PVR Inox reported lackluster June Quarter 2023 results due to weak movie content and lower occupancy. Occupancy fell to 22.4% in Q1FY24 compared to 31.4% in the same period previous. Lower occupancy led to revenues falling 17% YoY in Q1FY24 to Rs 1,324 crore of the combined entity adjusted for the pro forma numbers (combined entity) for 1QFY23. Admits fell 22% YoY to 33.9 million in June Quarter 2023. Average ticket price (ATP) and F&B Spend per Head (SPH) rose 2% and 10% respectively in Q1FY24. The combined entity of PVR Inox reported net loss of Rs 44 crore in June Quarter 2023. After delivering subdued Q1FY24 results, the stock price of PVR Inox has gained 29% from its 52-week low of Rs 1,336 hit in May 2023. The stock price has in fact jumped 26% since July 2023.
Strong content and big releases to drive PVR Inox revenue growth
June Quarter 2023 started off on a slow note due to weak content. Though there were hits like ‘The Kerala Story’ (hindi), ‘2018’ (malayalam), ‘PS-2’ (tamil), Adipurush (multi-lingual) and ‘Fast X’ and ‘Guardians of the Galaxy Vol. 3’ (Hollywood), it was no match to blockbusters, ‘RRR’ and ‘KGF Chapter2’ released, corresponding quarter previous year. There were one crore more footfalls in June Quarter 2022 compared to June Quarter 2023, said Nitin Sood, Chief Financial Officer, PVR Inox.
Content volatility has become a major factor impacting movie exhibition business after the advent of OTT platforms. As the movie exhibition business is run on a high fixed cost structure, the number of footfalls have a direct impact on the overall profitability of the business. For PVR, fixed costs constituted 45% of total revenues in Q1FY24. But things are looking up for the movie business in India from July 2023. ‘Rocky and Rani Ki Prem Kahani’, ‘Barbie’, ‘Oppenheimer’, ‘Mission Impossible- Dead Reckoning Part I’ and ‘Gadar 2’ have brought crowds back to the theatres. Movie exhibition business has survived the OTT onslaught and both will coexist. While OTT has now taken a strong mindshare of Indian viewers post Covid, for pure cinematic experience there is no substitute for IMAX and Dolby Atmos theatres. Speaking on movie theatre experience vis-à-vis OTT, Alok Tandon, Co-CEO, central, west and east–PVR Inox said, “For a giant screen experience, for uncompressed sound, for absolutely clear image, larger-than-life movies are there to be entertained only in a cinema hall.”
The negative noise around Bollywood seems to have faded away. ‘Rocky and Rani Ki Prem Kahani’ collections have crossed Rs 300 crore worldwide and Rs 150 crore in India. Gadar 2 collections have crossed Rs 500 crore only in India. PVR Inox recently announced that august 11-13th 2023 was the biggest weekend ever for the company earning more than Rs 100 crore revenue. Dream Girl 2 will also contribute handsomely and Shahrukh Khan starrer, ‘Jawan’ is expected to do extremely well maintaining strong momentum in the month of September too. As footfalls increase, the operating leverage due to higher admissions would reflect directly through a stronger bottom line. Thus, September Quarter 2023 is expected to be robust. While content volatility and footfalls might vary every quarter, PVR Inox, the largest movie chain in India is keenly moving ahead with its expansion spree. The company is adding around 150 screens in FY24. India still has just 3.2 multiplex screens for a million population. A long way to go.
