PVR shares in focus after favourable Supreme Court ruling; stock set for rerating, says Anil Singhvi

PVR Limited shares fell on Wednesday, tracking weakness in the domestic equity markets. The counter quoted Rs 1,713 on the NSE around 1:45 PM. 

The stock is expected to benefit from a Supreme Court ruling on Tuesday which ruled that the owners of cinema halls were entitled to set the terms and conditions for sale of food and beverages and can determine whether outside food should be permitted within the theatre precincts. The apex court set aside a direction of the Jammu and Kashmir High Court which had in July 2018 directed multiplex and cinema hall owners there not to prohibit movie goers from carrying their own food articles and water inside the theatres.

Earlier today, Zee Business Managing Editor Anil Singhvi lauded the Supreme Court decision and said that the stock is now poised for re-ratings. He said that the news augurs well for the company as a lion share of its business comes from food and beverages.

Technical Analyst Nilesh Jain said that the underperformance in markets today has impacted the stock, though the news is positive for PVR.

The chart structure appears positive, Jain said, adding that the counter witnessed a double bottom at levels around Rs 1620 which is indicative of an upside from this level. It should be treated as a stop loss, he added while recommending a buy.

An immediate target of Rs 1,800 and Rs 1,860 is on the cards, he further said. However, the counter finds resistance at levels of Rs 1920.

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The stock has been moving in either direction, giving opportunities of a two-way trade.

The stock has outperformed Nifty50 by over 25 per cent over a 1-year period. PVR has given 28 per cent returns as against 2.5 per cent returned by the broader market index according to data sourced from Trendlyne.

Source: NSE

The stock is trading at a 22 per cent discount from its 52-week high of Rs 2214 on the NSE.

Source: NSE

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One-year beta of this counter is 1.04, which indicates average volatility. The Price-to-Book (PB) value is 7.65 which is below industry median, Trendlyne data said.

Momentum indicators RSI and MFI were at 41.6 and 27.1 which suggest that a considerable upside could be expected in this stock. A number below 20 suggests oversold while above 70 indicates that the stock is trading in overbought territory.

(Disclaimer: The views/suggestions/advises expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)