PVR INOX is actively looking to expand into Tier II and Tier III cities, particularly in South India, says company CFO Gaurav Sharma

PVR INOX is actively looking to expand into Tier II and Tier III cities in South India. Currently, 22% of PVR INOX screens are in Tier II and III cities. Over the past 14 months, the company has entered new cities such as Dharwad (Karnataka), Cuddalore (Tamil Nadu), Machilipatnam (Andhra Pradesh), and Patna (Bihar).

Gaurav Sharma, CFO, PVR INOX, said, “The company believes that India remains significantly under-screened, offering vast growth potential. The trends of rapid urbanisation, a young workforce, and rising disposable incomes will drive demand across all regions of the country. That is why PVR INOX is actively expanding into Tier II and Tier III cities, particularly in South India, where the market is highly vibrant.”

Internationally, PVR INOX has a presence in Sri Lanka. However, at this point, the company doesn’t have immediate plans to expand into international markets.

Additionally, the company plans to invest in the renovation of key high-value properties to accelerate revenue growth from existing cinemas.

Gaurav Sharma, CFO, PVR INOX, said, “PVR INOX is primarily a multiplex operator, with only 10 of our 356 cinemas being single screens. Revamping or reinventing a single screen is a tactical decision that is taken on a case-by-case basis. Over the past 4 years, we have opened just 2 single-screen theatres, Paras in Delhi and Lido in Mumbai.”

Currently, 15% of the screen portfolio consists of premium or special format screens. This includes various high-end experience formats, such as Directors Cut, Luxe, Insignia, IMAX, and ICE; premium large formats such as Big Pix, PXL, and Screen X; 4D screens such as 4DX and MX4D; and screens for kids such as Playhouse and Kiddles. Typically, these screens are housed in cinemas, which offer curated dining options and menus designed by celebrity chefs for our discerning patrons.

Gaurav says that premiumization is a growing trend across all consumer segments in India, with customers willing to pay more for enhanced experiences and services. This is evident in the exhibition sector as well.

He said, “Since April 2023, we have added 196 new screens, of which 50 screens are either premium or special formats, representing about 26% of our new additions. We plan to continue expanding our premium screen portfolio to cater to the increasing demand for high-quality, differentiated experiences in cinema.”

Currently, the company’s F&B spending per head is around 50% of the average ticket price, and this ratio has consistently increased over the past decade due to the demand for a wider range of products from rising disposable incomes.

In comparison, international cinema chains achieve F&B spends as high as 75% of the ticket price.
Gaurav believes that Food & Beverage will be a key growth driver for the company.

He said, “This growth will stem from our strategy to diversify our menu offering, including healthier and premium options, and enhance the overall dining experience within our cinemas. Initiatives like the INR 99 weekday combos and unlimited weekend refills have already been well-received, driving higher consumption. We are leveraging strategic partnerships with popular brands, aiming to encourage higher spending per visit. Earlier this year, we formed a joint venture with Devyani International to launch food courts in shopping malls under the brand name ‘Treat Junction’. It shall allow us to pivot into a pre-ticketed F&B revenue stream. We have also collaborated with ‘EazyDiner’ to enhance the overall dining experience for our patrons, providing substantial savings on their favourite meals and beverages while enjoying movies.“

Before the pandemic, PVR INOX, on a combined basis, was delivering approximately 18% operating margins at around 32% occupancy. Post pandemic, while there has been smart recovery in admissions, the occupancies are still lower than pre-pandemic levels at about 25–26%, and in FY24 it delivered 13% operating margins.

Looking ahead, the company expects the content flow to normalise in the second half of this year, with movies like Pushpa 2, Vettaiyaan, Devara, Kanguva, Bhool Bhulaiyaa 3, Singham Again, Baby John, Sitare Zameen Par, Joker: Folie à Deux, and Venom 3 set for release over the next three to four months.

As occupancy rates improve due to this consistent film flow and our strategic initiatives, the company anticipates robust growth in both revenues and profitability, says Gaurav.