How has Imminent Recovery for Multiplexes been Pushed to FY23 by Third Wave

The revenue in the December quarter is expected to be the highest since the onset of the pandemic but the same will drop in the last quarter of the fiscal
How has Imminent Recovery for Multiplexes been Pushed to FY23 by Third Wave

The revenue in the December quarter is expected to be the highest since the onset of the pandemic but the same may drop in the last quarter of the fiscal.

The ongoing third wave of the Covid pandemic is expected to push back the 'imminent recovery' for multiplex operators to the first quarter of next fiscal. It can be noted that in order to arrest the surge in new cases, many states have adopted measures including shutting down cinema halls if not imposing full lockdown.

The revenue in the December quarter is expected to be the highest since the onset of the pandemic but the same will drop in the last quarter of the fiscal, according to ICRA. 

Experts also believe that once the restrictions are removed, the recovery is expected to be much faster, it said, noting that there is a robust content line-up of releases waiting in the queue.

"The industry participants were pinning recovery hopes on the festive season in Q3 FY22 with the strong content pipeline, increased pace of vaccination, and relaxations in key markets like Maharashtra adding to the optimism," said Jay Sheth, Sector Head for Corporate Sector Ratings, ICRA. 

Sheth added that supported by higher occupancy of over 60 percent of pre-Covid levels, higher average ticket prices, and spending per head, the multiplex operators are expected to report their highest revenue since Q4 FY2020) and report operating profits.

READ MORE: How Third-wave will Push Revenue Recovery for Multiplexes by Five Months

"This is despite some restriction on occupancies in key states of Gujarat (60 percent cap) and Maharashtra (50 percent cap) and restrictions on consumption of food and beverages inside cinema halls (a high-margin segment) across a few key territories such as Maharashtra. Furthermore, as occupancy remained sub-optimal, the contribution from another high-margin revenue source viz. advertising income (comprising 10-11 percent of overall revenues) also remained low," Sheth further stated. 

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