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Multiplex stocks continue to edge higher as states ease lockdown; PVR, Inox rally for 3rd day

Multiplex stocks continue to edge higher as states ease lockdown; PVR, Inox rally for 3rd day

Multiplex stocks continue to edge higher as states ease lockdown; PVR, Inox rally for 3rd day
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By Mousumi Paul  May 21, 2020 4:04:25 PM IST (Updated)

After few states like Kerala, West Bengal and Karnataka announced relaxation of lockdown restrictions, the entertainment industry received renewed hopes of opening up of multiplexes. PVR and Inox Leisure have been surging from past 3 trading sessions, over 30 percent. The former stock jumped 19 percent while the latter surged 33 percent for the third straight day.

After states like Kerala, West Bengal, and Karnataka announced some relaxations in lockdown restrictions, the entertainment industry is somewhat hopeful of opening up multiplexes. The positive expectation has sent both multiplex competitors- PVR and Inox Leisure on a recovery run.

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Furthermore, the Multiplex Association of India has also submitted a full-proof plan for cinemas to the Information & Broadcasting Ministry and various state governments, said film trade analyst and critic Taran Adarsh, in a tweet, on Wednesday.
The safety and precaution plans that were submitted include deep cleaning, sanitisation of strategic location, washing hands, and social distancing.
Both the stocks have been surging from the past three trading sessions, over 30 percent. PVR jumped 19 percent while Inox Leisure surged 33 percent for the third straight day.
At closing on Thursday, the shares of PVR ended nearly 2.26 percent higher to Rs 875 while Inox surged 9.77 percent to Rs 215.70 per share, on the NSE.
However, both the stocks began to slip from early March 2020 to as much as 63 percent as multiplexes were avoided and subsequently shut down.
Most analysts believe that the extended lockdown restrictions will impact the performance of the multiplexes during the first half of FY21.
ICICI Securities in its report slashed PVR’s operating profit estimates by 64 percent and 13.9 percent for FY21 and FY22, respectively. For Inox, operating profit estimates are cut by 67 percent and 8.2 percent for FY21 and FY22, respectively.
Inox Leisure is virtually a debt-free company, while PVR’s liquidity is expected to be supported by healthy cash balances of Rs 300 crore compared to its gross debt of Rs 1,300 crore. Absolute repayment obligations for PVR are Rs 425 crore over the next two fiscals.
Sanjiv Bhasin, director, IIFL Securities said that he is extremely bearish on these stocks. The idea of entertainment has changed with the advent of OTT and the COVID-19 outbreak is likely to further change the way we consume entertainment,” he said.
He feels that even after COVID-19, people may not quickly go to theatres.
Till now, there are only 3 states that have declared to ease the lockdown. Kerala Chief Minister Pinarayi Vijayan on Monday announced ease of restrictions for shopping complexes and saloons in the state.
For West Bengal, Chief Minister Mamata Banerjee said hawkers, salon and parlour owners will be allowed to reopen the shops from May 27.
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