Amid growing speculation over the possibility of movie halls being allowed to reopen as part of the government’s Unlock 3.0, which will begin from August 1, stock market players have been betting on stocks of movie exhibitors over the last few days.

Even in a weak market, stocks of Inox Leisure witnessed an intra-day increase of 11.34 per cent on Monday to touch ₹267.5 apiece against the previous close of ₹239.90, while shares of PVR gained 6.33 per cent intraday to touch ₹1,172 from the previous close of ₹1,102 per share.

“PVR and Inox gave stellar upmoves on Monday as speculation is rife that movie theatres will reopen as part of the phase 3 unlocking plan. This cheered D-Street, but the question still remains whether occupancy rates will be the same as pre-Covid-19 levels,” said Nirali Shah, Senior Research Analyst at Samco Securities.

The nationwide lockdown, which began on March 25, has brought the film industry to its knees. With single theatres and multiplexes located inside malls closed for more than four months, industry players have incurred huge revenue losses in terms of sale of movie tickets and food and beverage, besides losing several films to online streaming platforms.

“Until there is a vaccine, the majority of the population will restrict themselves from venturing out and depend on OTT or DTH platforms for entertainment. This will cause decline in revenues, and in fact, (the industry) will incur additional costs,” Shah said.

The Multiplex Association of India (MAI) recently submitted a document on standard operating procedures (SOPs) to various ministries assuring safety, hygiene and social distancing protocols. The SOPs will focus on optimising show timings, sale of paperless tickets, seat distancing, regular cleaning and disinfecting and basic temperature checks.

While there is no official word yet from the government, a news agency report quoted that a senior bureaucrat in the Information and Broadcasting Ministry (I&B) has recommended to his counterpart in the Home Ministry that cinemas halls across the country be reopened from August.

As part of Unlock 1.0 and 2.0, the government had allowed a gradual re-opening of retail, hospitality and aviation industries. The film industry is also hoping that it will be allowed to reopen during Unlock 3.0.

Inox Leisure which touched a 52-week high of ₹511.80 on February 25, has lost more than 50 per cent value in the last five months to close at ₹253.70 apiece on Monday. It touched a 52-week low of ₹158.40 on May 19.

Similarly, PVR, which touched a 52-week high of ₹2,103.96 on February 25 dropped to a 52-week low of ₹711.19 on May 19 before recovering to close at ₹1,129.30 per share on Monday.

“Since large-caps are mostly overvalued, money is flowing into small-caps,” VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said, adding, “the rally in segments like theatre stocks is an extension of this trend — money moving into segments where things are expected to look up when the economy limps back to normalcy.”

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