Multiplex operators are expected to bear the brunt of rising COVID-19 cases. State governments have started announcing closure/reducing occupancy of cinema halls, while big-ticket releases RRR and Jersey have been postponed.

Haryana and Delhi have announced the complete closure of cinema halls, while other states like Gujarat, UP, Karnataka and cities like Mumbai have resorted to 50 per cent occupancy in multiplexes amid night curfew. These states contribute nearly 65 per cent of Hindi Box Office revenue.

Going ahead it is expected that medium budget films may announce OTT releases, while large content films may not come before March/ April. Representations are being made by industry for the opening of multiplexes.

Key releases for the month of January include Prabhas starrer Radheshyam, Akshay Kumar’s Prtihviraj, Attack and Hollywood biggies like The King’s Man and Morbius. Almost Rs 1,200 crore of revenue is expected from the film releases in January. Over the last 3-4 months, business of around Rs 400 crore was done due to the release of big-ticket movies like Pushpa and 83.

Cash burn for the chains would go up substantially even if cinemas are open without large-scale content as it’s a high operating leverage business as stated by a brokerage note by Elara Capital. The brokerage also added that restrictions in operations will be negative for exhibitors like PVR and Inox Leisure, and it is expected that they will correct between 10-15 percent from current market price levels.

Since March lows, shares of Inox Leisure and PVR have risen between 42-46 per cent.