To answer your question, PVR does enjoy a premium valuation over INOX due to its pedigree and that this is likely to sustain although the gap may narrow over time. From that perspective, INOX surely looks good. But, here is what you need to know.

· PVR trades at a forward P/E ratio of 38.2 while INOX trades at a much more reasonable P/E ratio of 24.13. This premium of 58% for PV, is substantially higher than the 3-year average of 38%.

· PVR has a premium valuation due to some basic factors. PVR, for starters, has much better locations. It is not just about screens, but locations that play a critical role in making the business highly profitable. That is where PVR really scores and INOX will take some time and big investments to catch up. However, INOX has also added new screens aggressively and is now close to 600 screens across India.

· The location advantage of PVR may also not sustain for too long as INOX is upping its presence in premium locations (including in the chic Atria Mall in Mumbai’s Worli). This should aid margins going ahead. Inox added 85 screens in FY19 and in the next two years, it is expected to launch another 150 screens. In comparison, PVR has been adding 50-60 screens per year in the past few years. Above all, Inox is debt-free and has a promoter holding of 52%, as against less than 20% promoter holding for PVR.

As of now, the premium tag still exists with PVR but that could be changing fast.