Due to reduced seating capacity, ticket sales that generate around two-thirds of exhibitors’ total revenues are likely to see a decline of nearly 55%.

Multiplexes are expected to incur Ebitda (earnings before interest, tax, depreciation and amortisation) losses in the current financial year as adherence to social distancing norms will have a bearing on occupancy levels, according to a recent report by Crisil Ratings.

Analysts at the firm estimate occupancy rates to halve to nearly 15% in FY21, compared to about 30% in the previous two financial years.

Due to reduced seating capacity, ticket sales that generate around two-thirds of exhibitors’ total revenues are likely to see a decline of nearly 55%. Revenues from food and beverages (F&B) and advertisement will also be impacted.

“Their high operating leverage, in turn, would lead to a sharp fall in profitability and cause Ebitda-level losses this fiscal. That compares with average operating profit of 17%-19% seen through fiscals 2018-2020,” said senior director Sachin Gupta.

Crisil Ratings cited the virus as a “material threat” to multiplexes as fear of enclosed spaces will keep audiences away from the theatres for sometime even post lockdown. Occupancy levels are expected to normalise only in the next financial year, the firm said.

A mix of high fixed costs and lower occupancy after resumption of operations means that multiplexes will have to reset their cost structures. “Those with strong balance sheets and ability to raise funds will be better placed, but prolonged closure and lower occupancy will impair credit profiles,” said Nitesh Jain, director, Crisil Ratings.

Theatres were the first to halt operations — before the imposition of the countrywide lockdown starting March 25, after fresh cases of Coronavirus were detected in India in early March. Even though the government has allowed malls, religious places and restaurants to recommence services under phase one of unlock, there is yet no definite timeline for opening of theatres. Industry players and analysts expect theatres to open in the July-September quarter.

To get customers back to the theatres, Inox will launch private screenings once multiplexes reopen.