PVR, Inox Leisure shares rally up to 18% on reopening of cinemas from Oct 15 under Unlock 5.0

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October 01, 2020 11:47 AM

Cinema and leisure stocks were in focus today after the Ministry of Home Affairs issued new guidelines for opening up cinema halls, theatres and multiplexes with effect from October 15, 2020, with a 50 per cent capacity

PVR, Inox leisure, unlock 5.0Maharashtra government has allowed cinema halls, multiplexes and drama theaters to operate with 50 per cent of seating capacity

Cinema and leisure stocks were in focus today after the Ministry of Home Affairs issued new guidelines for opening up cinema halls, theatres and multiplexes with effect from October 15, 2020, with a 50 per cent capacity. PVR shares rallied 15 per cent to Rs 1,395 apiece, while Inox Leisure shares soared 17.63 per cent to 318.20 apiece in Thursday’s trade. In comparison, S&P BSE Sensex was trading 546 points or 1.43 per cent higher at 38,614 in late morning deals. However, cinema halls, theatres and multiplexes will have to strictly follow standard operating procedures (SOP) issued by the I&B Ministry.

According to the analysts at Anand Rathi Financial Services, the occupancy level allowed by the government is a major factor in deciding if large-budget movies will be soon released. Another crucial factor is which other competing movies will be released. “Discussions are on-going about a particular film being released on all screens, post-reopening, against the earlier practice of many films being released on different screens at the same time,” it added.

Media and Entertainment sector to take 9-12 months to return to normal

Among the three majors, Disney, Netflix and Amazon, it is not possible to buy all content produced. Cinema still accounts for 60-65% of revenues. For certain films, producers would reckon that they are getting decent assured returns compared to a theatre release. “But the exhibition sector, as a whole, is suffering losses as films may not be released in theatres soon,” the brokerage firm added. After re-opening, the sector will take 9-12 months to return to normal. “After theatres open, we probably need to see larger films released for longer time-spans,” it said. It is not that after two weeks another film is released. A new pattern will be seen in exhibitions of films.

Cinemas/ theatres/ multiplexes can open with up to 50% of their seating capacity. SOP for this will be issued by the Ministry of Information & Broadcasting, the central government said. While Entertainment parks and similar places have been allowed to open. The SOP will be issued by the Ministry of Health and Family Welfare (MoHFW). Social, academic, sports, entertainment, cultural, religious, political functions and other congregations have already been permitted with a ceiling of 100 persons, outside COVID19 containment zones only.

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