PVR Q2 Results: India's Biggest Multiplex Chain Slips Into Loss On Lower Footfalls, Bollywood Flops

PVR Ltd. slipped into losses as subpar Bollywood movies dragged footfalls and dented collections of the country's largest multiplex operator.

The movie exhibitor posted a net loss of Rs 71.23 crore in the quarter ended September, against a profit of Rs 53.38 crore in the previous three months, according to its exchange filing. That compares with the Rs 49.8-crore consensus loss estimate of analysts tracked by Bloomberg.

PVR Q2 FY23 Highlights (QoQ)

• Revenue fell 30% to Rs 686.72 crore, as against the Rs 785.03-crore estimate.

• Ebitda fell 55% to Rs 153.65 crore. Analysts had projected it at Rs 151.35 crore.

• Margin stood at 22.37% against 34.8%, higher than the estimate of 19.3%.

The July-September period is one of PVR's weakest quarters in normal times. It posted its first profit in Q1 FY23 after battling two years of covid-led slowdown. Negative reviews from film critics, underwhelming Bollywood releases, a weak Hollywood line-up and the adoption of over-the-top platforms post pandemic have impacted footfalls.

"BoycottBollywood" trend for potential blockbusters and movie releases of A-listers like Amir Khan and Ranbir Kapoor also hurt.

"The underperformance of Hindi films could also be attributed to factors like films released were conceived before and during the pandemic, not resonating well with the current consumer tastes, quality of content driving performance as compared to star presence and negative social media against certain movies and stars," the company said in a statement.

The quarter featured a string of flops in the Hindi genre. Shamshera (Rs 43 crore), Raksha Bandhan (Rs 44 crore) and Laal Singh Chaddha (Rs 59 crore) failed to attract crowds. However, two movies, Thor (Rs 102 crore) and Brahmastra (Rs 245 crore), breached the Rs 100-crore mark.

Collection of top five Bollywood movies--this time including Jugjugg Jeeyo, Ek Villain Returns, Raksha Bandhan, Laal Singh Chaddha and Brahmastra-- for PVR dropped 37% to Rs 25.6 crore over the corresponding period pre-pandemic.

The second quarter was the weakest in almost two decades for Hollywood as well, both by the number of movies released and their box office collections, the company said. Collections for Hollywood movies for PVR dropped 47% over the second quarter of FY20. Thor: Love and Thunder was the only big tent pole that performed well.

Regional movies continued their robust performance. For PVR, the box office contribution of such movies rose to 44% from 28%. "Movies like Sita Raman, Kartikeya 2, Thiruchitrambalam, Rocketry and Vikrant Rona performed well."

• Weak performances in cinemas meant that the average ticket price fell to Rs 224 from Rs 250 three months prior. Spending per head also fell month-on-month to Rs 129. Both the readings were, however, higher than the pre-Covid period.

• Occupancy rate, according to the company's presentation, is still lower than the pre-pandemic levels at 24% against 38% in the second quarter of FY20.

• The admits or the number of visitors who visited theatres stood at 1.8 crore, down from 2.9 crore in Q2 FY20. It fell 28% sequentially.

• The company reported an advertising income of Rs 57.2 crore, 39% lower than the pre-pandemic level and 9% lower than the June quarter.

"We remain focussed on driving admissions back to our cinemas," Ajay Bijli, PVR chairman and managing director, said in the statement. "I'm confident of the full recovery in the business driven by the robust content line up for the rest of the year."

The third quarter, he said, has started off on a great note with strong response to releases like Ponniyan Selvan—Part 1 and Vikram Vedha.

"The content pipeline over the next three months also looks promising," the presentations stated, "with many big-budget Bollywood movies like Ram Setu, Thank God, Drishyam 2 and Hollywood movies like Black Panther, Wakanda Forever and Avatar: The Way of Water line up for release." Within the regional genre, movies lined up for release include Shaakuntalam, Vaathi, Kushi and Honeymoon.

PVR has opened 14 screens across three cinemas in the second quarter. The company is ramping up capex to open a total of 110-125 new screens by the end of the current fiscal.

The merger plan with Inox Leisure Ltd., it said, is also progressing well.

"Both the companies have received their respective shareholders and secured creditors approval for the proposed scheme of amalgamation," the company said. "We expect the NCLT process will complete in three to four months."

Shares of PVR closed 0.20% lower after the quarterly results were announced, against a 0.73% gain in the Nifty 50.