PVR’s Not a Hit in Dec Qtr, but Non-Hindi, English Films May Light Up Screens Soon
Box office collections fall 23% sequentially on poor performance of mid-and small-budget films and absence of major titles; likely boost this calendar year to keep stock on Street radar
Rajesh Naidu (THE TIMES OF INDIA; January 17, 2024)

ET Intelligence Group: The stock of PVR, India’s largest multiplex company, has lost 15% over the past month notwithstanding the bullish sentiment in the broader market. The stock has lost momentum following an estimated sequential fall in the box office collection for the December quarter.

Analysts point out that only a few big-budget films worked at the box office during the quarter compared with the previous quarter which had successful films released in Hindi, English and regional languages. Poor performance of mid-and-small budget films -- fourteen such films were released in the December quarter-- added to the woes of multiplexes.

According to the estimates released by trade portal Sacnilk Technologies and compiled by Kotak Institutional Equities, the net box office collections in the December 2023 quarter fell by nearly 23% to Rs. 2,324 crore sequentially. On a year-on-year basis, they grew by 73% since fewer films were released in the December 2022 quarter.

The absence of major movie titles in the early part of 2024 is another reason for the underperformance of PVR’s stock. According to trade analysts, 2024 is expected to be a year of mid-and-small budget films. Till date, there has been no announcement of big-budget star-studded films in 2024. Given the poor performance of recent mid-budget films, 2024 may produce fewer money-spinners when compared with 2023.

Non-Hindi movie releases, however, may offer a ray of hope for exhibitors in 2024. Films of regional stars who have a proven box office record in pan-India distribution territories such as Allu Arjun (Pushpa 2 - The Rule), Rajinikanth (Lal Salaam), and Kamal Haasan (Indian 2) are expected to generate high footfalls in theatres.

Besides this, after over six-month strike by Writers Guild of America (WGA) over sharing of residuals (income from reruns on various platforms) and guarantee of minimum wages for writers in the US, the release of spectacle and franchise films from Hollywood is expected to boost the net box office collections in 2024. This may help PVR to stay on investors’ radar.

On the valuation front, based on the FY25 estimates, PVR’s enterprise value (EV) is nine times the earnings before interest, depreciation, tax, and amortisation (EBITDA) compared with the EV/EBITDA of 21.6 in FY23.