The 100 per cent capacity in cinemas is a key positive as Maharashtra and Tamil Nadu states account for a significant chunk of collections. Over the medium term, the prospect of the sector as a whole remains intact, given limited out-of-home entertainment options available in the country.
“While near-term pressures are evident, we believe that the long-term prospects for the film exhibition industry, where PVR
is the leader in terms of screens and brand equity, are intact as Indians have limited out-of-the home entertainment options. Once India recovers from the pandemic, multiplexes will see a full rebound in footfalls. The industry structure is also in favor of larger players i.e. PVR, Inox and Cinepolis could witness more consolidation. This is a consumer discretionary play where we believe there is considerable headroom for growth,” analysts at Nirmal Bang Equities said in September quarter result update.
Meanwhile, in the past year, PVR
(down 21 per cent) and Inox Leisure
(down 9 per cent) have underperformed the market by reporting negative returns. In comparison, the S&P BSE Sensex was up 19 per cent during the year.
On December 8, 2020, PVR said that rating agency Crisil reaffirmed its rating on the long-term bank facilities and debt programmes of the company at 'CRISIL AA/Negative'. The negative outlook reflects CRISIL's expectation of the potential weakening of the credit profile over the next 2-3 months if occupancy remains muted despite resumption of operations. Lower-than-expected ramp-up in occupancy, resulting in continued high cash losses, would remain a key rating sensitivity factor, Crisil said in rating rationale.
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