The Indian box office during the last weekend (August 11–13) registered one of the busiest weekends since the re-opening of the cinema industry after the Covid pandemic. Theatres across India sold 2.10 crore tickets in just three days.
This remarkable surge in ticket sales and collections was driven by a lineup of successful films, including Rajnikanth's "Jailer," Sunny Deol and Ameesha Patel's "Gadar 2," Akshay Kumar's "OMG 2," and Chiranjeevi and Tamannah Bhatia’s "Bholaa Shankar."
The combined gross box office collections reached an impressive ₹390 crore across theatres all over India over the weekend, setting a new all-time record in the history of the film industry, as highlighted by the Multiplex Association of India (MAI) and Producers Guild of India (PGI).
Amid this backdrop, the country's leading multiplex operator, PVR INOX, reported the highest-ever daily and weekend admissions and box office collection. On August 13, 2023, it had 1.28 million admissions while it saw 3.36 million admissions from Friday to Sunday, with gross box office revenue of over ₹1 billion.
Domestic brokerage firm ICICI Securities estimates an occupancy rate of 72–75% on Sunday and 63–65% over 3 days. The brokerage has been bullish on the recovery of the movie exhibition business given the strong pipeline since Q2 FY24.
However, it said the current performance is a positive surprise. Merger synergies have also started playing out. Given the high operating leverage that plays out in this business, ICICI Securities believes earnings upgrades are necessary.
To this end, the brokerage has increased its adjusted EBITDA projections for FY24E/25E by 48%/12%. Consequently, the brokerage revised its target price to ₹2,240 (up from ₹1,950). This new target price implies a potential increase of 31% from the previous closing price of 1,710.
"We believe investor concerns around digital disruption by OTT players was one of the key reasons behind PVR Inox’s de-rating. Now, as a strong content pipeline manifests into tangible box office collections, we think investor concerns regarding relevance of movie exhibition in today’s context should be assuaged," said ICICI Securities.
For the June quarter, the company reported a 33% YoY surge in total income of ₹1,329 crore. The operating profit came in at ₹352 crore, a modest surge from ₹342 crore in Q1 FY23. Movie ticket sales accounted for 52.14% of total revenues in Q1, while revenue from the F&B segment contributed 32%.
The company reported a net loss of ₹82 crore during the quarter as compared to a net profit of ₹53 crore in Q1FY23. The finance cost surged significantly to ₹194 crore, an increase of 51% YoY.
The June quarter witnessed an 11% increase in admissions to 33.9 million from 30.5 million in Q4 FY23. The average ticket price grew by 3% QoQ to ₹246 in Q1, and the average F&B spend per patron saw a 9% QoQ growth, reaching ₹130.
The company said the June quarter witnessed a muted start, with limited movie releases in Hindi. The box office picked up pace in the month of May with the release of ‘The Kerala Story', which turned out to be the biggest release of this quarter along with other superhits like ‘Fast X’ and ‘Guardians of the Galaxy Vol. 3’ from Hollywood, and ‘2018’ from Malayalam.
The momentum continued in June with the release of ‘Adipurush’, which recorded the highest weekend admissions in 2023. Unfortunately, the movie did not do well after first weekend, the company said in a regulatory filing.
Looking ahead, the company is optimistic about the robust content line-up across all languages.
PVR INOX Limited is the largest film exhibition company in India, with 1,710 screens across 362 properties in 115 cities (India and Sri Lanka). The NCLT, on January 12, 2023, approved the ‘Scheme of Amalgamation’ between INOX Leisure Limited and PVR Limited. The scheme became effective on February 6, 2023.
24 analysts polled by MintGenie on average have a 'strong buy' call on the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.
