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Home >Markets >Mark To Market >PVR, Inox Leisure set for a washout Q4; second wave delays revival

The second covid wave has stalled the recovery that multiplex firms PVR Ltd and Inox Leisure Ltd were just starting to witness. The March quarter (Q4FY21) had begun on an encouraging note with a better-than-expected response to the Tamil movie Master. Some regional content releases also put up a good show. But the lack of big-budget Bollywood releases curtailed the rebound in footfall during the quarter.

Accordingly, PVR’s and Inox’s revenues are expected to rise sequentially in Q4FY21, but they are estimated to be considerably lower year-on-year. Both firms are likely to report losses at an earnings before interest, tax, depreciation and amortization (Ebitda) level.

Analysts from JM Financial Institutional Securities Ltd said: “Operating losses are expected to be lower sequentially despite sharp increases in rental expenses and other overheads (on reopening of theatres) aided by improved revenue trajectory."

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The brokerage firm expects Inox Leisure and PVR to report operational losses of 62 crore and 100 crore, respectively, on an intrinsic basis, which is 16-27% lower quarter-on-quarter. To be sure, rising covid infections have understandably kept sentiments muted for shares of multiplex firms as mobility restrictions weigh on footfall. So far in 2021, PVR and Inox Leisure stocks have declined by around 13% and 4%, respectively; vis-à-vis a 5% gain in the Nifty 500 index.

Meanwhile, Salman Khan starrer Radhe: Your Most Wanted Bhai is set to release in theatres worldwide—and across multiple platforms—on 13 May. If this trend picks up in the short term, then it is a damper for multiplexes. Some analysts though reckon the impact of this move will not be too big. Karan Taurani, analyst at Elara Securities (India) Pvt. Ltd, said: “Radhe’s simultaneous release is along expected lines and it is likely that a few more small- and medium-budget films may also consider direct releases across platforms. But the impact on multiplexes, which have hardly opened up in select cities or towns due to the second wave of pandemic, is minimal. For multiplexes, this is just like another film going for a direct digital release."

Taurani added: “Warner Bros had adopted a similar simultaneous release strategy globally for Wonder Woman, Tenet and Godzilla vs. Kong; however, realizing the potential for cinemas in India, (it) has released all movies exclusively in theatres, which have done well despite the pandemic situation." This suggests consumers prefer to watch movies in the theatre, if circumstances are normal.

Be that as it may, the business environment continues to remain uncertain and that’s a worry. In the interim, investors should watch how rentals shape up for multiplexes. As things stand, the June quarter is also turning out to be rather weak. In general, over the medium term, faster pace of vaccinations would help improve consumer confidence.

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