Multiplex operator shares tank; PVR slips 19%, Inox Leisure down 15%

Shares of multiplex operators like PVR and Inox Leisure tanked up to 19 per cent on the BSE on Monday after the Maharashtra government on Friday announced that cinema halls will remain closed in major metros till March 31, 2020, as the number of Coronavirus (Covid- 19) cases rose in the state.

Delhi, Kerala and UT of Jammu & Kashmir have also announced cinema theatres to remain closed up to 31 March 2020 amid the outbreak of Covid-19.

Shares of PVR hit 52-week low of Rs 1,046, down 19 per cent, while Inox Leisure slipped 15 per cent to Rs 270 on the BSE in the intra-day trade today. In the past three weeks, PVR has plunged 49 per cent and Inox Leisure has tanked 45 per cent, as compared to a 20.5 per cent decline in the S&P BSE Sensex.

Analysts at IDBI Capital expect more states to take this precautionary step which is likely to have a significant impact on the January-March quarter (Q4FY20) result. Further, spill-over of closures of cinemas to Q1FY21 remains an important monitorable. The brokerage firm sees the probability of April 2020 to be hit.

PVR is among the top multiplex operators in India with significant presence in premium malls. It will be impacted in 4QFY20E and 1HFY21E as footfalls recede. To factor this in, we cut our footfalls by 4 per cent/9 per cent and adjusted EBITDA by 8 per cent/15 per cent for FY20E/FY21E, according to analysts at KIM ENG Securities.

The brokerage firm believes the impact of Covid- 19 will be limited to the short term, and the long-term fundamentals and the growth story of PVRL are unaffected. Risk from slump in high-margin ad revenue, but we assume this won’t change.