As the
Omicron phase of
Covid-19 eases in India, film exhibitors are starting to see the fastest recovery following the lifting of curbs after a wave, with a strong content line-up and states lifting restrictions.
Theatres in most markets are now allowed to operate at 100 percent capacity. Maharashtra announced guidelines on March 2 for 14 districts including Mumbai, allowing restaurants, shopping centres and cinema halls to function at full capacity from March 4. Delhi, too, has allowed full capacity for cinemas.
Karan Taurani, senior vice-president at Elara Capital, said 85-90 percent of the country’s box office is now fully open.
Rajender Singh Jyala,
INOX Leisure’s chief programming officer, said this was the “fastest recovery” following the lifting of curbs after a wave.
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“In the first unlock there was hardly any recovery and similar was the case post the second Covid wave. But after the third Covid wave, in the first week of reopening we got footfalls and are seeing good recovery,” Jyala added.
He said Alia Bhatt-starrer Gangubai Kathiawadi and Telugu film Bheemla Nayak that released on February 25 and Tamil film Valimai that hit theatres a day earlier are drawing houseful shows in many markets.
Gangubai Kathiawadi is performing the best in Maharashtra, Jyala added. The film collected Rs 55 crore in five days, with Rs 10-12 crore from INOX alone.
“This weekend we will see better business because both Gangubai Kathiawadi and Pawankhind are doing very well in Maharashtra,” he said. “Maharashtra allowing full capacity will have a huge positive impact, especially on fourth quarter earnings.”
Gautam Dutta, CEO, PVR Limited said that Gangubai Kathiawadi is the first big Bollywood blockbuster after the omicron wave. "We expect the movie to hold good with the women’s day March 8 approaching with Alia Bhatt as the female protagonist."
Dutta further noted noted that admissions and occupancies are gradually returning to pre-covid levels in specific regions as seating capacity and operating restrictions are getting lifted across various states.
"March sustains the momentum generated in February with some great movies. This includes Jhund starring Amitabh Bachchan, Batman, Radhey Shyam, Akshay Kumar’s Bachchan Pandey, SS Rajamouli’s RRR, Oscar nominated King Richard, Bhool Bhulaiyaa2 and The Lost City starring Sandra Sandra Bullock and Brad Pitt," he added.
Rahul Puri, MD of Mukta A2 Cinemas, a chain by Mukta Arts, the company founded by veteran filmmaker Subhash Ghai, noted that occupancy is slowly returning to normal, but that won’t be enough to make a positive impact in the fourth quarter.
Impact on Q4 results
“The content line-up for March is excellent but bear in mind we lost most of January and some of February to the Omicron wave,” Puri said.
Jyala agreed that while March will be one of the best months, it alone cannot offset the quarter’s losses due to the Omicron wave, which peaked with over 345,000 daily Covid cases on January 21.
Taurani said March will not be as compelling as December, which was the strongest period, with exhibition revenue reaching close to pre-pandemic levels. He noted that the first half of the fourth quarter was a write-off.
“The recovery rate will slow down as compared to the last quarter (Q3) because in Q3 the recovery was closer to 60 percent of pre-Covid levels. This time around, there will be 30 percent recovery in Q4 and that is because there is no film surpassing Rs 200 crore,” Taurani said.
He said three films – Pushpa, Sooryavanshi and Spiderman: No Way Home surpassed the Rs 200 crore mark at the box office in the third quarter.
“This quarter it could be Bachchan Pandey (starring Akshay Kumar) that could do Rs 200 crore business and Gangubai Kathiawadi could be touching Rs 100 crore. So, quarter-on-quarter, it will be negative, but going ahead, April-May-June quarter will be the strongest quarter,” Taurani said.
Nitin Menon, cofounder of NV Capital, said restrictions were lifted only after January, because of which February was muted for the first 15 days.
“It looks like Q4 will not be as strong as Q3,” he said. He added that cinema stocks are subdued because of the recent screen closures and capacity caps.
PVR shares opened at Rs 1,700 on the BSE on March 3, off a 52-week high of Rs 1,838 on November 8. INOX Leisure opened at Rs 417.95, off its peak of Rs 466.10 on November 8.
Strong business in FY23
While Q4 of FY22 will remain impacted, analysts are confident about the theatre business in FY23.
“The first half of FY23 will be the strongest historically because the content pipeline is so heavy and this is factoring in only large films. So, if there are surprises from mid-size films like Gangubai Kathiawadi, then we could see stronger growth, higher than historic numbers. For PVR and INOX, 30 percent growth is expected in Q1 of FY23 from Q1 of FY20,” Taurani said.
Menon added that FY23 could be a blockbuster year for Indian cinema with the kind of releases expected in both Hindi and other languages.
“Towards the end of March, RRR is going to be released and that should send the cash registers ringing,” he said.
Taurani expects Hindi films to surpass pre-Covid levels in the June quarter.
“In the last 18 months, the trends have favoured regional content but there will be a reversal and Hindi is close to 65-70 percent of the box office. We have close to about eight (Hindi) films in Q1 that will surpass Rs 100 crore business and this will be the highest and would reach closer to the quarter when Baahubali 2: The Conclusion (one of the biggest Indian films) had released in 2017 on April 28,” he said.
Likhita Chepa, a senior research analyst at CapitalVia Global Research, expects footfalls to surpass pre-Covid levels in the next two quarters.
“The outlook for both PVR and INOX appears to be improving on the back of expectations of increasing footfalls and pricing power. Also, both the firms have strong balance sheets and their prospects appear to be constructive,” she said.
