PVR INOX Ltd.’s shares are have the potential to nearly double in value over the next two years, brokerage firm Ventura Securities said in its note.

The brokerage initiated coverage on the stock with a “buy” rating and a price target of ₹2,657, which implies a potential upside of 88% over the next two years from current levels.

Ventura noted that the worst is over for the sector following the recent successes of films like Stree-2 and Pushpa-2. It said that the audience occupancies hit an all-time low earlier, which hurt PVR INOX’s financial performance.

PVR INOX undertook a change in business model from a COCO-FOCO setup to a FOCO & O&M format, which is asset light and helps advance breakeven and enhance profitability.

Post the restructuring exercise, the current screen count is at 1,700, and Ventura expects it to reach 1,900 by financial year 2027. This may entail a total capex of ₹400 – ₹450 crore.

Despite a conservative projection for occupancies and F&B growth, Ventura still expects a 10.5% revenue growth Compounded Annual Growth Rate (CAGR) to ₹4,500 crore by financial year 2027, led by sale of movie tickets, food and beverages, advertising income and conveniences, Ventura wrote in its note.

Ventura is expecting PVR INOX’s EBITDA to net earnings to grow at a Compounded Annual Growth Rate (CAGR) of 13.2% and 25.4% respectively by financial year 2027.

“Given the recent disappointing performance, our estimates model very conservative assumptions and any significant traction can lead to significant upside risks to our estimates,” Ventura’s note said.

Premium offerings, faster traction in occupancies coupled with higher than estimate Average Ticket Prices are the primary drivers.

Out of the 23 analysts that have coverage on PVR Inox, 17 of them have a “buy” rating, four say “hold”, while the other two have a “sell” call.

Shares of PVR Inox are trading 1% higher at ₹1,375. The stock has been an underperformer this year, down 17% so far.