Shares of multiplex operators fell on Friday after media reports said that Maharashtra would allow moviegoers to carry their food to theatres. The share price of PVR fell by 13.10% and ended the session at Rs 1,214.20. The price of Inox’s shares dropped 5.43% to close at Rs 238.70. The stock of production house Eros International fell by 3.78% and closed at Rs 114.45. Media reports said multiplexes in Maharashtra will not be allowed to charge more than the maximum retail price of the products from August 1 and there will be no ban on taking eatables from outside.
Media reports citing state food minister Ravindra Chavan said the government is working on a resolution that is expected to come out in six weeks. Last month Bombay High Court termed the prices of food items sold at multiplexes in Maharashtra as exorbitant. The high court’s observations came during the hearing of a public interest lawsuit, challenging the prohibition on carrying outside food items inside the movie theatres and multiplexes.
“Maharashtra is a huge market for PVR and Inox. I don’t know how this is going to take shape. I think a correction of another 8 to 10% can also be there,” A K Prabhakar, head of Research at IDBI Capital said “A third of their EBIDTA comes from food and beverages. The theatre profit is not sufficient for anybody to run these huge complexes then they have to hike ticket prices significantly from these levels. There is a lot of uncertainty which has crept in. Once Maharashtra does it, every other state will follow,” Prabhakar added.