T20 World Cup, IPL, Bollywood: What's behind PVR Inox's weak stock performance?

PVR Inox has fallen about 18 per cent in the last six months and Emkay Global believes the recent weak stock performance has to do with a lack of major movie releases over the last couple of quarters. It noted that the June quarter has also turned out to be a damp squib after a subpar March quarter, with the IPL, the T20 World Cup, and the general elections being hurdles for movie releases.

On Friday, PVR Inox shares were up 3.14 per cent at Rs 1,427.55. Yet, the scrip is off 24 per cent from its 52-week high of Rs 1,879.75, hit on September 8, 2023.

"The chain’s high fixed-cost structure has aggravated this issue, hitting profitability. The company should see some respite ahead, as the pipeline has improved, even though mega-star movies are likely to be released only in 2025," Emkay said.

The PVR Inox management has started taking initiatives on both, the revenue and cost fronts, aimed at maximising profitability, though fruition of some of these efforts is likely not before the medium term, Emkay Global said.

The brokerage noted that Bollywood’s performance has been erratic, whereas regional movies continue to do well, though PVR Inox’s lower share in the South has offered no meaningful contribution. Hollywood has been impacted by the writers and actors’ strike, and should take some time to normalise, it noted.

"Both, Bollywood and Hollywood, are still seeing footfalls below pre-Covid levels’, whereas South Indian movies are faring relatively better. Also notable is the dichotomy of mega budget vs small/medium-budget movies. Although big-budget movies with differentiated content/experience have done well, small-to-big-budget movies have been hit hard as audiences have opted to wait for their OTT release," it said.

With structural issues persisting, occupancies are unlikely to rebound to pre-Covid levels which is, though, in the price, Emkay said.

"Stock performance continues to hinge on improvement in box-office collections. We maintain BUY on PVR INOX and target price of Rs 1,650 per share (11.5x Mar-26E pre-Ind AS Ebitda)," it said.