With the Omicron-led third COVID-19 wave ebbing in most parts of the country, analysts are placing their bets on hospitality and entertainment sector stocks. Among them is Karan Taurani, the senior vice-president at Elara Capital, who has sounded bullish on the prospects of Inox Leisure, PVR and Jubilant FoodWorks.
Cinemas, in particular, will witness an acutely sharp recovery, Taurani suggested. "March onwards, we will see normalcy most states as restrictions are to be further relaxed. As we speak right now, 35-40 percent of the box office has opened with 100 percent occupancy. Maharashtra and Delhi are keen markets. If they open up with 100 percent occupancy, then close to 80 percent of all box offices will be open," he said on February 23, while speaking to CNBC TV18.
Frequency of film releases will also go up in the near future, as compared to the past 18-20 months when only two or three major Hindi films have hit the box offices, the analyst pointed out.
"From March-April onwards, we will probably see 10-12 large Hindi films coming to the box office," he said.
"As far as the upside is concerned, we have upgraded our stance for both PVR and Inox," Taurani noted, adding that there could be 40 percent upside in the near-future.
According to him, OTT releases would fail to dent the prospects of multiplexes. The platform has not acted as a major disruptor so far, he argued, pointing out that the solid releases will be made only in cinemas.
Taurani also sees the prospects of quick service restaurant (QSR) sector further improving in the coming period. One particular stock, that he mentioned, is Jubilant which according to him is expected to significantly gain with the accelerated lifting of COVID-19-related curbs.
While the quantum of home deliveries may slide with the resumption of offices and lifting of travel curbs, this, Taurani said, would be neutralised through the jump in in-person dining.
"With theatres opening, people would go to malls and turn towards in-dining, and with work from offices resuming, the prospects of in-dining further rises. These two factors would offset the reduction in home deliveries," he said.Taurani believes that another factor that goes in favour of Jubilant is the new business initiatives. "I think there is a big potential for these new initiatives to scale up and probably that will also add to some part of upgrades, maybe in the next 24 to 36 months," he said.