Screen expansion will continue to be slow in FY22, as top multiplexes such as PVR and INOX will have total addition of new screens in the range of 40-50.
In the first half of FY22, PVR added around 13 new screens including six screens in Jio World Drive, Mumbai; four Director’s Cut screens in Ambience Mall, Gurgaon and three screens in Jamnagar, Gujarat. As for INOX, the multiplex operator launched 15 new screens.
By end of FY22, while PVR is likely to add 30 more new screens, INOX has plans to launch 30-35 screens.
However, the number of screen additions remain lower than pre-COVID levels, when both PVR and INOX each added screens in the range of 70-80 in a year.
In FY19-20, PVR had added 87 screens while INOX increased capacity by 85 screens.
"As far as new properties are concerned, many multiplexes are yet to resume business as usual, and it is still too soon to say how the footfalls would be in the coming months. Thus, players are still not very bullish on their expansion because the fear of the contagion and the anticipation of a third wave still looms large," said Anuj Puri, Chairman, ANAROCK Group, a real estate services company.
Echoing similar sentiments, Nitin Menon, cofounder of NV Capital, a credit fund for the media and entertainment sector, said that it will take some time since theatres have just opened up. "Once they get a feel that overall collections are almost at pre-pandemic levels, then the overall additions to screens would go up."
However, there are many single screens that are not in the position to open up post the pandemic, and these could be ripe for acquisitions by the multiplexes since they could be sold for a discount, added Menon.
Puri pointed out that as of 2019-end, India was home to nearly 6,327 single-screen theatres, according to industry data. "Nine months after the lockdown was first announced in March, 2,000 single-screen theatres continued to remain shut. Analysts estimated that at least 25-30 percent of these screens could be forced to shut down permanently due to COVID-19," he said.
Analyst Karan Taurani, Senior Vice-President, Elara Capital, is confident that screen expansion will soon recover.
"I don't think it is a long way. It is going to happen next year. It all depends on visibility. After Sooryavanshi, I think if one more movie does the performance on par with Sooryavanshi we might see screen expansion coming back in the next quarter itself. I think the pipeline is very much ready. Organic will come back soon and there will be many inorganic additions as many smaller multiplexes might be up for sale. These talks will emerge slowly and they will come back to pre-COVID level. I don't see this as a concern," he said.
Even PVR is hoping to get back to pre-pandemic run rate in terms of screen expansion sometime in the next financial year.
Taurani added that there has been improvement in screen additions from last year to this year. "Last year, not even 5-10 screens were added and those were contracts from pre-COVID times. But this year there were more fresh additions," he said.
While screen expansion is likely to pick up in FY23, Puri said, "There are still limited big movie releases happening. Also, as far as geographies of the expansion of the cinema halls in concerned, a lot will depend on how the footfalls are in the coming months."
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
