This was from screener.in and their concall transcripts (also available on screener)
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Please read about Ind AS 116 Leases. Long term + short term debt is the actual debt payable. Lease liability is created on liabilities side and Right of use asset on asset side. This was done to stop hiding of commitments as they used to take it off balance sheet
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Relevant article with key data points. Looks like the content from Hollywood movies may not add much value in FY24-25. PVR’s strategy to therefore focus more on South aligns with the movie watching trend of South. Muted Hollywood content will therefore continue to challenge potential growth opportunities. Will Indian movie content alone uplift revenue opportunities?
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Disclosure: Invested
Summary-
a)No commercials, just films: PVR Inox adopts ad-free movies amid declining theatre footfalls.
b)Cutting down the length of the ads slotted before a movie begins on the big screen from 35 minutes to 10 minutes, the company is looking to add extra shows.
c) This new product by PVR Inox has been launched across 40 luxury properties of the multiplex chain in Delhi, Mumbai, Bengaluru, among others, effective from April 1.
Seems 1Q FY2025 is going to be affected due to poor performance of Bollywood movies, ongoing IPL season and lack of Hollywood content.
Disclosure- Not invested
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A116 In very simple words @RahulSingh you can have a look at it
Alright, imagine you have a toy car that you really like, but you have to pay to play with it every month.
Now, imagine you tell your friend, “Hey, I’ll pay you every month to play with your toy car.” That’s like a lease.
Now, before, people could hide these payments, so it looked like they didn’t owe any money. But that wasn’t fair because they were promising to pay money later.
So, now, with this new rule called Ind AS 116 Leases, they have to write down how much they promised to pay. It’s like writing it in a special book so everyone knows they owe this money.
They write down the money they owe (lease liability) on one side of the book, and they also write down the toy car they can play with (right of use asset) on the other side of the book.
This way, everyone knows about the promise to pay and the fun toy car they can play with.
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I think you are very wrong in saying that it was a commodity business. It’s the farthest thing possible from commodity. It’s all about comfort and value-add
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Since 2023 has been theatres haven’t seen any big release across the film industry Hollywood to a small industries like Malayalam only star movie released in Last 7 to 8 months is Kalki By Prabhas
But the new turnaround for the movie fraternity is coming from the August 2024, until 2026 first half is what we can see at the ground.
Some of the big releases that are on the way in the next 1.5 years Which has the potential to be as successful in the theatres from Respective industry
1.Stree 2
Greatest of all time - Tamil
Devara part one By NTR - Multiple language
Joker sequel - English
Kanguva - Tamil
Bhairati Ranagal - Prequel - Kannada
Barroz - Malayalam
Bunkingham murders - Hindi
Kantara 2
Salaar 2
Kalki 2
Avatar 3
Sitare Zameen par
Pushpa 2
Welcome 3
Houseful 5
Sigham again
Ramayana
Toxic
Spirit
Some of the movies that comes to mind that can be the successful in their industry And I have left many such movies.
In the next 1.5 years, every industry who has stardom has their one or the other release All three khans , Ranveer Singh, Ranbir Kapoor
Rajinikanth Ramcharan NTR
Alluo Arjun
Pawan Kalyan
Vijay
Dulquer Salmaan
Surya
Yash
Sudeep
Prabhas
For the first time in Indian history There are so many merging opportunity happening between the industries
For example Previously, only Malayalam or the Kannada, the people used to see their own language movies And respective actors used to work in their industry only
But for the first time, all the industries, actors and viewers are merging .
Example :
Ranbir Kapoor - Yash - Ramin djwadi
NTR - Saif Ali Khan
Salman Khan - Attlee
Hrithik Roshan NTR - In war2
Like this, there are so many actors and the movie productions are collaborating each other with other industries, which could bring the people from across the India
Most of the releases that going to happen in the next 1.5 year is either a sequel Or the prequel Of a franchise
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I do believe that good set of movie releases may uplift the financial performance for a few quarters but is this a good long term investment??
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It appears that at least some portion of people have moved towards OTT, these are not metro folks or the folks from cities where theater chains exist. The people who visit these theaters, who don’t think about the high prices of F&B are different, and they will exist, but I think, one question that can be asked is, are these patrons regular moviegoers or visit occasionally, if they visit from time to time, will the gap be filled with ordinary folk, who stay away from F&B, and are visiting to have a pleasant theater experience, also due to discounts of some sort (if any). Sales will give the clarity and judgement, of course.
The last 8 quarters’ sales are not smooth, maybe because of content not good enough, I don’t know, maybe they will pick up with high profile releases, I don’t know.
One complaint that I have come across are the charges of F&B. If indeed they make a hole in the pocket of who are complaining, I am sure, they will control their hunger or thirst and not shell out for F&B, which looks like form a major share in the revenue. Or maybe who watch here don’t mind these prices. My point is that, ticket sales may increase, but I am not sure of the F&B sales.
And as for the long term is concerned, if big size TVs become affordable, and a more faster internet reaches every household, maybe more and more people will have the theater experience from their homes. Unless one is dying is see something in particular, for the most part, this is just entertainment. Even if it is not understandable, being a foreign language it is entertaining, and if the content is available in regional languages, entertainment even from Hungary will suffice. So, technology has the power to change this consumption, which is not necessarily the case with something like FMCG.
No position, just some thoughts.
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Strictly my opinion as I’m not invested.
PVR has two big issues that prevent it from becoming even a decent stock to own for long term.
1- They are merely distributor or trader of a product (movies) whose quality and demand is highly unpredictable and totally beyond their control. So a good year of blockbuster will lift the stock price while a series of flops will sink it.
