New Delhi: After the release of the much-awaited Brahmastra and approval of the merger, PVR and Inox Leisure shares have been buzzing in trade, but analysts see more challenges for the multiplex operators after a lacklustre phase.
Brokerage firms remain divided whether the situation is a glass half full or half empty. They see challenges for the sector amid the signs of revivals, and some suggest an action plan which may push the sector back on track.
Edelweiss Securities said that ticket prices are high amid the record-high inflation and food transportation cost is equal to what some OTTs charge for many months.
A major chunk of the movie budget is bagged by top stars and marketing, while the quality of content remains poor and recycled due to Covid-19 delays, it said.
Other factors, including growing consumption patterns of the audience, social media movements, quick arrival of movies on OTT platforms, and poor casting, are also denting the sentiments.
This is not the first extended slump for the industry. Multiplexes need one good movie to regain muscle, and cinemas need to price tickets realistically. Furthermore, new entrants such as NY Cinemas have tiptoed into the sector and can give competition to PVR/Inox in key pockets, flag the experts.
believes that content needs a complete overhaul by movie producers with differentiated stories. Ticket pricing needs to be much more realistic and better allocations of funds for important aspects of movies such as screenplay, sets and marketing.
“We feel a combination of factors augur well for PVR-Inox, including tremendous scope for screen penetration, industry consolidation, reinstatement of 8-week theatrical windows, and acceptance of regional movies in the Hindi language,” said
.
With minimal leverage, PVR-Inox remains extremely comfortably placed in terms of growth plans, it said. While in 2QFY23, multiplexes are likely to see a QoQ dip in earnings on account of the high base of 1QFY23.
“We continue to maintain our positive stance on
and PVR with a March 2023 target price of Rs 665 and Rs 2,220, respectively, signalling a 33 per cent upside,” it added, citing the adoption of OTTs and subpar content as their key risks.
Edelweiss continues to remain positive on multiplexes on a long-term basis and retains buy on PVR and Inox Leisure but has slashed FY23E and FY24E EBITDA by 13 per cent and per cent; and 15 per cent and 5 per cent, respectively.
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