26x its FY2023E/FY2024E EPS.
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