Third Covid wave to delay multiplex revenue collection by 5 months: Report
– World Affairs SRS
Crisil Ratings said the full revenue realization of multiplexes will be pushed back to the second half of the next financial year from the earlier quarter.
However, once restrictions are lifted, the pace of recovery is expected to accelerate – as seen after the second wave – and should limit further deterioration in credit profiles of multiplex operators with healthy balance sheets, it said.
Its director Nitesh Jain said that the temporary closure of operations in New Delhi/National Capital Region, Bihar, Haryana and restrictions in other major states like Maharashtra will push back new film releases.
Stating that some of the big-ticket films like ‘RRR’ and ‘Jersey’ have already been postponed indefinitely, Jain said in his original case, he expects the third wave to peak in February and the third wave in March. Assuming a bottom line by the end, that would mean releasing big ticket stuff to resume in the first quarter of fiscal 2023.
Occupancy doubled to 20 per cent in December 2021 from 10 per cent in September, indicating healthy demand, and could improve to over 25 per cent this quarter from 30 per cent pre-pandemic as several large- Ticketed films were about to release, it said.
Multiplex operators may increase occupancy despite a 10-15 per cent increase in average ticket prices from their pre-COVID levels in the last quarter, it said, adding that ‘Sooryavanshi’ and ‘Spider-Man: No Way Home’ Films like 200 collected Rs. crore each at the box office, which is equivalent to the collections made by big-ticket films in a normal year.
The rapid recovery despite the plethora of over-the-top (OTT) platforms demonstrates the relevance of multiplexes, and reinforces our view that OTT platforms are not a threat to multiplexes – the two can coexist – and That the current disruption is temporary, the rating agency said.
CRISIL, which accounts for half of the multiplex industry by revenue, said such operators expect a profit of Rs 40-60 crore in the third quarter of FY20, after a loss of Rs 625 crore in FY11 and Rs. 360 crores in Rs. The period April-September 2021.
There will be operating losses on account of third wave but healthy liquidity of Rs 880 crore by September 2021 will comfortably cover operating expenses and debt obligations for the next 4-6 months, it said.
The theater release will also boost revenue from the food and beverages (F&B) segment, which accounts for 25-30 per cent of the topline of multiplex operators, said Rakshit Kachal, associate director.
Downside risks to the industry, which need attention, include the sustainability of cost-control measures and the longer-term effects of the pandemic.
(Only the title and image of this report may have been reworked by Business Standard staff; the rest of the content is generated automatically from a syndicated feed.)
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