PVR INOX Limited

NSE:PVRINOX
Q3 FY2024 2024-01-31
TOTAL REVENUE: INR
Total revenue: INR 1,569 crores (YoY +6.4%)
EBITDA: INR 226
EBITDA: INR 226 crores (YoY +2.7%)
PAT: INR 41
PAT: INR 41 crores (YoY +925%)
GUESTS WELCOMED: 36.5
Guests welcomed: 36.5 million (Q3 FY '24)
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AR
Arun Prasath
9 questions
AB
Abneesh Roy
Analyst at Nuvama
3 questions
JI
Jinesh Joshi
Analyst at Prabhudas Liladher
3 questions

It's not a right strategy, but some people can get nervous about releasing upfront when such a large event happens. The results in October and November were muted due to this event, but I'm happy to explain that it's not due to a lack of appetite for movies. When movies are released, they do very well, as seen with the success of films like Animal, Salaar, and Dunki. We're working with the industry to stagger releases better, but sometimes clashes can work in favor of both movies if they are good.

Ajay Bijli • Managing Director at PVR Cinemas

These countries are compared because they have the highest movie consumption. India has performed better than pre-COVID levels. The drops in mature markets are due to their dependency on Hollywood, which has faced reduced releases due to strikes and a focus on streaming. The return of the 8-week window has allowed mid-budget movies to perform well in theaters, indicating that the skew is not only towards big movies.

Ajay Bijli • Managing Director at PVR Cinemas

We had a traditional loyalty program that didn't change consumer behavior significantly. We've launched a new Passport program to drive more frequent visits to cinemas, which has shown positive results. A pan-India version of this program will be launched soon to encourage consumers to watch a variety of films, not just the big ones.

Gautam Dutta • CEO at PVR Cinemas

The average occupancy of 26.5% reflects volatility in content supply. While the box office has improved, admissions have lagged due to inconsistent content releases. We expect occupancy to improve as the content situation stabilizes. The pandemic has changed customer preferences, and producers are adjusting their content accordingly. There is potential for growth in both occupancy and per-customer contribution.

Nitin Sood • CFO at PVR Cinemas

This year's closures were a one-off exercise to rationalize unprofitable screens post-merger. Going forward, we expect gross and net openings to be much closer, with only a small percentage of properties closing annually due to lease expirations.

Nitin Sood • CFO at PVR Cinemas

Advertising is recovering, and the festive season has indeed propelled brands to advertise more. We've also secured long-term deals during this period. However, advertising is still on the path to recovery, and we expect to return to 2019-20 numbers in a couple of quarters.

Gautam Dutta •

The deals are based on how much time and media they will consume on our screens over a longer period, which ensures a certain income level and reduces the need to constantly seek new business.

Gautam Dutta •

About 30% to 35% of our ad revenue comes from these long-term deals.

Gautam Dutta •

Our average ticket pricing is strong, up 14% this quarter, and food and beverage spending is up 8%. The ATP reflects the performance of big films, whether Bollywood or Hollywood, and is consistent with the market trends.

Nitin Sood •

ATP typically rises with inflation, historically increasing by 4% to 6% annually, and this trend is expected to continue.

Gautam Dutta •

Lease contracts will be adjusted based on cinema performance and will be priced according to what the cinema can afford to achieve optimal returns.

Nitin Sood •

We can't share that data.

Nitin Sood •

There has been no change in the time taken for new screens to reach steady state; many have performed well immediately after opening.

Nitin Sood •

Lower overall footfalls compared to pre-COVID levels are affecting operating leverage, despite improvements in other metrics.

Nitin Sood •

All free operating cash flow after capex will be directed towards debt reduction, as demonstrated in the first 9 months of the year.

Nitin Sood •

That's correct.

Nitin Sood •

We plan to launch the revised features of the Passport program pan-India this month, with more details to follow in the coming weeks.

Nitin Sood •

Average occupancy in December was 37%, compared to 25% in the previous quarter, indicating significant improvement.

Nitin Sood •

Occupancy levels in South India are generally higher, and we expect 40% to 45% of new screen additions to be in this region.

Nitin Sood •

All 72 screens are under fitout and they're absolutely ready. Out of the 72, 4 screens in Ajmer have already opened. Every cinema mentioned is under fitout and awaiting licenses. We are not aggressive; whatever we have committed, we'll be opening. The projects are nearly over, and we are waiting for the licenses to come so that we can open our cinemas.

Alok Tandon • CEO

On merger synergies, we'll share an update at the end of the year. The other income includes a write-back of lease liabilities on account of shutting down 62 screens in the first 9 months of this year, which is a one-off item.

Nitin Sood • CFO

Advertising mirrors box office performance and market sentiment. In Q3, advertising increased due to Diwali and new product launches. We don't provide quarter-on-quarter guidance, but the trajectory is positive. Clients and media planners are returning, and we expect healthy increases. However, advertising revenues will be volatile based on content flow and seasonality.

Gautam Dutta • COO

In Q3, we had 4 blockbusters that crossed a certain threshold, leading to an increase in film hire percentage. There has been no change in the arrangement with producers. Additionally, 3D revenue was significantly lower this year compared to last year, contributing to the uptick in film hire percentage. We expect this to stabilize going forward.

Kamal Gianchandani • President

We've made rapid progress in technological synergies, integrating different systems from INOX and PVR. By March 2024, we expect a fully integrated system, eliminating duplication and improving efficiencies. We've also worked on branding, HR rationalization, and energy conservation. For PVR Pictures, we expect a strong Q4 and have allocated more capital for this business, anticipating a jump in both top and bottom lines next year.

Kamal Gianchandani • President