With the release of Pushpa 2: The Rule on Thursday, PVR Inox Ltd is back in the spotlight. Expectations for the movie’s collections are running high as the first edition of the action film franchise was a success at the box office.
“With strong franchise recall, Pushpa 2 may break records and fetch lifetime India gross box office collections (GBOC) of more than ₹1,000 crore while Hindi GBOC could do ₹500 crore; this may also break the record of India GBOC of ₹1,200 crore and ₹1,000 crore of Bahubali 2 and KGF Chapter 2, respectively,” wrote Karan Taurani, analyst at Elara Securities (India) in a report dated 3 December. Note that movies that released earlier in this quarter such as Singham Again, and Bhool Bhulaiyaa 3 have performed well.
How does this help PVR Inox?
The answer is simple. Better-performing movies pull audiences to the theatres, hence improving occupancy rates. PVR Inox’s earnings are highly sensitive to occupancy trends and that depends heavily on good movie content. So far in FY25, the company’s occupancy rate stood at 20.3% in the June quarter (Q1FY25) and improved to 25.7% in the September quarter. The occupancy rate is expected to improve further sequentially in the December quarter. This would be backed by a slew of blockbusters and a strong content pipeline for December, which includes movies such as Baby John and Sitaare Zameen Par.
“With 33% quarter-on-quarter Hindi GBOC growth, PVR Inox’s overall GBOC (Hindi plus non-Hindi) is set to grow 29% quarter-on-quarter in Q3FY25 to ₹800 crore,” said Taurani. Note that in the first half of FY25, the company GBOC has sustained a 33% share in India’s Hindi GBOC and this is likely to sustain in Q3FY25 as well.
But what really remains to be seen is whether Q3FY25 collections can match or surpass those of Q2FY24, which was the best-ever post-pandemic quarter.
Also Read: ‘Pushpa 2’ offers a ray of hope for box office as theatres look to end the lull
Investors in PVR Inox’s shares seem to be treading carefully. While the stock has gained 15% in the past six months, it is still 7% lower so far in 2024.
The company plans to open around 110 to 120 new screens in FY25 and exit 70 underperforming screens. Its screen count while announcing September quarter results was 1,747. As of September end, its net debt stood at ₹1,153 crore, down by ₹141 crore versus the previous six months.
Amid increased competition from over-the-top platforms, the growth path ahead remains challenging for PVR Inox. All said and done, good quality movies are the lifeline for multiplex companies. Therefore, PVR Inox’s investors will closely track the movie pipeline’s performance in the coming quarters.
“Although the management sounded upbeat about the FY26 content pipeline, we note that even a 200-300 basis points blip in occupancy could derail the company’s screen economics,” said analysts from Motilal Oswal Financial Services in their September quarter results review report.
“Stable occupancy, healthy recovery in advertising revenues, ramp-up of F&B (food & beverages) business through ventures like PVR Café and food courts remain the key growth drivers,” the Motilal report added.
Also Read: At the box office, a dull first half punctuated by small moments of delight
