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Even as the prospects of theatre reopening appear distant, stocks of listed multiplex players are registering an impressive show in the stock market in recent times. Stocks of the two leading multiplex players – PVR and Inox Leisure – have rallied around 50 per cent in the last 12 months despite uncertainties over theatre re-openings and footfalls, growing threat from OTT platforms and poor financial results posted in the recent quarters.
Stocks of India’s largest multiplex operator PVR had hit a low of ₹718 apiece on May 19, as the multiple phases of national lock-down brought the film exhibition industry to its knees. PVR stocks have since rallied over 94 per cent to touch an intra-day high of ₹1,398 on Friday. The stock even touched a 52-week high of ₹1,592 in January before dipping due to the second wave of Covid and consequent theatre shut-down across the country.
Similarly, stocks of Inox Leisure rallied over 100 per cent and touched an intra-day high of ₹321 on Friday. Inox Leisure's stocks touched a low of ₹158 apiece on May 19, 2020.
Betting on reopening
“The recent rise in the stock price is due to a combination of several factors. Signs of peaking out of Covid-19 cases have raised hopes that multiplexes would get to start with their operations soon and help the business to return to normalcy in a phased manner,” said Ajit Mishra, VP- Research, Religare Broking Ltd.
“Secondly, global trends of multiplexes are quite positive on the back of strong openings of some films suggesting that theatres have not lost their charm. Thirdly, abundant liquidity and positive sentiments have also helped the stock prices to inch higher,” he added.
Record losses
The strong rally and buy interest from investors come at a time when both the multiplex operators posted net loss in the latest quarter. PVR reported a consolidated net loss of ₹289 crore in Q4 as against a loss of ₹74.5 crore in a year ago period while Inox Leisure posted a consolidated loss of ₹93.69 crore (₹82.15 crore) for the fourth quarter ended March 2021.
“Apart from improved market sentiment, the rally of the multiplex industry was backed by easing lockdown norms which led to increased footfalls in Q2FY21 & Q3FY21 and helped in achieving fund raisings,” said Vinod Nair, Head of Research at Geojit Financial Services.
“However, we should note that the industry is still heavily under-performing in terms of both business income and stock performance. Public restrictions norms are maintained leading to blockbuster movie releases being postponed. OTT platforms too are rising competitors for the industry,” he added.
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