PVR-INOX, now fifth largest listed multiplex chain globally, awaits good movies

• The multiplex behemoth now owns more than 1,650 screens across over 350 properties in 110 cities in the country.
• The combined entity aims to open 180-200 screens per year, across formats, in the next two years.
• The merged entity can definitely achieve bigger goals, but needs good content.

After the merger of two multiplex chains PVR and Inox Leisure this year, the merged entity has become a behemoth in the country, and fifth largest listed multiplex chain globally by screen count.

While the merger was announced last March, the record date for the scheme of amalgamation between the two multiplex operators happened in February 2023. The combined entity will start trading with the name PVR-INOX on exchanges in March 2023 and their combined financials would be reported from 4QFY23.

The multiplex behemoth now owns more than 1,650 screens across 350 properties, in 110 cities.

“PVR-INOX now controls 18% screen share (43% share in multiplex screens in India) and 30% box-office share (over 50% share of multiplex box office). The merged entity commands the highest multiplex market share in all key regions of India. PVR-INOX would become the fifth-largest listed multiplex chain globally by screen count with the highest number of admissions per screen (around 127,000 admissions/screen in 2019),” said a report by Kotak Institutional Equities.

The combined entity aims to open 180-200 screens per year, across formats, in the next two years. “Capex per year would be ₹8-8.5 billion (₹800-850 crore). Over 40% new screen openings will come from the South as it remains underpenetrated,” said the report.

While merged entity gains the lion’s share, real issue still remains poor content

While the merged entity can definitely achieve bigger goals, analysts believe the real issue still remains poor content leading to flop movies on screen.

“The management has guided for annual synergy benefits of ₹2.25 billion (₹225 crore) at the EBITDA (earnings before interest, taxes, depreciation and amortisation) level in the next 12-24 months,” said a report by Kotak Institutional Equities.

Analysts say that the merged entity has no real competitor and should remain focused on strengthening its position at the cost of single-screen theatres and smaller chains. Yet, there are challenges that all multiplexes will face bringing in the mega footfalls.

For one, the Hindi cinema industry itself is facing the shifting trend and migration of audiences to South movies which captured audiences with larger-than-life characters.

Rapid adoption of OTT, proliferation of social media and an active ‘Boycott Bollywood’ campaign and higher ticket prices have impacted footfalls in theatres, say analysts at Emkay Global.

“While focus of the merged entity now shifts to realising synergies, the crucial issue of footfall recovery remains moot. Post-Covid, we have witnessed a clear dichotomy in box-office performance, with a high proportion of movies turning out to be duds; we believe the main culprit is the sub-par content quality, punctured by the weak critic and audience reviews,” said a report by Emkay Global.

Not star power, alone
It’s because of the increasing Southern push that PVR Inox are planning to boost the addition of new cinemas there.

“With Bollywood content not up to the mark, footfalls have not seen a meaningful uptick post Covid. Only select movies with differentiated offerings have managed to taste success at the box office. As we have emphasised in the past too, Bollywood’s recovery is critical to box-office collections, with regional and Hollywood contribution being only sporadic in nature,” said the report.

Bollywood continues to witness poor movie performance with most movies including Amitabh Bachchan-starrer Goodbye and Uunchai, Akshay Kumar’s Ram Setu and Ranveer Singh’s Cirkus not meeting expectations except for Drishyam 2 and Pathaan.

“Going ahead too, we believe that star power alone cannot drive collections, if there is no differentiating factor in the movie,” said the Emkay Global report.

In Q3 FY23, only one Bollywood movie i.e Drishyam 2 managed to break the ₹100 crore box office barrier.

“CY22 has been one of the worst years for Bollywood, with very few movies finding traction. A mere 7% of the major movies that were released in the CY21/22 managed to recover their investment and yielded some profit. Prior to Covid, this was close to 30%, with more than 40% of movies doing well in CY19,” said a report by Emkay.

While Inox-PVR have a bigger screen presence, they need what it takes to bring in audiences — better movies, bigger hits from Bollywood and Hollywood alike – in addition to South superhits.

Some Bollywood movies expected to be released in the next six months


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