Inox Leisure, PVR trade firm as cinema halls to operate at higher capacity

Share of multiplex operators PVR and Inox Leisure gained up to 4 per cent on the BSE on Thursday in an otherwise weak market after the government allowed cinema halls, which are operating at 50 per cent limit to occupancy, to operate at higher occupancy.

The Ministry of Home Affairs (MHA), on Wednesday, allowed cinema halls and theatres to operate with more people, and it will issue revised SoP for the same. The new guidelines regarding Covid-19 protocols will be effective from February 1 onwards.

Following the news, the stock of Inox Leisure was up 4 per cent at Rs 326, while PVR ticked up 3 per cent to Rs 1,523 on the BSE in intra-day trade. In comparison, the S&P BSE Sensex was down 1.2 per cent, or 589 points, at 46,820, at 12:30 pm.

In the past one month, PVR (up 16 per cent) and Inox Leisure (up 14 per cent) have outperformed the market as compared to 1 per cent decline in the benchmark index.

Meanwhile, PVR also launched a qualified institutional placement (QIP) offer on Wednesday, in order to raise funds. The floor price of Rs 1,495.93 per share, a 1.1 per cent premium to closing price of January 27. Issue price will be determined on February 1. The capital raised will be used for either organic/inorganic expansion, to reduce debt obligation or working capital requirements.

“PVR management is hopeful for government’s permission for higher occupancy and for financial relief. Potential equity capital raise (up to Rs 800 corre) will be used for deleveraging, preparing for any unexpected rise in cash burn and any inorganic opportunities. We are baking in a full recovery from FY22E, while we continue to highlight that, in the near term, consistent release of films holds the key to pull crowds back to cinemas,” analysts at Emkay Global Financial Services in stock update.

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