hares of PVR Ltd touched a new 52-week high on Friday on the National Stock Exchange. This is despite the fact that its December quarter results, announced during market hours on Thursday, showed flat year-on-year consolidated footfall growth to 25.9 million.

Overall, this means fewer- than-expected people walked into the company’s cinemas, due to the weakness in content performance by the Tamil and Telugu film industry. This was reflected in the 8.6% revenue growth in Q3.

Shouldn’t this trend have bothered PVR’s investors? Analysts say the outlook for the current quarter remains upbeat and that’s encouraging. “Management expects the March quarter to be better due to better content in Andhra Pradesh and Tamil Nadu," pointed out analysts at Ambit Capital Pvt. Ltd in a report on 24 January.

In general, movie content pipeline remains strong this quarter, with expectations running high from movies such as Street Dancer, Love Aaj Kal, World Famous Lover (Telugu) and Baaghi 3.

View Full Image Graphic by Satish Kumar/Mint

Additionally, the company performed well on the advertising revenue front.

“Advertising growth continues to be a surprise for the third consecutive quarter with growth of 16% year-on-year for 9MFY20 despite weakness in the overall ad market, as PVR has a larger share of long-term deals coupled with properties in key locations," said analysts at Elara Securities (India) Pvt. Ltd.

For the December quarter, advertising income increased 8% year-on-year. Sure, this was relatively slower than the growth seen in the nine months ended December, but against the backdrop of tough macroeconomic conditions, the Q3 number was nothing to complain about.

PVR said its Ebitda (earnings before interest, tax, depreciation and amortization) margin declined by 40 basis points year-on-year to 20.4%, excluding the impact from Indian Accounting Standard 116. A basis point is 0.01%.

So far in FY20, the PVR stock has risen 19%. It helps sentiments with the management saying that the company was on track to open 90-100 screens in FY20. So far, it has opened 67 new screens, taking the total count to 825.

If the box office surprises positively, the PVR stock is likely to continue to be a hit with investors.

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