PVR’s Q4 earnings hit by lockdown

Multiplex chain operator PVR earnings display vulnerability to its operations from non-availability of movie watchers.

The company reported a consolidated net loss of Rs 74.61 crore for the fourth quarter ended March 2020. Due to the coronavirus outbreak in India, theatres were the first to shut shop and had stopped operations since the second week of March which led to zero box office collections.

This is why PVR’s revenue from operations during the quarter under review stood at Rs 645.13 crore which was was Rs 837.63 crore in the corresponding quarter a year ago. The company posted a net profit of Rs 46.75 crore in the January-March quarter a year ago.

Beginning March 11, 2020, the company started closing its screens in accordance with the order passed by various regulatory authorities and within a few days most of our cinemas across the country were shut down.

Besides, PVR has taken one-time write off of perishable inventory of Rs 1.83 crore in March 2020, on account of spoilage due to closure of cinemas pursuant to COVID-19.

PVR’s total expenses was at Rs 731.84 crore in fourth quarter of 2019-20 as against Rs 771.27 crore a year ago. Revenue from movie exhibitions was at Rs 628.88 crore and Rs 29.89 crore from others which includes movie production, distribution and gaming.

Meanwhile, PVR’s results for year ended March 31, 2020, are not comparable with year ended March 31, 2019, ‘on account of acquisition of SPI Cinemas

Currently, PVR operates 845 screens in 176 properties across 71 cities. Meanwhile, PVR board in a meeting held on Monday has approved to raise Rs 300 crore through rights issue. For the fiscal year 2019-20, PVR’s net profit was at Rs 26.85 crore. It was Rs 189.40 crore in 2018-19. Its revenue from operations in FY20 was Rs 3,414.44 crore. It stood at Rs 3,085.56 crore in FY19.

The company’s theatres are expected to reopen over the next 30-45 days, with social distancing likely to impact occupancies by 25-30%.

Apart from invoking Force Majeure & cutting fixed costs by 75-80%, the company has requested for lower rentals post Covid-19 to mall owners. It is seeking a revenue sharing model in rentals vs. fixed arrangements currently. The company will also take safety measures such as demarcation, only etickets with digital payments, social distancing by keeping adjacent seat vacant between two customers and customer groups.

Hence net net one can safely assume that leisure activities and discretionary spends will take a significant backseat during FY21 and normalcy to come back in FY22 only.

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