PVR Bets On A Packed Bollywood Lineup For Return To Pre-Pandemic Levels

India's biggest multiplex chain is betting on a packed lineup of Bollywood movies to take its business back to the pre-pandemic levels as Maharashtra, the nation's largest movie market, has now allowed cinemas to open.

"All eyes are now on upcoming Bollywood releases which includes Akshay Kumar-starrer 'Sooryavanshi', which would set the tone for the festive season," Ajay Bijli, chairman at PVR Ltd., told BloombergQuint in a phone interview. "Ranveer Singh’s '83' releasing this Christmas, 'Jersey' starring Shahid Kapoor on Dec. 31, and John Abraham’s 'Satyameva Jayate 2' on Nov. 26.”

There is a strong line-up of Hollywood releases, too. For instance, there would be a clash between "Eternals" and superstar Rajnikanth's action drama "Annaththe" during the Diwali weekend. "All this will ensure that the business will bounce back sharply."

Multiplexes, along with hotels and airlines, were among the worst-hit businesses during the Covid-19 pandemic. While 2020 was a washout for multiplex operators like Inox Leisure Ltd. and PVR, the second wave of the pandemic snuffed out a nascent recovery.

PVR is confident that the big releases will help it unlock its next phase of growth as cinema halls reopen on Oct. 22 in Maharashtra—a state that fetches multiplex operators over 40% of box office revenues for Bollywood releases.

“Not just for us, but Maharashtra opening is significant for the revival of the cinema exhibition industry,” Bijli said. “What we're given to understand is that our consumers, most of whom are between 12 and 39 years of age, are keen to step out after a long Covid-interval. There's also a visible theme of revenge spending across sectors."

Bollywood producers are fast lining up release dates to make up for the lost time soon after the Maharashtra government permitted cinemas to resume operations. About 100 films are lined up for the next four months," according to Abneesh Roy, executive vice president of research, Edelweiss Securities. “This means 5-6 movies would hit the screens every week, up 25% from pre-Covid levels.”

Cinemas were allowed to resume operations in a staggered manner only from July. States like Rajasthan, Karnataka, Andhra Pradesh and Telangana have already allowed theatres to operate at 100% occupancy.

Geographically, Bijli said, the southern region and Punjab are doing exceedingly doing well in terms of footfalls. While South has recovered to 83% of pre-pandemic levels, Punjab has grown 114%. “Regional content is largely driving occupancy," he said.

Push For Premium Theaters

The company anticipates a strong revival from the fourth quarter as the economy has now fully reopened.

Capitalising on the festive season demand, PVR has stepped up its expansion plans. It has unveiled a six-screen boutique luxury concept multiplex—PVR Maison—in Mumbai entailing investments of Rs 40 crore. With two upscale Luxe auditoriums and one viewing room for bespoke private screenings, the new multiplex has a seating capacity of 882. Maison takes PVR’s total screen count in the state to 157 across 38 properties.

“In Delhi, we have Director's Cut, but in Mumbai we were deprived of a premium-to-luxury format. This is probably the most premium property we've ever opened in the city, because my consumers here are also premium," Bijli said. "The whole idea is to make movie watching more experiential."

By the month-end, PVR plans to open Mumbai’s first rooftop drive-in-theatre at the New Jio World mall in the upscale office area of Bandra-Kurla Complex. And close to 100 screens are at different stages of execution, Bijli said. “We'll be ready to roll these out in the next 12-14 months."

With audiences increasingly consuming more films at home, the cinema-going culture has come under question even as Covid-led restrictions abate. But Bijli is unfazed.

“I don’t think 12-18 months of interruption can alter the movie-watching business which has been going on since time immemorial," he said. "Crowds will be back... it's just a matter of time.”

The Multiplex Association of India has decided to push for the original eight-week gap between movies releasing in theatres and their debut on streaming platforms like Netflix and Amazon Prime Video from April 2022. That gap was reduced to four weeks owing to the pandemic when cinemas ran under restrictions.

Leg-Up For Cinemas

Ticketing platform BookMyShow projects that this festive quarter is likely to be on a par with that in 2018 and 2019.

According to Edelweiss, the third quarter can bring in box office collections of over Rs 1,000 crore, with the Deepawali period alone contributing Rs 200 crore.

The Multiplex Association estimates Rs 4,000-6,000 crore collections in 2021—up from Rs 2,000 crore in 2020.

The consolidation after small companies went out of business during the pandemic may aid larger players. “PVR and Inox are well-capitalised and set to gain from industry consolidation," HSBC Securities and Capital Markets (India) said. "We expect a mid-teen revenue CAGR for both over the next five years."

Edelweiss’ Roy said PVR and Inox get more room to grow with smaller players like Carnival Cinemas smarting from Covid pain.

Q2 Earnings

PVR's revenue stood at Rs 275.21 crore, including other income of Rs 133.18 crore owing to rental waivers.

It reported a net loss of Rs 153.3 crore in the quarter ended September even as it posted an operating profit of Rs 86.8 crore, according to its exchange filing.

"Our priority during the (September) quarter was reopening our cinemas with all the safety guidelines," Bijli said.

The figures aren't comparable to the June quarter or quarter ended September 2020 as cinemas were shut.

Break-Up Of Financials

• Sale of movie tickets: Rs 53 crore.

• Sale of food and beverages: Rs 44.5 crore.

• Advertisement income: Rs 7.66 crore.

• Income from movie distribution: Rs 5 crore.

PVR's investor presentation said the multiplex operator achieved rental discount to the tune of 75% in the first half of the ongoing fiscal and in some cases managed to negotiate discounts on rentals for the next two quarters, too.

Total available liquidity on the balance sheet as on Sept. 30 was more than Rs 700 crore.