The Hindu Business Line : Terror attack leaves its imprint on cinema stocks

Chennai, Nov. 28 Cine-related stocks tumbled sharply after the Maharashtra Government ordered the closure of cinemas on Thursday following the gruesome Mumbai terror attack.

PVR Ltd slumped 12 per cent to close at Rs 63.05 against the previous day’s close of Rs 72.2. Shares of Cinemax India fell 2.04 per cent to end at Rs 36 (Rs 36.75). Inox Leisure fell 3.49 per cent at Rs 33.2 (Rs 34.40) while southern-based Pyramid Saimira Theatre tumbled 6.73 per cent at Rs 36.75 (Rs 39.7). Anil Ambani controlled Adlabs Films also fell by 2.22 per cent at Rs 152.15 (Rs 155.6).

Single-screen movie halls and multiplexes were closed on Thursday after the Commissioner of Police, Mumbai, asked the respective managements to keep their properties shut as a security measure. “Though there was no fresh directive from the Government or the Police, the managements of most of these cinema halls preferred to shut shops on Friday as well, as a precautionary measure,” said a Mumbai-based broking source.

Liquidity crunch

According to brokers, though Friday’s fall is a knee-jerk reaction, as these companies are expected to lose revenue in the region of Rs 2-2.5 lakh a day, the sector as a whole is facing severe financial crunch, which is likely to impact them in the next few quarters.

These stocks have been already under pressure following the Q2 results, which were below market expectations, they added.

Angel Broking in its recent report on Inox said: “Going ahead, we have revised our estimates downwards factoring in a slowdown in expansion plans (on account of rising interest costs) and subdued earnings performance (on account of margin pressure and lower other income).”

An Indian Infoline report on PVR said: “The occupancy rate for the quarter fell to 36.7 per cent as compared with 44.8 per cent in Q2 FY-08 due to frequent bomb blasts and threats affecting the patron turnout.”

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