Multiplex operators trade weak; PVR tanks 10%, Inox Leisure hits 52-wk low

Foreign portfolio investors reduced their stake in multiplex operators by up to 5 percentage points in Q4FY20

Shares of multiplex operators like PVR and Inox Leisure were under pressure on Tuesday, falling up to 10 per cent on the BSE, on concerns of the impact of the Covid-19 outbreak on the firms' revenues and cash accruals on account of closures of cinemas.

Among individual stocks, PVR tanked 10 per cent to Rs 1,007 and was trading close to its 52-week low of Rs 932, touched on April 7. Inox Leisure hit its 52-week low of Rs 213, down 5 per cent on the BSE today. The share prices of both these firms have more than halved from their respective 52-week highs, touched in February this year.

Last month, credit rating agencies Icra, CRISIL and India Ratings and Research (Ind-Ra) had placed PVR’s ratings on watch with developing implications due to the lockdown imposed to stem the Covid-19.

As a result of lockdown extension, and the possibility of further restrictions on cinema halls going forward, the impact on PVR’s revenues and cash accruals is expected to be further aggravated, relative to the shorter shut-down period announced earlier, Icra said in rating rational.

ICRA also noted that a significant part of the operating cost of the company is variable in nature which will enable it to reduce costs to a large extent during this period of screen closure; however, on overall basis, the company is expected to report operating losses during the period of shutdown.

Meanwhile, foreign portfolio investors (FPIs) reduced their stake in multiplex operators by up to 5 percentage points during the January-March quarter (Q4FY20). In PVR, FPIs' holdings declined by 460 basis points from 42.94 per cent in December quarter to 38.35 per cent at the end of the March quarter. In Inox Leisure, they cut their stake to 9.32 per cent from 10.96 per cent in previous quarter, as per shareholding pattern filed by the company.