Food & beverage sales contribute 25-30 percent to revenue of company like Mukta Arts.
While speaking in State Legislative Council, Maharashtra Minister said the people can carry their own food items in multiplexes, reports CNN-News18. "We will act against multiplexes if they don’t allow people to carry their own food."
This is expected to be effective from the first day of August 2018.
Foods and beverages segment is generally a high margin business for multiplexes and that contributes 35-40 percent to industry EBITDA.
Food & beverage sales contribute 25-30 percent to revenue of company like Mukta Arts. "Government will need to engage with multiplexes before taking such a call," Rahul Puri, MD of Mukta Arts told CNBC-TV18.
He said if a 'ruling' does come, it might be a precedent for rest of the country. "Maharashtra cinema halls constitute 30-35 percent of revenue and Maharashtra will constitute 25-30 percent of screen across India."
But most analysts are of the view that it is too early to react as it is just a sentiment driven and there is hearing in the court on July 27 related to this subject.
"This is just a statement which is not being officially passed," Karan Taurani of Dolat Capital said.
He further said, "But if it does get passed, then we have to downgrade estimates."
Food and beverages business generally contribute 25-30 percent to total revenue with 74 percent gross margin. Maharashtra is a key state and contributes large proportion to their revenue, he added.
Abneesh Roy of Edelweiss Securities also said it is too early to react. He sees this as a politically populist measure ahead of elections. "It is most likely to go into court as multiplexes will file the case."
Overall he said structurally this is a good industry and it is a good time to accumulate for long term.
If this gets implemented, then foods & beverages earnings hit can be substantial, Mayuresh Joshi, Research Analyst at Angel Broking said, adding advertising revenue continued to be strong.The stock price of INOX Leisure closed at Rs 238.70, down 5.43 percent and PVR was down 13.10 percent at Rs 1,214.20 but Mukta Arts recouped losses to close 1.26 percent higher at Rs 44.10.