Multiplex chain operator PVR Ltd reported a consolidated net loss of Rs 74.61 crore YoY in Q4 as compared to a profit of Rs 46.75 crore as film exhibition business has emerged among the worst hit sectors under the lockdown. PVR's revenues dropped to Rs 645.13 crore for the quarter (from Rs 837.63 crore) as the company started closing its screens from March 11 onwards. It also had to take in on account of spoilage.

For FY20, PVR's net profit was at Rs 26.85 crore as compared to Rs 189.40 crore in FY19 while its revenue in FY20 was Rs 3,414.44 crore as against Rs 3,085.56 crore in FY19. The company acquired SPI Cinemas during the year.

The company is focusing on liquidity preservation during the current trying times. It is expecting to reduce 70-75% in fixed costs during the period the cinemas are closed. The company also put all CAPEX plans on hold and took salary cut across the board to achieve the objective. It has also availed moratorium facility on debt and interest payment to preserve the liquidity. Further, the board has approved a right issue of up to Rs 300 crore. The company expects these steps to be sufficient to sail through the current period.

According to trade experts, the cinema business is expected to remain affected till July. Prolonged shutdown of operations could lead to nil accrual and weakening of the financial risk profile. Sizeable,debt-funded capex or acquisitions is also weakening the capital structure, with debt to EBITDA ratio sustaining above 2x

Final Thoughts:

PVR is the largest multiplex operator in India, with a strong brand equity. It had 845 screens and presence in over 176 locations across 71 cities and has 33% more screens than the second largest player.

Addition of screens from SPI Cinemas Pvt Ltd (SPI) has led to significant improvement in PVR's market position in South India and has helped diversify content, as cinema from the region contributes more than 40% to the overall box office collections. Any capex plans to add screens have been put on hold temporarily given the current uncertainties around the spread of Covid-19. However, once the situation normalises, earlier plans to add 80-100 screens in FY21 over the medium term should help PVR maintain its leadership position.

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