PVR hits nearly 4-year low as Icra places rating on watch amid lockdown

Shares of PVR hit an over three-year low of Rs 932, down 8 per cent, on the BSE on Tuesday after rating agency Icra placed the company's ratings on watch with developing implications due to the lockdown imposed to stem the coronavirus (Covid-19).

The stock of the multiplex operator was trading at its lowest level since June 24, 2016. In the past two months, it has tanked 55 per cent following the closure of movie theatres across India as state governments ramped up efforts to contain the spread of coronavirus. In comparison, the S&P BSE Sensex has declined 29 per cent during the same period.

“The ratings remain unchanged as the earlier ratings of [ICRA] AA-/A1+. However, the ratings have been placed on watch with developing implications following the nationwide lockdown and consequent extension in the period of shutdown till April 14, 2020,” ICRA said in rating rational.

As a result of this extension, and the possibility of further restrictions on cinema halls going forward, the impact on PVR’s revenues and cash accruals is expected to be further aggravated, relative to the shorter shut-down period announced earlier, it added.

Last week, CRISIL and India Ratings and Research (Ind-Ra) had placed its rating on the long-term bank facilities and debt instruments of PVR on 'rating watch with negative implications'.

"The rating action follows the closure of movie theatres across India by orders of state governments to contain the spread of Covid-19. While the present closure is valid until March 31, 2020, it could be extended if the pandemic worsens. Prolonged closure may significantly impact credit profiles of the film exhibition industry, including PVR," the rating agencies said.

At 01:36 pm, the stock was trading 2.5 per cent lower at Rs 986 on the BSE, as compared to a 6.9 per cent rise in the S&P BSE Sensex. A combined 1.5 million shares have changed hands on the counter on the NSE and BSE till the time of writing of this report.