PVR INOX’s 50-screen closure may work in its favour, experts say
The screens account for less than 5 per cent of PVR INOX’s total of 1,680-plus screens
- May 18, 2023,
- Updated May 18, 2023 3:46 PM IST
India’s largest multiplex chain PVR INOX’s plans to shut 50 under-performing screens amid mounting losses may actually work in its favour, especially as the newly merged giant plans to open 150-175 screens in 2023-24, experts said.
The company plans to shut 50 screens in the next 6 months, it informed investors on Monday, as the properties are loss-making or housed in malls which have reached the end of their life cycle with little hope of any revival.
These screens are a mix of PVR and INOX brands, it told Business Today. Besides, the company has realigned all upcoming handover of new sites for fitouts till the time business fully recovers. The company has taken Rs 10.58 crore depreciation charge for this.
“Both companies are 25-plus year old and the number of screens they are closing is not even 5 per cent of their overall screen count,” says Tushar Dhingra, Founding CEO of Dhishoom Cinemas.
Brokerage firm Nuvama Capital in its investor note flagged this as a positive and pointed out that the multiplex giant’s plans to close 50 screens will improve profitability through savings of Rs 10 crore.
The erstwhile rivals were forced into a union after the pandemic’s extended lockdowns and the rise of OTT platforms ravaged their incomes. The brands completed their merger in February 2023 to become PVR INOX -- the country’s largest cinema multiplex chain with 1,689 screens. But the screens launched before the merger continue to be called PVR or INOX and not ‘PVR INOX’
“Let us also not ignore that Hindi films have not fired as of yet post-Covid and that is making all the major multiplexes become nervous and draw up alternative plans. PVR INOX is no exception to this,” says Vivek Menon, Managing Partner of NV Capital.
However, he added, India continues to be an under penetrated market compared to global standards and multiplexes will continue to add screens. India, the most populous nation, has an estimated 9,000 screens, while China has nine times as many.
“But it will be with a certain amount of cautious optimism rather than irrational exuberance. It can be seen in the financial numbers of PVR INOX where the growth has been muted on multiple fronts,” Menon added. PVR INOX intends to open 150-175 screens in FY24. Of these, nine screens have opened till date, 15 screens are awaiting license for commercial opening and 152 screens are currently under various stages of fitout.
The new screens will be a mix of premium screen and mainstream formats, PVR INOX said in response to Business Today’s query. These screens will mostly be in the South (38 per cent), followed by North (26 per cent), Central (16 per cent), West (13 per cent) and East (7 per cent) regions of India, according to its investor presentation.
India’s largest multiplex chain PVR INOX’s plans to shut 50 under-performing screens amid mounting losses may actually work in its favour, especially as the newly merged giant plans to open 150-175 screens in 2023-24, experts said.
The company plans to shut 50 screens in the next 6 months, it informed investors on Monday, as the properties are loss-making or housed in malls which have reached the end of their life cycle with little hope of any revival.
These screens are a mix of PVR and INOX brands, it told Business Today. Besides, the company has realigned all upcoming handover of new sites for fitouts till the time business fully recovers. The company has taken Rs 10.58 crore depreciation charge for this.
“Both companies are 25-plus year old and the number of screens they are closing is not even 5 per cent of their overall screen count,” says Tushar Dhingra, Founding CEO of Dhishoom Cinemas.
Brokerage firm Nuvama Capital in its investor note flagged this as a positive and pointed out that the multiplex giant’s plans to close 50 screens will improve profitability through savings of Rs 10 crore.
The erstwhile rivals were forced into a union after the pandemic’s extended lockdowns and the rise of OTT platforms ravaged their incomes. The brands completed their merger in February 2023 to become PVR INOX -- the country’s largest cinema multiplex chain with 1,689 screens. But the screens launched before the merger continue to be called PVR or INOX and not ‘PVR INOX’
“Let us also not ignore that Hindi films have not fired as of yet post-Covid and that is making all the major multiplexes become nervous and draw up alternative plans. PVR INOX is no exception to this,” says Vivek Menon, Managing Partner of NV Capital.
However, he added, India continues to be an under penetrated market compared to global standards and multiplexes will continue to add screens. India, the most populous nation, has an estimated 9,000 screens, while China has nine times as many.
“But it will be with a certain amount of cautious optimism rather than irrational exuberance. It can be seen in the financial numbers of PVR INOX where the growth has been muted on multiple fronts,” Menon added. PVR INOX intends to open 150-175 screens in FY24. Of these, nine screens have opened till date, 15 screens are awaiting license for commercial opening and 152 screens are currently under various stages of fitout.
The new screens will be a mix of premium screen and mainstream formats, PVR INOX said in response to Business Today’s query. These screens will mostly be in the South (38 per cent), followed by North (26 per cent), Central (16 per cent), West (13 per cent) and East (7 per cent) regions of India, according to its investor presentation.