Multiplex operator PVR reported strong recovery in box office business, food and beverage revenue in Q1 FY23, after facing a severe impact on business due to the pandemic in the last two years.
The April-May-June period saw the best-ever quarterly performance across all parameters in Q1 FY23, the company said.
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"This is the highest ever quarter for PVR which is even bigger than pre-pandemic. We have never done Rs 1,000 crore quarterly revenue or Rs 208 crore quarterly EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation). It is the highest quarter, both in terms of revenue and profitability," Nitin Sood, CFO, PVR Limited, told Moneycontrol.
Compared to pre-COVID levels, the company in Q1 FY20 had reported total income of Rs 887.2 crore, at an EBITDA of Rs 165.5 crore.
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In terms of profitability, PVR reported profit after tax (PAT) of Rs 68.3 crore in Q1 FY23, compared to Rs 44.2 crore in Q1 FY20.
PVR's net box office stood at Rs 530 crore for the quarter ended June, 2022, compared to Rs 456.6 crore reported in Q1 FY20.
Low footfalls
However, Sood said they did not reach pre-COVID numbers with the multiplex recording 2.5 crore admits in Q1 FY23 as against 2.7 crore in Q1 FY20.
"There is a large segment of consumers who go to cinemas once or twice a year. This consumer has to come back. It will take a few months in terms of full recovery. But globally, India has been the best performing market in terms of theatre admissions. We are at 90 percent levels of pre-COVID compared to global markets which are at 50-60 percent levels," said Sood.
The company said that it will take more films to bring more people back to cinemas. "In December, when you have a big run-up of films, the recovery in terms of footfalls will be strong," he added.
Analysts tracking the exhibition sector have pointed out that high ticket prices in multiplexes is one reason for low footfalls. However, Sood said that average ticket price (ATP) is not impacting admissions.
PVR saw 23 percent growth in ATP at Rs 250 in the quarter ended June, 2022, compared to Rs 203 in Q1 FY20.
"With the kind of line-up we have, ATP will be sustained over what we have managed to achieve," the CFO said.
The company said it has recorded the highest ever ATP for the quarter on the back of global and local tentpoles that resonated with the Indian audience.
Betting big on new releases
The first quarter of the current financial year saw some of the biggest hits, including KGF: Chapter 2, RRR, Vikram, Bhool Bhulaiya 2 and Hollywood tentpoles like Doctor Strange and Top Gun: Maverick. "KGF 2 went on to become the second-largest blockbuster in the Indian market. It was the highest grosser ever for PVR with a net box office of Rs 121 crore across our cinema circuit," said PVR.
Sood said that for the second quarter, the company is betting big on titles including Aamir Khan's Laal Singh Chaddha, Ranbir Kapoor's Brahmastra, and Akshay Kumar's Raksha Bandhan in August and September.
"Hindi content will come back in a big way. A lot of big films are lined up for release. Hindi films are also releasing in multiple languages like Brahmastra is releasing in Tamil and Telugu. Makers are realising that their market is not one segment of the country, but is the entire country. This was shown by the success of RRR, and KGF. And when a Bollywood film does well across the country, the numbers will be bigger than RRR and KGF," said Sood.
Contribution of Hindi language in box office collections dropped from 47 percent in Q1 FY20 to 46 percent in Q1 FY23. The company noted that the contribution of Hindi language will be lower if the contributions of RRR, KGF Chapter 2 are removed.
Slow recovery in ad revenue
On the ad revenue front, cinema advertising remains 32 percent lower than pre-COVID levels. PVR reported ad revenue of Rs 62.7 crore in Q1 FY23 versus Rs 91.6 crore in Q1 FY20.
"It is taking time for us to get advertisers back but the Q1 numbers will help. Q2 will be 75-80 percent (of pre-COVID level) and by Q3 there will be full recovery as we hit the festival season. Brands like telecom and FMCG, which are relevant, are struggling. FMCG has not fully come back and handset manufacturers are facing supply issues," he said.
Gautam Dutta, CEO, PVR, said that FMCG was contributing 15-17 percent to the company’s overall ad revenues, and the second big category telecom and handsets has slowed down due to lesser number of products to sell. These two categories have taken a dent, he said during an investor call.
"The second quarter of FY23 will be under pressure in terms of ad revenue. We are communicating with brand managers of the two main categories. Q3 is festival time and this is when these guys will come back to advertising in cinemas. So, Q3 will be largely in the range of pre-COVID numbers. By Q4, we may end up exceeding pre-COVID numbers," said Dutta.
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