With a few large screen theatres due to shut down, others like PVR and INOX Leisure may see large occupancy

Every coin has two sides and so is Coronavirus. The deadly virus that has hit both humans and businesses hard all over the world, has turned a blessing in disguise for India’s leading multiplex chains with the consolidation of business now expected to be faster than earlier.

Domestic brokerage and research firm ICICI Securities, in a note, has said that multiplex chains like PVR and INOX Leisure may see increased occupancy as some other large screens move towards shutting down in the wake of the pandemic. “Our working shows 100bps higher occupancy will drive EBITDA higher by 9.1 per cent and 11.7 per cent for PVR and INOX respectively,” the note said.

Although the multiplex sector in India is not a new industry but remains a largely fragmented space with top four operators controlling only 24 per cent of the screen share at the end of the previous fiscal year. In the same year, ICICI Securities said that domestic box office collection was Rs 12,200 crore, and the estimated industry average ticket price (ATP) was Rs 130 with a footfall of 93.9 crore. 

The brokerage firm said that box office revenue  of multiplexes is estimated at Rs 5,800 crore or 47 per cent of the industry box office revenue driven by 32 crore admits or 34 per cent of industry admits and ATP of Rs 180. On the other hand, single-screen theatres’ box office revenue was Rs 6,500 crore with 62 crore admits with ATP of 104. “Our working of single screen shows the business model is very fragile and has been surviving due to depreciated asset, owned property and low operational costs,” the report said.

Even KPMG India’s report on the sector expects permanent closing down of many single screens.

In the post-pandemic world, ICICI Securities expects footfall to reduce further for the industry. “We also estimate admits to fall by half of seat reduction due to affordability (higher ticket price of surviving screens), change in distance to nearest theatres etc,” they said. Overall the spillover effect is expected to work in favour of multiplexes in India. Currently, PVR has a 9 per cent share in the Indian cinema market while Inox has a 6.6 per cent share.