PVR Inox shares down over 8% today: What's the reason?
What's the story
PVR Inox, India's leading cinema chain, witnessed a major fall in its share price today. The company's stock fell over 8% after reports of an internal investigation into alleged kickbacks worth up to ₹200 crore from developers of cinema properties. The probe uncovered irregularities and sought to determine the extent of the alleged wrongdoing.
Executive departure
Immediate exit of executives involved in probe
The internal investigation led to the immediate exit of Pramod Arora, PVR Inox's CEO for growth and investment, along with a few others. The company's board discussed this matter in recent meetings. The probe also sought to establish whether others were involved in these malpractices.
Promoter scrutiny
Promoters under scrutiny amid kickback allegations
The senior executive involved in the alleged kickback case was close to PVR Inox's promoters.
This has raised questions about how long these alleged payments continued and if others were aware of these malpractices.
The allegations could potentially bring PVR Inox co-promoters Ajay and Sanjeev Bijli under scrutiny, who have been at the helm since the merger of PVR and INOX in February 2023.
Buyback details
PVR Inox announces ₹300cr buyback
Despite the ongoing investigation, PVR Inox recently announced a tender-offer buyback at ₹1,450 per share. The total consideration for this buyback will not exceed ₹300 crore.
Promoters and members of the promoter group are expected to participate in this buyback scheme.
The announcement comes as a capital-return milestone for the company amid its current crisis.
Financial outlook
JM Financial raises earnings estimates
Despite the scandal, JM Financial raised its earnings estimates for PVR Inox and increased its target price to ₹1,270 per share.
This implies a potential upside of around 3.5% from the stock's previous closing price of ₹1,227.2 per stock on NSE.
The company reported a consolidated net profit of ₹56.5 crore for Q1 FY27 as against a loss of ₹47.3 crore in the same period last year.