Bollywood box-office duds worry PVR, Inox
2 min read 30 Aug 2022, 11:02 PM ISTAs films failed to live up to expectations, PVR and Inox shares fell around 18% from their highs this month
PremiumHindi language movies are facing the wrath of audiences for poor content. The boycott Bollywood trend on social media, too, has not helped matters. Against this backdrop, recent movies such as Aamir Khan-starrer ‘Laal Singh Chaddha’ and ‘Raksha Bandhan’ featuring Akshay Kumar have garnered lower-than-expected box office collections.
Multiplex companies PVR Ltd and Inox Leisure Ltd would also face the effects of viewer dissatisfaction with Bollywood movies. “Two months into Q2FY23, the sense we get from the performance of content is that occupancy levels will be among the lowest that both companies, PVR and Inox Leisure, have seen during ‘normal’ times," said Nirmal Bang Institutional Equities in a 30 August report.
Shares of PVR and Inox Leisure scaled 52-week highs of ₹2,214.85 and ₹619.35, respectively on NSE on 4 August.
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Analysts said hopes were running high ahead of the release of the big-budget Hindi movies, which were expected to be blockbusters. However, the films failed to live up to expectations, hurting investor sentiments for PVR and Inox, which have fallen around 18% from their highs seen earlier this month.
“With their budgets and star casts, these movies (Laal Singh Chaddha, Raksha Bandhan, Shamshera, and Ek Villain Returns) should have done better. So, after the recent rally, both PVR and Inox shares have corrected," said Jinesh Joshi, analyst at Prabhudas Lilladher.
Given this, footfall and occupancies of PVR and Inox are likely to drop sequentially in Q2FY23. According to Nirmal Bang, with costs having fully ramped up and with little scope for cutbacks, both companies will, at best, be able to eke out an Ebitda breakeven (pre-IndAS 116).
The next big release ‘Brahmastra’ will hit theatres on 9 September. As ‘Vikram Vedha’ and ‘Ponniyin Selvan’ are slated for release on 30 September, for occupancies to rise meaningfully, a lot depends on how ‘Brahmastra’ fares, note analysts.
The movie content line-up for Q3FY23 seems exciting, but disappointments in this festive quarter would mean steeper cuts in earnings estimates. “With audiences becoming particular about content, the quality of Bollywood storylines has to improve and that remains a crucial upside trigger for PVR and Inox Leisure stocks," said Joshi.
Meanwhile, the PVR-Inox Leisure merger, which is crucial for both the stocks, has got approvals from the Securities and Exchange Board of India and stock exchanges. Clearance is awaited from the National Company Law Tribunal.
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