As the pandemic kept people indoors, India’s two largest multiplex operators suffered. And both PVR Ltd. and Inox Leisure Ltd. reported losses in the quarter ended September even as all states have allowed cinemas to open and at least five key states are already operating at 100% occupancy.
PVR Vs Inox: Financials
While PVR managed to register an operating profit in the second quarter, Inox reported an Ebidta loss.
Revenues of the two companies, however, doubled sequentially.
The figures aren’t comparable with a year earlier as theatres were allowed to reopen in a staggered manner only after July 2021.
Things, however, are likely to get better as Maharashtra, the largest movie market contributing 40% of the sales for multiplexes, has allowed cinemas to reopen starting Oct. 22.
But lack of big movies during the quarter ended September meant that both PVR and Inox saw their average ticket price—the biggest contributor to revenue—stay lower than the pre-Covid levels. Spend per head, however, surpassed pre-pandemic levels for both the companies.
PVR also fared better on occupancy than its smaller peer.
PVR Vs Inox: Costs
As the restrictions to contain the second Covid-19 wave hurt revenues, the firms kept a tight lid on costs to reduce cash burn. For now, PVR and Inox have sufficient liquidity.
“During the quarter as the screens reopened, the company continued with its strategy for keeping operating costs low and maintaining adequate liquidity,” PVR said in a statement. The total available liquidity on the balance sheet was more than Rs 700 crore as on Sept. 30 (including unutilised sanctioned credit lines), it said.
Inox, on the other hand, is net debt free and has nearly Rs 300 crore, including an undrawn limit of Rs 120 crore as on Oct. 18.
The multiplex chains are also looking beyond sales from box offices to bolster growth.
Expansion Plans
Inox operates 658 screens across 156 multiplexes in 70 cities and this financial year, it plans to open 49, of which 19 are a carry-forward from FY20.
“So far, a total of 15 screens (including 10 carry-forward) have been opened and work on nine upcoming screens is 95% completed and hence, would require an additional capex of Rs 4-5 crore,” the company said in its investor presentation. “Opening of the remaining 25 screens will be decided once the situation normalises, and this would require a capex of Rs 65 crore.”
Similarly, PVR has stepped up expansion plans. It will spend about Rs 80 crore to add about 100 new screens in FY22.
PVR has 855 screens and 178 cinemas in 72 cities.
The industry is hopeful of a boost after Maharashtra allowed cinemas to open. A string of Bollywood and other language releases is lined in the next three months as the industry looks to regain pre-Covid levels.
"We expect all-time occupancy records in multiplexes in India to get broken in the next four months. Reason is a very strong pipeline of content and huge pent-up demand," said Abneesh Roy, analyst at Edelweiss Securities. Advertisement revenue will come back with a lag of two quarters after occupancy peaks, while food and beverage revenue should be strong, he added, flagging a potential third wave as the only risk hindering growth.
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