Why PVR Inox Share Price is Falling

Covid-19 brought in a lot of changes in our lifestyle. Starting from being comfortable with masks to washing hands frequently, we incorporated a lot of changes in our daily routine.

The pandemic also changed the way we watch movies. All the OTT platforms became widely popular because of pandemic-led lookdowns. 'Netflix and Chill' became a comfortable option.

Traditional cinemas suffered a lot because of this. No wonder, two big cinema companies joined hands to survive the changing market areas. We are talking about the PVR - Inox merger. PVR and Inox both are popular movie theatres that merged in February 2023.

Recovery was on the cards for PVR cinemas as people stepped out of their homes and made their way into theatres. But the financials of the company continued to suffer because of which PVR share price was falling.

In the last six months, PVR's share price fell by 19.6%.

Even today its share price is on a downtrend after the company made a big revelation in its quarterly results.

#1 PVR Inox quarterly results

Multiplex chain operator PVR Inox on Monday this week, reported a net loss of Rs 3,334 million (m) for the March 2023 quarter. This is against a net loss of Rs 1,054.9 m in the corresponding quarter of the last financial year.

It had clocked a profit of Rs 161 m in the preceding December 2022 quarter.

Average ticket prices in the quarter decreased to Rs 239 from Rs 244 in the previous quarter, while the average food and beverage spend per patron was Rs 119, down from Rs 133.

The revenue from operations rose to Rs 11,431.7 m for the quarter under review from Rs 5,361.7 m in the year-ago period.

The operating profit for the March quarter stood at Rs 2,850 m.

The company's revenue increased despite the underperformance of Hindi movies and significantly low releases from Hollywood.

About 30.5 million movie buffs visited PVR Inox cinemas during the quarter.

For the March 2023 quarter, the company reported a combined financial statement for the first time after the merger. Hence, it is pertinent to note that the YoY comparison of financial figures may not give an exact picture of the company's financial performance.

#2 PVR Inox to shut down 50 screens

One of the reasons for the sudden increase in losses in the books of PVR Inox is the accelerated depreciation charge of Rs 105.8 m. The company decided to shut down some of its loss-making screens and their value was written down in the books which widened losses.

The company plans to shut down approximately 50 cinema screens over the next 6 months. These properties are loss-making, or housed in malls which have reached the end of their life cycle with little hope of any revival.

The markets perceived this move as a reduction in business and hence PVR share price is falling today.

It also took an impairment charge of 108.2 million rupees related to a project in a Bengaluru mall which was suspended.

What next?

The company is shutting down a few screens but it is adding a lot more. It added 168 screens in the financial year 2023 - PVR (97 screens) and INOX (71 screens). In March 2023 quarter, it added 79 new screens - PVR (53 screens) and INOX (26 screens).

The multiplex operator also shared its screen opening outlook for the financial year 2024. The company intends to open 150-175 screens in 2024.

Of these, 9 screens have already opened, while 15 screens are awaiting license for commercial opening and 152 screens are currently under various stages of fitout.

According to the company, it has realigned all upcoming handovers of new sites for fit-outs till the time business fully recovers. The company has a robust pipeline of screens signed up for development over the next 5 years.

The company expects its revenues will increase on account of the combined entity operating about 1,670 screens in various geographies with a robust pipeline of content in English, Hindi, and regional laguages.

All of this is built on hopes and expectations. If hopes do not translate into reality, then the company may continue to suffer because of increased OTT competition.

How shares of PVR Inox have performed recently

PVR Inox is down 6.4% in the past one month. In the past one year, its share price is down by 17.8%.

In 2023 so far, its share price fell 17.1%.

PVR Inox touched its 52-week high of Rs 2,221.6 on 4 August 2022. Its 52-week low was Rs 1,404 touched today on 16 May 2023.

About PVR Inox

PVR Ltd is an Indian movie theatre chain in India with its headquarters located in Gurgaon, Haryana, India.

PVR pioneered the multiplex revolution in India by establishing the first multiplex cinema in 1997 at Saket, New Delhi, India.

It now provides different services under different names. Apart from running PVR Cinemas it also runs PVR Gold, PVR Director's Cut, PVR Imax, etc.

To know more, check out PVR's financial factsheet and its latest quarterly results.

You can also compare PVR with its peers:

PVR vs Balaji Telefilms

PVR vs UFO Moviez

Happy Investing!

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