PVR says January, February will be muted due to deferred releases, bets big on March

The recent spike in coronavirus cases and the spread of the more infectious Omicron variant is a cause of concern for exhibitors, including multiplex operator PVR which is expecting low business in the first two months of fourth quarter of FY22.

“January and February are going to be muted due to deferred releases. Our sense is that both these markets could reopen in 10-15 days. We will start seeing smaller releases first and big releases towards end of February,” Nitin Sood, CFO, PVR Ltd, told Moneycontrol after the company reported its December quarter numbers.

PVR narrowed its consolidated loss after tax to Rs 10.2 crore on easing of COVID-19 restrictions. The company had posted a consolidated loss after tax of Rs 49.21 crore in the same period last fiscal, it said in a regulatory filing.

Sood said at present, in around 75-80 percent markets, theatres were operating with reduced capacity.

“Only in one or two markets full capacity is allowed in cinemas. Two important markets Delhi and Haryana have shutdown theatres due to which movie releases like RRR, Prithviraj and Jersey have been postponed,” he said. Haryana has shut cinemas in five districts.

Bollywood was waiting for these markets to reopen. “As soon as these markets reopen, in two to three weeks we will see these movie releases,” Sood said.

A busy year ahead

He said there was a massive pipeline for this year and there was no change in release dates of movies scheduled in March. “Akshay Kumar has announced Bachchan Pandey on March 4 then there will be RRR, Jersey. We will have difficulty fitting in dates,” Sood said.

In March, Ranbir Kapoor-starrer Shamshera, Kartik Aaryan’s Bhool Bhulaiyaa and Ayushmann Khurrana’s Anek that will hit theatres. Hollywood has six movies, including The Batman, lined up and the regional film industry has 34 films.

While there are concerns regarding the last quarter of FY22 due to rising COVID case, the third quarter spelled good news for PVR.

The company said that Q3 FY22 was the best in the last seven quarters, with Bollywood movie release calendar starting in November 2021.

“The Hindi film releases started from November 5 with Sooryavanshi and the momentum picked up in December. While the footfalls at 1.45 crore are still 42-45 percent lower than FY20 but revenues were down 30 percent as we saw strong growth in ticket pricing which was 14 percent higher than pre-pandemic levels. Average spending on F&B (food and beverages) was up almost 28 percent versus pre-COVID levels.”

A good quarter

The company said it saw improvement in financial metrics on month-on-month basis and stopped burning cash after six continuous quarters.

Giving a performance breakup of the third quarter, Sood said PVR was bleeding cash as there was no content but in November, the company earnings before interest, taxes, depreciation, and amortisation (EBITDA) were positive.

The company reported a consolidated revenue and EBITDA of Rs 709.7 crore and Rs 260.5 crore, respectively, compared to Rs 320.1 crore and Rs 196.6 crore during the corresponding quarter last year.

“In December, we were at 23 percent EBITDA margin which is equal to what we were doing in pre-pandemic times. So, our sense is that the bounce back will be faster as soon as the new content comes in.

“Spider-Man No Way Home was the number film followed by Pushpa and Sooryavanshi. The most surprising was Pushpa‘s Hindi version collection. 83 that released on December 24 underperformed versus expectation. Plus, towards the end of December there were concerns of third wave which came into play,” Sood said.

In Q3 FY22, December 2021 witnessed strong business recovery with exhibition revenue and EBITDA margin close to pre-pandemic levels.

Even advertising revenue, which has been a laggard, in December reached 50 percent of pre-COVID levels with revenue at Rs 22 crore.

However, advertising income continues to lag in recovery as compared to F&B and box office income.

“It is coming back but it will take longer. It will need one or two months of releases without shutdown for it to bounce back. We are hoping that ad revenue recovery will happen starting March,” said Sood.

The shutdown and capacity reduction also resulted in exhibitors looking at going back to rental discount. “We will figure out if we can get rebate from landlords. We haven’t got to that conversation because business had reached its peak in December. We had gone back to pre-COVID rental,” Sood said.