Box office boost lifts multiplex outlook as broadcasters face a weak Q2

Strong box office collections, higher ticket prices and spending per head are set to lift PVR Inox's Q2 results, while broadcasters face weak advertising and margin pressures

Segments within the media and entertainment sector are expected to post contrasting results in the September quarter.

 

While film exhibitors (multiplexes) are likely to fare better due to higher sales, broadcasters could struggle because of weak advertising revenues and margin pressures.

 

Listed majors had a mixed performance on the bourses. PVR Inox led the pack with a revenue gain of 21.6 per cent in the past year while Sun TV rose 9 per cent. Zee Entertainment sharply underperformed with a fall of 36 per cent over this period.

 

Revenue for multiplex market leader PVR Inox was boosted by strong box-office collections.

 

Elara Research estimates net collections for Hindi releases at ₹1,290 crore in Q2FY27, up 30 per cent year-on-year (Y-o-Y) and 51 per cent sequentially.

 

The movies that boosted collections were Hanuman Ansh, Mirzapur The Movie, Dhamaal 4, Awarapan 2 and Toxic (Hindi).

 

Nuvama Research estimates average ticket prices at ₹294 (up 12 per cent Y-o-Y, and 8 per cent quarter-on-quarter or Q-o-Q) while spends per head was at ₹152 (up 13 per cent Y-o-Y).

 

Footfalls at 46 million were up 4 per cent Y-o-Y. Analysts led by Abneesh Roy of Nuvama Research point out that Hanuman Ansh emerged a sleeper hit, with the bulk of revenue generated from week four onwards, where the share of producers is lower, leading to better profitability for PVR.

 

Major Bollywood releases in Q3 are Drishyam 3, Jailer 2 and Ramayana Part 1 while Hollywood releases for this period include Avengers: Doomsday and Dune: Part Three. PVR Inox is its top pick in the media and entertainment space.

 

JM Financial Research says PVR’s gains were led by higher average ticket prices and spending per head with an increased Hollywood contribution supporting realisations.

 

It expects operating leverage and cost control to drive a 400 basis points (bps) Y-o-Y expansion in pre-Ind AS operating profit margin to 20.8 per cent in the quarter.

 

Analysts led by Rajiv Berlia of the brokerage have upgraded the stock given a strong content pipeline across Hollywood, Hindi and regional films, improving realisations, operating leverage and cost control.

 

Capital-light expansion and a net cash balance sheet further strengthened the recovery, says the brokerage.

 

The second consecutive year of healthy performance in FY27 after a strong FY26 cements the recovery in PVR and partly disproves fears of over-the-top (OTT) disruption, it adds.

 

Broadcasters had a muted quarter. Advertising revenues for Zee Entertainment are expected to be flat Y-o-Y but could rise on a sequential basis given the Fifa World Cup and partnership-led gains.

 

Elara Research expects festival season-led benefits to flow into Q3.

 

Subscription revenue may grow 21 per cent Y-o-Y, led by digital as well as Fifa-led revenue (Fifa likely contributed 15 per cent growth in total subscription).

 

The brokerage expects subscription revenue growth to continue on a better repeat rate of Fifa viewership to Z’s OTT platform.

 

Analysts led by Karan Taurani of the brokerage expect revenue to grow 9.3 per cent Y-o-Y and 12.9 per cent Q-o-Q, but higher advertising and promotion spends at 24.5 per cent of sales compared to 18.7 per cent in the year-ago quarter may keep operating profit margin at 4.2 per cent, down 323 bps Y-o-Y.

 

Nuvama’s Research expects Zee’s revenue to rise, led by a 20 per cent Y-o-Y growth in subscription revenue and strong digital growth.

 

ZEE’s ad revenue is likely to turn flat Y-o-Y after nine consecutive quarters of decrease, backed by a favourable base and Fifa World Cup.

 

Zee5 revenue is estimated to reach ₹640 crore, up 106 per cent Y-o-Y while remaining profitable at the operating level.

 

For Sun TV, revenues are likely to dip 30 per cent Y-o-Y, hurt by high base from Rajinikanth’s Coolie while operating profit is expected to plunge 40 per cent.

 

Ad revenue could rise by 2 per cent Y-o-Y and domestic subscription revenue by 6 per cent Y-o-Y.

 

Nuvama Research expects Q3 growth to improve, supported by the anticipated release of Jailer 2 starring Rajinikanth.