2- Very low operating leverage- You can’t keep expanding a theater or increasing prices. So your revenue per theater is capped. There is only so much you can make on food and beverages. Which means company will have to keep opening plenty of theaters to grow on an already big topline. Premiumization of theater is one option that company needs to start looking into to increase per footfall realization.
To me PVR can be a good trading stock to be bought at 20-30% correction and sold on the upmove, but as long term investment I am not convinced if it has any compounding power.
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Is anyone tracking the footfalls each month post COVID?
A Bengaluru resident won a consumer case against PVR INOX for displaying excessive displaying excessive advertisements before film screenings, which he claimed was a waste of his time. The consumer court has directed PVR to display the actual film start time on tickets, rather than the time when the time when advertisements begin. Not sure if appeal is made against this order by PVR Inox.
Note- Advertisement income represent 7-8% of revenue for PVR Inox on 9M FY2025 basis.
Disclosure- Invested
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Good news for movie goers, but bad for shareholders… Could this help speed up the bottoming for PVR-Inox share price… but i am still not convinced if it will be a long term hold stock…
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Karnataka capping ticket prices is negative for the the company. Govt regulations on movie ticket prices is one of the negatives that need to be factored in while taking investment decision
But I find stock interesting short/mid term play owing to it being attractive on various valuation metrics like Mcap/Sales, EV/EBIDTA… Also market cap is at multiyear lows almost resembling Covid hit valuation.
Management through recent moves is taking some strategic steps in right direction
- considering franchise owned company operated model for new screens, they are experimenting with asset light model and are expecting to receive management fee which is expected to boost their return metrics
- Rerelease of movies is providing additional revenues whenever content pipeline is weak and there seems to be decent demand for the same (YJHD, Sanam Teri kasam, Tummbad, Interstellar etc)
- partnership with devyani seems to be an interesting move and execution needs to be monitored
Some of the general trends point towards better revenues
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Last year big hero movie releases are muted + hollywood content churnout was lower on back of writers strike and more movies are expected to be bunched up over 12-18 months
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People are always willing to visit movie theatres if the movie content is good and are vehemently rejecting bad content… OTT are blessing in disguise as lot of new talent is being unearthed there be it movie actors/directors/other technicians, who can create better quality content going forward
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Language barrier narrowing down for movie lovers… Audience base even for regional movies is going up and it’s good as there will be more content available for exhibitors
They have consolidated slowly into very big player kinda monopoly in terms of preferred theatre to watch movies… They definitely have upper hand over competition and have managed to build biggest brand in the segment they operate in
Negatives are already well captured from the threads inception, contra views are welcome
Disclosure:- invested recently with a 2-3 year view
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Truth be told:
It’s looking attractive on all parameters like ev/ebita, market cap/sales. Price to book, and it has been attractive not just now but for quite some time on such parameters, still stock keeps going down.
Except for one aspect, on which it never looks attractive is price to earnings .
All the Ebita is eaten by intrest and depreciation.
It’s a capital intensive industry, but being almost a monopoly, it still doesn’t make money at the bottomline.
Plus the business model moat in itself hasn’t been knocked severely ever since OTT acceptance.
It may turn out to be a good investment or a mediocre one.
Atleast from downside perspective it seems downside may be limited.vso must offer some comfort, but expecting big returns may not happen.
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I wish someone could say with enough confidence that bottom is near… i am drawing parallel with AMC holdings which is the largest movie exhibition firm, and it has fallen again by 40% since last year August when i posted the chart above…
Somehow OTT has broken the back of movie exhibition business everywhere… Wonder if this will ever recover meaningfully…
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I’m bearish on PVR for a few key reasons:
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The Reels Effect: Short-form content like Instagram Reels and TikTok has changed the way people consume media. The patience for a 3-hour movie is gone. I used to be a movie buff, but now I find it hard to sit through a film unless it’s truly exceptional. The next generation, watching short content from such a young age, may have an even weaker connection to traditional cinema.
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Content Overload from OTTs: Platforms like Netflix and Prime Video are pumping out content like machines. Audiences have seen it all—standard storylines feel predictable. Genres like romance, which once dominated Bollywood, are struggling because there’s little left to explore. The demand now is for unique, high-quality storytelling; making mid-budget films with average actors is nearly obsolete.
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Artists Have More Freedom & Better Options: Why make a 3-hour movie about a social topic when you can make a 45-minute YouTube video and reach millions of people free of cost? The friction in content creation has disappeared, and digital platforms offer creators far greater control and scalability. The investment in the movie-making business is not worth it. You can achieve more as an artist at a fractional cost through digital mediums.
Will movies die? No. But the industry will become highly unpredictable. Only the very best will thrive. I’d rather bet on Meta and YouTube (Alphabet)—that’s where the real long-term money is.
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There is one fundamental difference between PVR-Inox and AMC. In the US, there are many other large cinema chains such as Regal, Cinemark and Cineplex, and even standalone theatres provide the exact same viewing experience.
In India, you can notice a stark difference between a local single-screen theatre and PVR-Inox. Multiplexes like PVR-Inox are in the business of selling a premium experience to our affluent and aspirational classes, and not just showing movies. We have very few mainstream options to have a peaceful “day-out” with friends and family and this is one of them. What is a commodity in first world countries is still a luxury here. That’s why not everything here can or should be compared to examples in the US market.
Seasonality of movie releases and OTT penetration is a separate topic.
Disc: Invested earlier this month as the valuations look very attractive, so I might be biased.