PVR-INOX earning call notes
this was the first earning call from combined entity PVR-INOX after completing merger in march.
PVR-INOX has 1689 screens across 361 cinemas in 115 cities, largest multiplex chain India by miles. Co decided to shut down 50 odd screens in next 6 months, which are loss making and malls located are at end of their life. Will open 150-175 new screen in FY24.
Reported revenue of 1165 crore with EBITDA of 27 crore and 286 crore loss in PAT. This acounts for one time write off of 160 crore from deferred tax/merger expense/and screen closure(?). foot falls of 3.05 crore for FY23 quarter and 14 crore for full FY23. Pre-pandemic footfalls were around 17 crore for PVR+INOX.
New screen openings will be with focus on profitability, try to capture quality shopping centers in most of the cities. holiday period for rental cost is over, back to pre-covid contracts. Advertising re venue well below pre-covid levels, down by 30 percent.
Company breaks even on EBITDA basis with occupancy around 22%, with synergies from merger this could reduce to 20-25% in few quaters. Pre-covid occupancy was around 30-35%.
ATP has gone up 16% and SPH is 30% from pre-covid.
In my view, biggest negative for multiplex buiseness is they are not in control of their topline, this is completely depend on movie box office. PVR-INOX has struggled in FY23 due to weak content – mainly in Hindi circuit with low number of release + only handful of success. I think this will continue for Q1 FY24 as well, with Adipurush being only big tentpole hindi release pending. Hollywood calendar is packed for June, so this might help a bit.
Real test for me is how Hindi circuit will improve from Q2FY24. If they can meet their FY24 capex goals with internal accruals, then company will be in good shape, Debt/Equity ratio should be key monitoring criteria going forward.
| Subscribe To Our Free Newsletter |
