PVR-Inox Q4 Results: Losses At Rs 333 Crore, Revenue Up 22%

PVR Inox Ltd. slipped into losses in the fourth quarter of fiscal 2023, hit by merger-related one-time expenses and higher costs on account of planned shutdowns of some cinemas, but its revenue surpassed expectations.

The country's largest multiplex operator posted a net loss of Rs 333.37 crore in the quarter ended March, as against a net profit of Rs 16.15 crore in the previous three months, according to its exchange filing. That compares with the Rs 66.03-crore consensus loss estimate of analysts tracked by Bloomberg.

The March quarter saw the finalisation of the PVR Inox merger. The entity is reporting results for the first time after the completion of the merger.

Profitability was impacted due to high depreciation expense of Rs 10.58 crore on 50 loss-making cinemas proposed to be shut down over the next six months. It also took an impairment charge of Rs 10.82 crore related to a project in a Bengaluru mall which is now suspended, and deferred tax asset write-off of Rs 134.3 crore on account of transition to new tax regime and reinstatement of deferred tax assets, according to the company.

Another Rs 5.49 crore was spent on other merger-related expenses such as stamp duty, consultant, advisory, legal fees, etc.

PVR Q4 FY23 Highlights (Consolidated, QoQ)

• Revenue rose 22% to Rs 1,143.17 crore, against an estimate of Rs 1,070.53-crore.

• Ebitda was down 9% to Rs 263.87 crore, as compared with an estimate of Rs 286.61 crore.

• Margin stood at 23.1% against 30.7%, lower than the estimate of 26.8%.

“The year gone by marks the first full year of uninhibited operations for the exhibition industry," said Ajay Bijli, managing director at PVR Inox.

Bijli said there was considerable volatility at the box office quarter on quarter. "We believe that the two major factors that marred the industry in FY23 was the underperformance of Hindi films and lesser number of Hollywood releases," he said.

But, the exceptional performance of regional cinema, an increase in ticket prices, and a substantial increase in consumption of food and beverages aided recovery in the fourth quarter, Bijli said.

The properties it plans to shut down are either loss-making or housed in malls, which have reached the end of their life cycle with little hope of revival. The company said it has taken an accelerated charge of the depreciation in its books and written off the written-down value of assets.

Other Highlights

• Average ticket price and average spend per head decreased to Rs 239 from Rs 244, and Rs 119 from Rs 133 in the previous quarter, respectively, in the January-March period. The metrics were higher by 3% and 13%, respectively, as compared with the previous year.

• The occupancy rate for PVR Inox stood at 22% as against 25% last year.

• Total number of admits rose 20% to three crore.

• Sale of movie tickets went up 21% to Rs 601.6 crore.

• Sale of food and beverages rose 37% to Rs 352 crore.

• Advertisement income jumped 162% to Rs 90.7 crore.

The March quarter started off with the blockbuster ‘Pathaan’ in January, recording Rs 226.9 crore in gross collection. It was followed by the impressive performance of 'Avatar: Way of Water', which was released in December 2022.

However, the performance was underwhelming over the remaining two months.

"While movies like 'Tu Jhoothi Main Makkar' and 'Bhola' from Bollywood were able to generate average box office collections, others like 'Selfiee' and 'Shehzada' failed to create an impact," the company said.

Overall, the box office collections for Bollywood movies were Rs 997.5 crore in Q4, which is lower than the Rs 1,063 crore recorded in the first quarter of FY23.

Bijli expects the volatility observed in the last four quarters to ease out in two to three quarters, on the back of upcoming Hollywood releases, including ‘Fast And Furious 10’ in May, ‘Transformers: Rise Of The Beasts’, ‘The Flash’, and ‘Indiana Jones And The Dial Of Destiny’ in June, and ‘Mission Impossible: Dead Reckoning Part 1’ and ‘Oppenheimer’ in July, among others.

From the regional genre, there is ‘Carry On Jatta’ in June, ‘Maveeran’ in July, ‘Jailer’ starring Rajinikanth and ‘Bhola Shankar’ starring Chiranjeevi in August, ‘Viduthalai Part 2’ starring Vijay Sethupathi and ‘Salaar’ starring Prabhas in September, among others.

"The movies that resonate with audiences are generating higher box office compared to the pre-pandemic era," the operator said.

A total of 79 screens were added in Q4 between PVR (53 screens) and Inox (26 screens). In the previous fiscal, 168 new screens were launched between PVR (97 screens) and Inox (71 screens) in 30 cinemas.

It intends to open 150-175 more 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 fit-out.

However, in a strategic decision, the company said it has realigned all upcoming handovers of new sites for fit-out to next year, till there is strong recovery in box office.

Bijli also said that the integration process is proceeding smoothly. "We are confident of achieving operational synergies of Rs 225 crore over the next 12-24 months."

As on March 31, PVR-Inox has a total of 1,689 screens across 361 cinemas, in 115 cities in India and Sri Lanka.

Shares of PVR-Inox closed 1.5% higher on Monday before the results were announced, as compared with a 0.46% gain in the benchmark Nifty 50.