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Merged entity PVR INOX to focus on F&B, screen expansion and ad revenue, says management

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PVR’s turnaround has been spectacular and recovery appears to be faster

Merged entity PVR INOX is looking at combined benefit in the range of Rs 200-225 crore over the next two years, the management said during a conference call.

As a combined entity, the company is focusing on food and beverage, upcoming content, screen expansion, and cinema advertising among others for growth.

PVR-Inox and other multiplexes to add 1,000 more screens in next 2 years

F&B business got a big boost during the Covid-hit years when the two cinema chains worked on new menus, priced food competitively and tied up with food aggregators like Swiggy and Zomato. Continuing their focus on F&B, the merged entity expects more contribution from this segment to spend per head (SPH), said an Elara Capital note.

The PVR INOX management said that every cinema will target home delivery of F&B to contribute 5 percent of the SPH. The company will add more variety F&B offerings and will also convert ticket counters into F&B outlets as most of the ticket buying is online nowadays.

The other big focus of the merged entity is screen expansion with more screens coming up in the South market. Company’s management said that multiplex penetration in South India is low hence, the exhibitor will scale up its presence there. The Elara Capital note said that around 44 percent of the new screens of PVR INOX will be opened in Southern India.

PVR and INOX plan to invest Rs 500 crore to launch more screens during FY24

According to Elara Capital, focus on regional genre with screen expansion in the South will help the merged entity gain market share from the current box office share of 12 to 15 percent in the South market.

One of the laggards for PVR and Inox has been advertising revenue, which is yet to be back to pre-Covid levels. The management said the coming together of PVR and Inox will open up the ad market. The company is waiting for couple of movies to do well back-to-back and said that lot of advertisers are coming back and showing a lot of interest.

PVR Inox is also looking at increasing the theatrical window for the non-Hindi Indian films. A theatrical window is the is the time a film waits to be streamed on a OTT platform after its theatrical release.

While Hindi films are back to the pre-Covid window of 8 weeks for a film to stream on a streaming platform post its theatrical release, for regional films it varies between 6 to 8 weeks. However, Elara Capital in its note said that they don’t foresee a change in the theatrical window as streaming platforms now contribute 30-35 percent of revenue for a producer and have become an important revenue stream.

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