PVR Inox’s investors need more Pathaans, and soon enough

The lockdowns and shut screens are fading into memory, but multiplexes are still yearning for the footfalls of pre-pandemic days, as movies fail to shine at the box office. For PVR Inox Ltd, investors will closely follow the trajectory in footfalls ahead. In FY23, footfalls were 16% lower than the

pre-pandemic level of FY20, despite a higher number of Screens. In this backdrop, after a disappointing March quarter (Q4FY23), QIFY24 is yet to bring reason to cheer. “As per

Ormax, the gross box office collection for April stood at about 1620 crore, down roughly 7.5% month-on-month. Out of the total gross collections, ‘PS2, “Kisi Ka Bhai Kisi Ki Jaan’ and “Virupaksha grossed about 400 crores,” said analysts from Nuvama Institutional Equities in a report on 9 June.

However, the momentum was weak in May led by weak content, a lack of big Bollywood releases, and the IPL season. “Things took an adverse turn in May, wherein gross box office collection stood at about 7400 crore,” pointed out Nuvama’s analysts, adding, “This was due to lack of releases due to poor planning by the industry.” As such, the sector needs blockbusters such as Pathaanto to boost footfalls. Jinesh Joshi, an analyst at Prabhudas Lilladher said, “Q4FY23 had Pathaan, which garnered box office collections of over 1500 crore. So

far in QIFY24, there is no such blockbuster, though hopes are high from Adipurush. If the movie can clock say 1500 crore, then QI looks good and PVR’s footfalls can breach that of Q4.”

PVR intends to focus on profitable growth and plans to open 150-175 additional screens in FY24, which is slightly lower than its earlier guidance.

In its Q4FY23 earnings call last month, the management said they have also decided to shut down about 50 screens over the next six months. On Friday, shares of PVR Inox closed at 11,414.35 apiece, just about 6% above their 52-week lows seen on 17 May. Screen additions would fetch incremental revenues, but how movie content fares is critical, To be sure, the pipeline of movies is strong for FY24.

“However, the level of acceptance of these movies by the audience is crucial. Since the pandemic, the audience preference has evolved considerably amid OTT proliferation,” said Joshi.

The coming quarters are likely to shed more light on whether there is a structural change in consumer behavior post-pandemic. Amid this, the company’s efforts to protect its profitability will also be in the spotlight.