GFL LIMITED holds 16.16% in PVR-Inox Merger

Video https://youtu.be/gdHGVTi-vxw 

  • I spend a lot of time on finding bets that have huge potential and largely depend upon a situation of a theme if that plays out well --- How much it can benefit
  • Many analysts believe the merged entity of PVR INOX would have higher pricing power on the revenue front and higher bargaining power on the costs front
    • The merged entity, the largest multiplex chain stands to be the biggest beneficiary
    • The synergies would result in robust free cash flows which bode well for GFL as it is shareholder in the merge entity
  • GFL is a holding company. So dividends constitute a large chunk of its revenues ( currently no revenue!!!)
    • Due to this, there is a lot of uncertainty around the cash flow. And markets don't like uncertainty with regards to earnings. This is accounted for in the share price.
  • Industry level notes:
    • As far as the number of screens is concerned, India lags behind other countries. The country has around 9,500 screens compared to 40,000 screens in the US and 70,000 screens in China
    • Another interesting fact is that the industry has been consolidating for the last few years. The single-screen cinemas have been losing their market share to multiplexes
    • The pandemic has only accelerated this trend
    • Indians love watching movies. On the supply side, India produces more movies per year than any other country in the world

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