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Last Updated : Jul 23, 2015 08:16 AM IST | Source: CNBC-TV18

Bahubali, Bajrangi to add muscle to Q2 earnings: PVR

While, Indian Premier League (IPL) and examination season might drag the fourth quarter a bit but with blockbuster releases like Bajrangi Bhaijaan, Brothers, Bahubali, revured occupancy and other Sanjay Leela Bhansali and Shahrukh Khan films make second quarter look equally promising, says Ajay Bijli, Chairman and Managing Director, PVR.

A rising demand for cinema as a source of entertainment, supported by a line up of good movies drew a ‘momentum of people’ to PVR, boosting topline growth this quarter, says Ajay Bijli, Chairman and Managing Director, PVR.

“You had movies like Tanu Weds Manu, Piku, ABCD 2; even Hollywood films like Fast and the Furious, Avengers 2 and also another Hindi film, Dil Dhadakne Do all performed very well,” he adds.

Blockbuster releases like Bajrangi Bhaijaan, Brothers, Bahubali and other Sanjay Leela Bhansali and Shahrukh Khan films will make second quarter look equally promising, he says.

Speaking to CNBC-TV18, Bijli says controlled rental costs and operating expenditures have secured the next two quarters, making 23 percent margins sustainable.

Read more: PVR posts blockbuster Q1; net soars 680%, revenue jumps 

The Indian Premier League (IPL) and examination season might be a drag in the fourth quarter, he cautioned. 

With an addition of 72 new screens, mostly in the southern region, PVR expects to grow to 530-540 screens by the end of thsi year.

Below is the transcript of Ajay Bijli’s interview with Nigel D’souza and Surabhi Upadhyay on CNBC-TV18.

Nigel: Top-line has ballooned up, 30 percent plus. Could you give us some details? Your occupancy, your average ticket price spending per head?

A: It has been a fabulous quarter. Most of the movies that got released, they were not even such blockbuster films. You had movies like Tanu Weds Manu, you had Piku, we had ABCD 2, so if you look at the line-up of movies, they were not blockbusters, but yet there was a momentum of people coming in and watching movies.

Even Hollywood films like Fast and the Furious, Avengers 2 and also another Hindi film, Dil Dhadakne Do. So, they were all average films, but they all performed very well.

The average ticket price (ATP) went up by four percent. Our overall occupancy, which was 32 percent last year has gone up to 38 percent, by six percent. But on a consolidated basis, if you look at it, we are very happy with our earnings before interest, taxes, depreciation and amortization. We were at about Rs 55 crore last year. We are at Rs 113 crore this year.

Our margin has improved to about 23 percent which was 15 percent last year and even profit after tax (PAT) has gone up by close to 700 percent. It was Rs 7 crore last year, it is about Rs 58 crore this year.

So, overall there is a momentum of people coming back to the cinemas wanting to watch movies, getting entertained, and which comes very naturally to most of the Indian consumers.

Surabhi: 23 percent margins, are they sustainable or is it just a fabulous quarter?

A: If you look at the line-up and some of the things that we have done, it looks like the next two quarters are also looking very good. The line-up is very good. And as I said, the way we have made our circuit in certain locations, we have been controlling our costs, both on rental terms, all operating expenditures, the next two quarters at least are looking very good.

Nigel: Also I didn’t get one particular number. I have got your average ticket price but what about the spending per head, what is that number coming in at and on a year-on year (Y-o-Y) basis could you give us a comparison as well?

A: Spend per head on F&B was about Rs 64 last year, that has gone up to Rs 75.

Surabhi: Just want to talk about broader business plans for the remainder of this year as well. There is a lot that has been happening; you have acquired the DT Cinemas from the DLF group. I believe you have also got shareholder approval for a private equity placement, just in terms of fresh money raising, fresh spending and investing in the business, what lies ahead in the coming months?

A: These numbers don’t reflect the DT acquisition, that is going to happen after we get Competition Commission of India’s (CCI) approval but we had already decided to raise the money for the acquisition, so that happened today, by the board it got approved but other than that the way the year is looking, all the accruals that we will get will take care of our organic growth.

So even if we don’t add DT, we are looking at adding about 72 screens this year and the good thing is that most of the screens are happening in the southern region in Chennai, Mysore, Bangalore which is where the movie going consumption is also very high. So even if we don’t add DT, about 530-540 odd screens is what we will end up with by the end of this financial year.

Surabhi: So, in terms of fund raising requirement, where does that leave you for the DT deal separately of course that is an ongoing process and even otherwise, for your organic expansion, are you looking at raising any more capital this year?

A: No, there is no need because the accruals are good enough. We are adding about 70 screens and that is something that gets taken care of with our cash flow accruals every year.

Nigel: I was taking note of that point that you said, we did not have any big blockbuster film release and these are the numbers we get. I am guessing, the second quarter, we have a couple of blockbuster releases, so, how good are these numbers going to get in the second quarter and could you give us some guidance for the financial year as well?

A: Second quarter is looking very good. It started off with Bahubali which is not supposed to be an all-India blockbuster, more regional blockbuster. But the dubbed version is also done very well. Then we have had Salman’s movie and we have had record occupancies. Then we are getting another movie called Brothers. So, lots of movies coming this quarter as well. So, the way things are going this quarter is looking pretty similar to the first quarter.

Even third quarter we got some blockbuster movies of Sanjay Leela Bhansali, Shah Rukh Khan, So, first three quarters are looking pretty similar. Fourth always takes a dip because of exams and Indian Premier League (IPL).

Nigel: Alright, give us some guidance, give us some numbers for this financial year. What is the growth going to be?

A: Numbers are difficult to guess because we do not know what is going to happen in the first quarter.

Nigel: 20-25 percent, for the financial year?

A: This year itself, the first quarter itself has gone up by 25 percent. So, one can do some extrapolation, but as I said, fourth quarter is always very unpredictable.

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First Published on Jul 22, 2015 03:20 pm
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