PVR, Inox Leisure rally up to 7% as CCI rejects complaint against proposed merger

Shares of PVR and Inox Leisure gained up to7 per cent in Wednesday’s trade after Competition Commission of India (CCI) rejected a complaint against the proposed merger between two companies.

PVR shares later in the day were up over 2 per cent at Rs 1975.5 per share. Whereas, shares of Inox rose over 6.53 per cent to Rs 550.

CCI on Tuesday rejected a complaint against the proposed merger of multiplex chains PVR and INOX Leisure, saying apprehension of likelihood of anti-competitive practices by an entity cannot be a subject of probe. The watchdog's order has come on a complaint filed against the proposed merger that would create the country's largest multiplex chain with a network of more than 1,500 screens.

The development is seen to be positive for the multiplex operators which have seen a good run-up in the stock price given the release of Bollywood movie Brahmastra.

ICICI Direct views the news to be positive for the companies and stated, “With no major objections raised by CCI, the merger is on track for completion within the stipulated time. The companies are currently waiting for NCLT approval."

Karan Taurani, Senior VP at Elara Capital, said that NCLT and shareholder approval remain the only roadblock now. “If all goes throughwell, we expect the merged entity to form by the end of FY23,” he said.

Taurani said that both stocks have corrected 20 per cent over the last one month due to content issues and now there are expectations of some respite and upside movement based on this news.

Taurani further views that expedition of the merger process remains a trigger, while suggesting a target price of Rs 2,600/720 for PVR/Inox, respectively.

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