Is the picture ahead brighter for PVR and Inox Leisure shares?
The grass is greener on the other side or at least, thats what investors in shares of multiplex companies, PVR Ltd and Inox Leisure Ltd, would like to believe. More so, since the pandemic was particularly challenging for the multiplex sector. Occupancies collapsed as people refrained from venturing out because of the various restrictions imposed to contain the spread of infections and the need to protect themselves from the virus. The upshot: in FY21, both PVR and Inox Leisure saw their consolidated operating revenues drop by 92-94% on a year-on-year basis. With the resurgence in covid-19 cases, the outlook for the current June quarter is understandably dull, too, further delaying recovery in the sector. The focus for multiplexes from a near-term perspective would again be on costs as revenues are evaporating. Nonetheless, analysts are fairly gung-ho on the prospects for both PVR and Inox Leisure once unlocking begins. We remain confident regarding the industrys ability to bounce back quickly as and when regulations become lax. As seen in other (foreign) markets, major films will still be able to pull in crowds as before and collections should recover fast," pointed out a report by Edelweiss Securities Ltd on 18 June. View Full Image Satish Kumar/Mint      Here, a high pace of vaccinations would help pull audiences back to the theatres and that remains a key monitorable. The line up of movies available for release is robust, which means the content pipeline can be expected to be strong on reopening. We believe the industry has a strong pent-up demand and there is a lot of good content that producers are sitting on. Bollywood films are likely to release quicker as a number of international markets are opening up and Bollywood movies derive significant revenue from these markets," Edelweiss pointed out. Meanwhile, both PVR and Inox Leisure have raised funds through qualified institutional placements (QIPs) to cope with these trying times. Analysts from JM Financial Institutional Securities Ltd see Inox Leisure in a better position to handle future shocks than PVR due to its balance sheet strength. As per our workings, if we were to see a complete recovery by Q4FY22, Inox would see a cash burn of around 200 crore, implying that it could still end FY22 with net cash of 100 crore. However, in the case of PVR we expect the losses to be in excess of 300 crore (including interest expense) and net debt could be in excess of 900 crore by March 2022 (similar to levels seen at the end of FY20)," said JMs analysts in a report on 22 June. Shares of PVR and Inox Leisure have recovered handsomely from their 52-week lows on the National Stock Exchange. However, the shares are still 33-35% lower than their respective pre-covid highs seen in February 2020. Subscribe to Mint Newsletters * Enter a valid email * Thank you for subscribing to our newsletter.