Investors saw a sharp jump in the share price of PVR Ltd and Inox Leisure after the Maharashtra government permitted cinema halls to open for a limited crowd from November 5, 2020. PVR share price surged 9 per cent to Rs 1,212.50 apiece while those of Inox Leisure jumped over 5.5 per cent to Rs 279.40 apiece. Maharashtra government has allowed cinema halls, multiplexes and drama theatres to operate with 50 per cent of seating capacity. “We see this as a positive development for the multiplex industry. We believe gradually things are improving for the industry. We don’t have big expectations of box office collections around Diwali festival,” said Keshav Lahoti, Associate Equity Analyst, Angel Broking Ltd.
PVR shares have rallied over 71 per cent from their 52-week low of Rs 706.55 in May this year. Inox Leisure shares too have surged over 76 per cent in over five months. Lahoti added saying that movies releasing around Christmas should report decent box office collections. “We are bullish on PVR and Inox Leisure as long term fundamentals are still intact for the industry and stocks have corrected 40 per cent due to Covid-19,” Lahoti said.
Maharashtra accounts for 25 per cent revenue for the multiplex industry, so it is very important that theatres open in the state so that movies which are expected to get good occupancy plan their release. The reopening of multiplexes, cinema halls and theatres, however, will only see 50 per cent gathering at once in areas outside containment zones only.
Research and brokerage firm Motilal Oswal Financial Services said the recent shift in movies to OTT platforms and their increased viewership raise concerns regarding the increased competition from the OTT medium. However, multiplexes are expected to resume operations with a fixed exclusive window of movie viewing in cinemas and healthy flow of movie content. This, coupled with PVR’s scale and execution, should bode well for the company. It has buy rating to it with a target price of Rs 1,340, implying an upside of 20 per cent.
Meanwhile, Emkay Global Financial Services has maintained a ‘hold’ rating to PVR stock. It has given a price target of Rs 1,220 apiece, an upside of 9.3 per cent. Analysts at Emkay Global say that near-term headwinds may persist as consumer disposition and release of new movies may be patchy. Big-ticket Hollywood content releases are likely to start from FY22. While cinemas have been permitted to reopen in 17 states and UTs, fresh content and consumers’ disposition toward going to cinemas will be key monitorable.
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