MUMBAI: Thanks to the
Maharashtra government clarifying that there was no restriction on moviegoers carrying their own food inside theatres, the stock price of
PVR crashed over 13% in Friday’s market to close at Rs 1,214 on the BSE, losing Rs 183 in one session.
The stock of
Inox Leisure, another multiplex operator, also nosedived as a reaction to the news and closed 5.4% or nearly Rs 14 lower at Rs 239.
The state government is also in the process of implementing the central law which doesn’t allow dual MRP on products. This decision would hit the revenues of multiplexes. Some brokerages estimate that on an average multiplexes earn about 25% of their revenues from food & beverage (F&B) sales and have gross margins of around 75%.
In April this year, the
Bombay high court had directed the state to frame guidelines on F&B pricing inside multiplexes after observing that the prices were ‘exorbitant’.
Data on the BSE showed PVR had spent nearly Rs 160 crore on buying F&Bs during fiscal 2018, which were sold in its theatres across India. Its consolidated net profit for the year was Rs 124 crore. According to Batlivala & Karani, during the January-March quarter of FY18, the average price of a ticket in a PVR multiplex was Rs 209, while a person watching a movie in a PVR theatre spent Rs 87, on an average on buying F&Bs. This figure is expected to fall from the current quarter since the government notification on F&B will be effective from August 1.
At least three leading brokerages have ‘buy’ recommendation on the PVR stock. HSBC has a target price of Rs 1,662 while for Batlivala & Karani, it is Rs 1,700. Motilal Oswal Securities has a target of Rs 1,760.
Stock price of PVR crashed over 13% in Friday’s market to close at Rs 1,214 on the BSE, losing Rs 183 in one session. 
