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MUMBAI: Shares of multiplex operators surged on Thursday after Maharashtra, among the biggest territories for Bollywood, allowed movie theatres to reopen at 50% capacity, effective today.

At 0210 pm, the PVR stock was up 7.5% at 1,198.55 piece while that of Inox Leisure rose 4.1% to 275.35. The benchmark Sensex was up 1.5% at 41,224.91.

On Wednesday, the Maharashtra government had said said cinema halls, theatres, multiplexes and drama theatres outside containment zones will be allowed to resume function.

PVR reported near-zero revenue for the second straight quarter during July-September. As in the previous quarter, the focus remained on cost-control measures. There was a sharp reduction in employee costs and rentals/maintenance charges. While employee costs were down 61%, rent and common area maintenance charges fell 86%.

Analysts at Emkay Global, in a note, said, "PVRL delivered a quarter with controlled cash burn, led by total cost reduction of 3% qoq. Full rent and CAM waivers for the lockdown period as well as sizable discounts going forward for more than 60% of cinemas are steps in the right direction. Reopening of cinemas in Maharashtra and Tamil Nadu is also a key positive as these two states account for a significant chunk of collections. Having said that, we continue to highlight that over the medium term, the prospects of the sector as a whole remain intact, given limited out-of-home entertainment options available in the country". The brokerage has a hold rating to the stock.

Cinemas had remained shut since March following the lockdown, imposed to contain the spread of covid-19. Maharashtra was among the worst hit states with a total of 16,98,198 cases and death toll at 44,548.

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