The much-hyped and controversial movie Padmavati will not be released on Friday, as had been planned. The new release date is not confirmed yet, and it is quite possible that the movie may not release later in the month either. Will this affect multiplex companies—PVR Ltd and Inox Leisure Ltd—in any way?

The December quarter is typically a stronger one for multiplex companies thanks to the festival season and more holidays, encouraging people to splurge on movies. It goes without saying, of course, that good content is also necessary. Accordingly, this time around, expectations were high that Padmavati will do well on the box office on account of its big budget, big director and star-studded cast. If the movie had released as planned, then it likely would have contributed substantially to multiplex revenues this quarter.

Now, these companies will suffer owing to the delay. But there are some comforting factors at play here. Assuming that Padmavati doesn’t release in the December quarter, there wouldn’t be a big impact, says Gnanasundar, research analyst at Spark Capital Advisors (India) Pvt. Ltd. That’s because the December 2016 quarter had a lower base—it did no blockbusters and there was also the adverse impact of demonetization to deal with.

According to another analyst, earlier there were expectations that the December 2017 quarter will be better than last year but now, the feeling is that it could be similar to last quarter or even marginally worse.

Gnanasundar added: “If at all, the impact of Padmavati can be seen in the March 2018 quarter considering that the March 2017 quarter was a strong one helped by releases such as Dangal, Raees and Badrinath Ki Dulhania."

Dangal was released in the last week of December 2016 and hence, revenue was split between the December 2016 and March 2017 quarters. However, the timing of Padmavati’s release can make assessing the impact somewhat tricky, he added.

Meanwhile, for the current quarter, the performance of Tiger Zinda Hai (release date: 22 December) will be crucial. Golmaal Again and Judwaa 2 (released on 29 September) have done fairly well so far this quarter and that should offer some consolation.

Analysts expect a slight improvement in operating profit margin on account of the goods and services tax roll-out.

What of the stocks? Weaker content performance has weighed on sentiments. Based on data from Bloomberg, shares of PVR and Inox Leisure trade at about 31 times and 24 times estimated earnings for the next fiscal year, respectively. Both stocks have underperformed the S&P BSE 500 index so far this fiscal year.

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