As Shamshera, Laal Singh Chaddha & others disappoint, multiplexes stare at losses in Q2

Multiplexes PVR and Inox Leisure are likely to report losses for September quarter after many potential blockbusters including Shamshera and Laal Singh Chaddha failed to click with audiences, in the backdrop of "BoycottBollywood" trend, leading to a sharp drop in footfalls.

Footfalls for the quarter likely dropped 30-40 per cent quarter-on-quarter (QoQ), said analysts adding that average ticket price (ATP) and spending per head on food and beverages (SPH) also likely declined sequentially.  

"After a record quarterly performance by both PVR and Inox Leisure in Q1FY23, we believe that Q2FY23 will be one of the weakest quarters in normal times (outside of the pandemic phase) due to poor consumer response to content released during the quarter," said Nirmal Bang Institutional Equities.

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The quarter saw Shamshera (Rs 43 crore), Raksha Bandhan (Rs 44 crore) and Laal Singh Chaddha (Rs 59 crore) not faring well, said Prabhudas Lilladher. Two movies Thor (Rs 102 crore) and Brahmastra (Rs 245 crore), however, breached the Rs 100-crore mark, it said. 

Box office collections
The net box office collection (NBOC) for the quarter, including Bollywood and Hollywood, stood at Rs 698 crore, thanks to a string of flops in the Hindi genre.

The September quarter of 2021 and 2020 were hit by Covid-19 restrictions and, thus, PVR and Inox would be reporting multi-fold jump in year-on-year revenues. Sequentially, a de-growth of 20-35 per cent is likely, analyst estimates suggest.  

Drop in footfalls
Prabhudas Lilladher said its channel checks suggest footfalls can be 30-40 per cent lower as compared to the June quarter.

"On a conservative basis, assuming 40 per cent decline would mean footfalls for PVR and Inox can be in the range of 1.5 crore and 11 crore, respectively. In such a scenario, September quarter footfalls would more or less be a replica of 4QFY22 wherein PVR reported adjusted Ebitda loss while Inox managed a breakeven," it said.

Besides, rent & CAM (common area maintenance charges) concessions were in place in March quarter, which would not be the case in September quarter, the brokerage added.

Losses likely in Q2
Nirmal Bang said revenue for the quarter is likely to be 25-30 per cent lower vis-à-vis pre-pandemic Q1FY20 and June quarter of FY23.

With occupancy levels likely in high teen-to-low twenties; average ticket price (ATP) and spending per head on food and beverages (SPH) lower sequentially; and fixed costs broadly at June quarter levels, Ebitda will at best breakeven, the brokerage said.

The brokerage expects PVR to report quarterly losses to the tune of Rs 36.50 crore on net sales of Rs 676.60 crore. For Inox Leisure, it sees losses at Rs 17.5 crore on revenues of Rs 439.80 crore.  

Edelweiss sees 'other income' of Rs 40 crore for PVR and pegs losses at Rs 17.5 crore against a profit of Rs 53.40 crore in the June quarter.

"We expect revenue to be Rs 750 crore, of which ad-revenue is expected to be Rs 55 crore. ATP and SPH are expected to fall below Q1FY23 levels to Rs 235 and Rs 114, respectively. The start of the quarter was weak, but the latter half performed well due to movies picking up very well. Overall, we expect a positive Ebitda of Rs 217.50 crore," Edelweiss said.

For Inox Leisure, Edelweiss is expecting losses at Rs 59 crore against Rs 57.10 crore profit in Q1.

It expects Inox's revenues to be Rs 375 crore, of which ad-revenue is expected to be Rs 27 crore. ATP and SPH are seen at Rs 215 and Rs 100, respectively.  "We expect footfalls to be 1.16 crore (down from 1.84 crore in Q1FY23)," Edelweiss said.

Outlook still not bad
Shares of PVR and Inox Leisure have seen some correction of late. Yet PVR is up 30 per cent while Inox Leisure is up 42 per cent year-to-date.

"While PVR and Inox Leisure have corrected by 21 per cent and 17 per cent from their recent peaks, we think they could see some revival as content begins to perform well. The positive effects of the impending merger in terms of both cost and revenue synergies we believe are not priced in currently. The merger, we believe, will likely create a much stronger entity with considerable bargaining power vis-à-vis the ecosystem," Nirmal Bang Institutional Equities said.

This brokerage sees PVR at Rs 2,221 and Inox Leisure at Rs 720.

Hindi movies ‘Ram Setu’, ‘Thank God’, ‘Bhaijaan’ and ‘Pathan’; Hollywood movies such as ‘Avatar 2’ and ‘Black Panther – Wakanda Forever’ and South Indian movies such as ‘The Godfather’, ‘Vaathi’ and ‘Kushi’ are likely to be released in the December quarter.
 
"While Q2FY23 has turned out to be a dud, the opening week of Q3FY23 has been decent. Vikram Vedha has clocked Rs 37 crore while PS-1 has crossed Rs100-crore mark so far. Content pipeline for 3QFY23 is strong with movies like Ram Setu, Thank God, Black Panther and Avatar due for release," Prabhudas Lilladher said.

This brokerage has a target of Rs 2,330 for PVR and Rs 699 for Inox Leisure.