Chennai, NFAPost: Screen additions, higher moviegoer footfalls and increased consumer spending will drive up multiplex revenue 10-15% to Rs 7,300 crore in fiscal 2025.
That compares with 20-24% growth this fiscal following a slew of big-budget releases, especially Hindi films that attracted droves to cinema halls.
Rising revenue is also helping improve the operating margin of multiplex operators, which is already up 400 basis points (bps) this year and set for another 100 bps to ~15% next fiscal. But that number will still be lower than the pre-pandemic level of 18-20% given the competition from over-the-top (OTT) content.
Operating cash flow will be more than adequate to fund capital expenditure (capex) for new screens, which should keep balance sheets strong and bolster credit metrics.
A CRISIL Ratings analysis of three major multiplexes, accounting for more than 70% of sector revenue in India, indicates as much.
Operating performance improved last fiscal as moviegoers returned in big numbers to theatres after two pandemic-scarred years. Occupancy surged to 25% from 16% in fiscal 2022, but remained below the pre-pandemic, or fiscal 2020, level of 30-32% amid increased penetration of OTT. Hindi films, which form over half of the overall box office revenue, significantly underperformed regional ones.
CRISIL Ratings Director Naveen Vaidyanathan said this fiscal has been better in terms of quality, especially Hindi movies that leveraged the big-screen experience, leading to higher footfalls for multiplexes.
“Robust performance of several big-budget Hindi movies, such as Jawan, Gadar 2 and Animal, and healthy performance of regional films should drive occupancy 100 bps higher on-year to 26%. With movie producers aligning better with audience preferences and a stronger regional film pipeline, occupancies should remain at 26-28% next fiscal and over the medium term,” said CRISIL Ratings Director Naveen Vaidyanathan.
However, competition from OTT would keep occupancies below the pre-pandemic level. OTT continues to benefit from high-quality and diverse content available on-tap.
With moviegoers having the option to stream movies after the end of the 8-week exclusivity period for theatres, continued supply of high-quality movies focusing on the large-screen experience will be crucial to sustain and improve occupancy at multiplexes.
CRISIL Ratings team leader Shivaramakrishna Kolluri, said : “Interestingly, while footfalls are likely to remain below the pre-pandemic level this fiscal, multiplex revenue could hit an all-time high. This will be driven by addition of screens, rising movie ticket prices amid cost inflation and focus on premium formats, and increasing spend on refreshments following more offerings and menu revisions.”
