I always expected but never calculated about how F&B is important. For investors even after re-opening the problems are not going to stop if they take airline industry as a reference.
Refer excel sheet for calculations
PVR Food.docx (274.5 KB)
“Meals and drinking water cannot be served aboard the aircraft, except for extreme circumstances due to health conditions.”
PVR Cinema shows a glimpse of the life after COVID-19 lockdown.
Concall detail
Operating loss at INR1.2b as cinemas remain shut
PVR’s 1QFY21 revenues declined 99.5% YoY to INR43m (INR8.8b in 1QFY20) as cinemas remained closed across India during the whole quarter. Revenue comprises sales from F&B / movie production-distribution, which stood at
INR14m/INR29m.
PVR’s fixed expenses stood at INR1.3b during the quarter. They comprise nil charges for rent, and include provisions for CAM/inventory charges of INR280m/INR25m.
Thus, excluding provisional expenses, actual fixed expenses during the quarter stood at INR973m, amounting to fixed expenses of INR324m/month in 1QFY21. Furthermore, the company expects monthly expenses to drop to INR220–250m/month over 2QFY21, led by cost efficiency measures.
The company has not paid any rent and CAM charges to mall owners and is in talks with land owners for complete waiver of rent and CAM charges during the lockdown period. Also, PVR is in talks for a reduced rent / revenue-sharing
agreement post the opening of the cinemas.
Pre-Ind-AS 116, EBITDA loss stood at INR1.2b (INR1.5b profit in 1QFY20).
Other income stood at INR83m, arising from interest income and other non-operating income
Net loss stood at INR1.4b.
Other highlights
Employee expenses remain at INR227m/month in 1QFY21 (-35% YoY) and the company has guided to drop them to ~INR140m/month in 2QFY21.
The company had INR5.5b in cash & CE and INR1.6b in undrawn credit lines available from banks.
The company’s gross debt stood at INR12.7b.
All capex has been put on hold, and the management would review capex plans post the reopening of the cinemas.
Does anyone have insights on what is driving the price rise for this stock? It has already reached March 2020 levels. I was looking at some figures, and am unable to understand the rationale for this rise
What am I missing?
The stock is at 30% discount from pre covid levels.
OTT platforms are definitely going to hurt their businesses but cinema hall experience is very different. And many single screens are going to be completely shutdown.
I believe people are not betting here for short term. PVR/Inox were able to raise fund through Rights issue or QIP which didn’t affect their balance sheet. They just need to survive till covid is over, which is the biggest question which is deciding their share price.
The expenses should be back up once they resume all their operations.
Thanks @Kushagra_Surana . I myself am not a cinema-hall person and thus the pessimism.
I was expecting things being different for cinema goers (a physical and psychological shift similar to how businesses are now moving towards the concept of work from home)! So maybe more people prefer watching movies from home on OTT platforms given they are released simultaneously on that medium as well.
Anyways, my only other (and biggest) question for this company is how to value this business? While the company reports only 1 segment under IndAS , there are actually 3 major revenue streams.(1) ticket sales, (2) food revenue (directly proportional to 1) , and (3) distribution revenue. Unfortunately, all three are very volatile and hard to forecast and company doesn’t report individual profitability. How can a DCF method be applied here? It doesn’t have any hard assets also, so I wont rely too much on book value either. Any thoughts?
I am a beginner in financial analysis so whatever i am writing may not make sense 
We don’t have sufficient data to do DCF. Whatever is missing you would need to assume a value and put in. And this is doable since covid won’t last more than a year given the vaccination efforts that are going.
OTT will definitely hurt cinemas. To take that into account we can estimate the future growth to be a little less than historical growth and a dent in the earnings.
Although it is very small sample of just one city, it is indicator of the demand as it is today. Not good news for multiplexes
It’s not that difficult . All 3 have decent info available.
Telangana regulated ticket prices revised.
The acquisitions of stressed smaller players and market share gain strategy has started to play out.
PVR Cinemas, India’s largest and the most premium film exhibitor announced the opening of a 4-screen property in Narsipatnam, a town in Visakhapatnam district of Andhra Pradesh. The company now operates the former Sreekanya Cinemax as one of its properties making it the town’s largest and most contemporary cinema theatre. Located in the centre of the city, the cinema has a seating capacity of 1188 audiences and has excellent quality audience pleasing facilities.
PVR, Inox Leisure to consolidate via mega merger, boards likely to meet today for approval: Sources
This deal seems to be a nice offer for INOX shareholders but not a very favorable decision for PVR investors. Their synergies and target audience are different too. PVR fares better than INOX in all parameters except balance sheet too. Curious about views of other investors.
Disc: Invested in PVR from 1000 levels.
Does anyone see the recent boycott phenomenon as a negative development for PVR / INOX ?
It seems some movies will be boycotted depending on the star cast.
of course , good movies will keep pulling crowds irrespective of boycott calls , but those will be limited in number.
The time pass movies that keep steady state revenue seems to be getting affected going forward.
How do you guys see this panning out?
It’s more of an impact on the production houses and it’s only the production houses that can fix the issue. They will have to adjust to making content which pleases the majority of the population. They will have to identify the “boycott” risk for every movie they make. The factors which will qualify a movie for “boycott” calls can be the star, content or maybe even misunderstandings.
I believe there will be increased boycott calls nonetheless. And on the other hand there will be increased participation by the crowd for movies which somehow appeals to the majority.
As long as the production houses aim for profit, things will be fine for PVR-Inox.
Disc: I am not against any movie/religion/star/sentiment. I am just analysing the situation and trying to predict what may play out in future. Also, invested.
There was so much hatred against bollywood when Sushant singh rajput case was there. Current boycott is temporary, people will forget. Good movie will attract footfall. People need entertainment in india. Pvr and inox have their own niche.
We just need to buy at right price as the company is no longer a consistent compounder
Pvr and inox are at the mercy of Movies houses going to movies halls and not OTT first.
How can we think of playing PVR for ages to come ? i have allocations to moderately sunset industries then why put one more egg in that basket with PVR.
Zomato Nykaa are still in their early days where habits are getting formed aggressively. Ppl moving from cooking food at home or dining out everytime for outside food or eating at restaurants in neighborhood. Zomato nykaa is convenience Vs PVR being something i cant watch at 2x or at my convenience and PVR would never screen the best of the TV shows available on OTT. They were showing india vs pakistan last sunday instead of liger/LSC - habits are definitely going away + movies are a shame right now. Easy pass for me imho
These are certain notes that I made while tracking the company. GM will be helpful if any fellow members can share your thoughts on this
Pvr - main tracking parameter -
a)occupancy rate as declared in the presentation and if possible question the management on the ranking of the occupancy rate across india at various divisions 1) south 2) north 3) central 4) west 5) east as well as in movies 1) regional 2) Hindi 3) English
B) of all the screens total percentage of occupancy above 1) 35 % 2) 30% to 35% 3) 25% to 30% 4) below 25%
These metrics if asked in concall to the management will be really useful
PVR is all about experience which people can’t replicate at home. Even before OTT, people could watch movies at home on TV/DVD but still they went to cinemas.
However, that experience has become too costly and will be restricted to Upper middle class and Richie rich in future.
lowering down expectations from PVR Inox is the best solution.
Merging Inox PVR to increase the number of screens was a good choice but now just shutting down some screens doesn’t look well thought of.
Also PVR as a stocks is a factor risk at play which is movies should do well. And no other means of entertainment should not exist like IPL World Cups Amusement parks etc.
Restaurants flourish at times when IPL fever is at peak coz they just put a screen or tv sets and voila restaurants are always full.
