Multiplexes revival still in test as new restrictions kick in

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 Covid-19 had a disastrous effect on every business, both small and large. The ones that faced the worst impact were theatre businesses.

Multiplexes have seemed to find their mojo with cases at a low and seating capacity reduced to 50%. But as the new variant has entered the country, investors feel worried about the future restrictions that may result in closure once again.

Maharashtra has currently imposed night restrictions with a curfew from 9 pm to 6 am. As of now, theatres still function at 50% capacity and seem to thrive with new releases. However, owners are starting to feel the heat with the rising omicron vases and night restrictions.

Usually, the nighttime is when people come to see movies but, with the restrictions, it seems that these lasting effects of the virus will forever have an impact on multiplexes.

With the virus still at large, multiplex seems to be the only business that is at the front and exposed. Wonders in this category like PVR Ltd. and Inox Ltd have suffered huge losses in 2020 and 2021. Both companies reported a net loss for the half-year of around Rs. 373 crores and Rs. 210 crores respectively.

Meanwhile, what can be looked upon as a light at the end of the tunnel, are the performances of recent hit movies like Spider-man: No Way Home that is doing well in the box office as audiences come to see the film multiple times. This also indicates that movies can make a good comeback to the theatres in full swing and ease the tension about OTT platforms.

Regional movies like Pushpa: The Rise is also doing well at the box office and shows that; some films are better experienced in theatres than at home.

After analysis of both the renowned multiplexes, Inox stands out as the preferred due to more room for improvement. Looking at the balance sheet of Inox, they are net debt-free as of 18 October 2021. PVR’s net debt stands at Rs. 914 crores, after the analysis of September quarterly results.

Some analysts from JM Financial Institutional Securities stated that while PVR remains at the top, they believe that business should be financed conservatively.

As of now, the lifeline of multiplexes is only rising feebly. But once normalization sets in, there is no doubt that theatres will become the new normal once again, which will help in their stocks as well.

Both Inox and PVR shares are down at quite some margins, but 2022 will test their recovery to become full-fledged once again.

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