According to Karan Taurani, Vice President, Elara Capital, March was expected to be big but the spread of coronavirus in India could be a dampener for the box office business.
Amid coronavirus fears, it will be a litmus test for Bollywood and cinemas this Friday when theatres will see a big franchise release - Baaghi 3, starring Tiger Shroff and Shraddha Kapoor.
While film releases in India have not seen a change in schedule due to the coronavirus outbreak, theatre owners are nervous as people are staying indoors as a precautionary measure.
Ajay Bijli, CMD, PVR, thinks that it is an unpredictable environment and the health advisories by the government will have a negative impact on footfalls.
Experts said that with more cases of coronavirus being reported in India, sectors like the exhibition business will be at more risk in the near-term. And it looks like the investors are taking into account all these risks.
"Coronavirus outbreak has already started affecting the multiplex stocks like PVR and INOX which have plunged over 13 percent and 20 percent respectively in the first week of March. PVR stock has fallen below its 200-days moving average. COVID-19 fears are looming over multiplex companies as they may witness lower footfalls in cinemas," said Kaushlendra Singh Sengar, founder, Invest19.com.
He also thinks that any more panic selling in these stocks could ease out 10-15 percent further.
According to Karan Taurani, Vice President, Elara Capital, March was expected to be big but the spread of coronavirus in India may prove to be a dampener for the box office.
"Performance of Q4FY20 has been disappointing so far as no major movie has done well, except Tanhaji. Box Office collection for the month of January and February this year put together has declined 11 percent YoY (year-on-year) on the back of above," said Taurani.
March was expected to be big due to release of large films like Baaghi 3, Sooryavanshi which is slated to release on March 27 and Angrezi Medium which will hit theatres on 20.
"In case, the virus spreads rapidly in India, there will be a big negative impact on the performance in Q4," he added.
He added that if Hindi content pipeline for FY21 is taken into consideration then Q1 is estimated to be the biggest quarter as Hindi box office is slated to grow 65 percent YoY due to multiple big releases like 83 (April 10), Coolie No.1 (May 1), Radhe (May 22), Laxmi Bomb (May 22).
Hindi content contributes almost 65 percent of box office revenues for PVR, Inox, he added.
He explained that more cases of coronavirus in India will mean a big impact on box office business of Q1FY21. And this will eventually affect FY21 performance as a whole, which is slated to grow 13 percent YoY in nine months FY21, based on the present strong Hindi content pipeline visibility.
He fears that some of the large releases may also get postponed going ahead in case cinemas call for a closure in coming months.
"We will monitor the number of new cases closely to ascertain the exact impact on footfalls in cinemas," he added.
A footfall growth of 7 percent to 12 percent YoY is estimated in FY21.
"If the cinema halls were to shut for almost eight weeks and some large releases get postponed, it would result in an EBITDA (Earnings before interest, taxes, depreciation, and amortization) downgrade of almost 12 percent to 14 percent for Inox, PVR (only based on lower footfall and lower F&B/SPH (spend per head) revenue). The EBITDA downgrade could be sharper (15 percent to 17 percent) if the advertising revenue and other operating revenue were to be removed," said Taurani.
Hollywood ventures are also seeing new release dates in India.
Amid coronavirus fears, James Bond film No Time To Die has been postponed. Even in India, the film will not release on April 2 which was the initial release date. New date is yet to be announced.
Globally, Taurani pointed out that box office collection in Italy was down 25 percent YoY in the month of February.
In Italy, 2,706 active cases of coronavirus have been reported, according to latest updates.
He further said that Japan has postponed release of large movies due to the coronavirus outbreak."Most of the chains in Japan have stopped advance bookings and called for a temporary closure of over two weeks," he added.