PVR, Inox Leisure hit 52-wk lows on report of lockdown extension in Mumbai

Media reports suggest OTT platform Amazon Prime Video has acquired seven Bollywood & regional films, including Amitabh Bachchan-Ayushmann Khurrana starrer 'Gulabo Sitabo' for direct-to-digital premier

Shares of multiplex operators PVR and Inox Leisure hit their respective 52-week lows in the early deals on the BSE on Friday amid reports that the Maharashtra government could extend lockdown in Mumbai, Pune and other hotspots in the state till May 31.

That apart, media reports suggest OTT (over-the-top) platform Amazon Prime Video has acquired seven Bollywood and regional films, including Amitabh Bachchan-Ayushmann Khurrana starrer 'Gulabo Sitabo' and Vidya Balan-starrer 'Shakuntala Devi' for direct-to-digital premiere.

PVR (Rs 851) and Inox Leisure (Rs 193) slumped 4 per cent each in the early morning trade, falling below their previous lows of Rs 870 and Rs 200, hit on May 6 and April 28, 2020, respectively.

As multiplexes were the first to be shut and could be the last to be opened, the market value of these stocks have more than halved from their peak. Inox Leisure and PVR have tanked 62 per cent and 60 per cent, respectively from their respective 52-week high values (touched in February 2020) on concerns of the impact of the Covid outbreak on the firms' revenues and cash accruals on account of closures of cinemas.

Analysts expect heatres to open by June end. Also post-Covid, sense of security will be more in multiplexes and single screens making them prune to challenges pertaining to investment, especially for maintenance & sanitization, they say.

Analysts at Edelweiss Securities, however, do not expect popular movies to release on OTT platforms (albeit a few) as cinema screens in general (and multiplex screens in particular) continue to remain the largest revenue source for most movies.

"Until majority of the screens are opened, multiplexes such as PVR and INOX Leisure could start screening popular content and film festivals. We expect occupancy to be low initially given the audience’s reluctance to visit public places and screening of alternate content," the brokerage firm said sector update.

Furthermore, foreign portfolio investors (FPIs) reduced their stake in these two multiplex operators by up to 5 percentage points during the January-March quarter (Q4FY20). In PVR, FPIs' holdings declined by 460 basis points from 42.94 per cent in December quarter to 38.35 per cent at the end of the March quarter. Meanwhile in Inox Leisure, they cut their stake to 9.32 per cent from 10.96 per cent in previous quarter, as per shareholding pattern filed by the company.