PVR, Inox Leisure gain up to 8% as cinemas reopen in Maharashtra

Shares of multiplex operators such as PVR and Inox Leisure gained by up to 8 per cent on the BSE in the intra-day trade on Thursday after the Maharashtra government permitted cinema halls to operate from today.

The state government on Wednesday permitted theatres including single-screen, multiplex and drama halls to re-open from Thursday, adding that they could function outside containment zones only. This will benefit multiplex companies as box office revenue from Maharashtra state constitutes around 30 per cent of total revenue for Hindi films.

Following the development, the stock of PVR rallied 8 per cent to Rs 1,212, while Inox Leisure soared 6 per cent to Rs 279 on the BSE. In comparison, the S&P BSE Sensex was up 1.6 per cent at 41,274 points at 12:41 pm.

The reopening of movie halls in Maharashtra would come as a huge leg-up for film producers and distributors in Bollywood who were reluctant to release fresh content, since movie halls in the state were shut, the Business Standard reported quoting industry experts. CLICK HERE FOR FULL REPORT

For the first half (April-September) of the current financial year 2020-21, PVR reported a consolidated loss of Rs 410 crore as compared to profit of Rs 65 crore during the corresponding period of last year.

With the government allowing re-opening of cinemas from October 15, PVR reopened 577 screens in 16 states and UTs with 50 per cent cap on occupancy, which is likely to stay in effect during whole of Q3 as per management. Initial occupancy has been marginal at around 4-5 per cent as old films were being screened everywhere with exception of West Bengal. Analysts at ICICI Securities believe occupancy will be limited until new and big budget films release in theatres.

The brokerage firm believes PVR is a proxy play on urban/semi urban discretionary spends. "However, initial occupancy is very low and other revenue streams such as ad revenue are yet to pick up. Current liquidity of Rs 550 crore will ensure liquidity in near term but quicker recovery in footfalls as well as average ticket price or ATP (depending on pandemic tail) will be important," it said.