Omicron Effect: PVR, Inox shares decline after Delhi government shuts cinema halls, theatres

Amid the rising cases of the Covid-19 new variant Omicron, the business of cinema industry, one of the worst affected sectors during the pandemic, has nosedived yet again. In another blow to the industry, the Delhi government's decision to shut cinema halls and theatres would further add to the woes of the industry, which has been struggling to come to the terms of pre-Covid era.  

The Delhi government on Tuesday ordered the closure of cinema halls, multiplexes, and theme parks under the Graded Response Action Plan (GRAP) after the Covid-19 positivity rate remained above 0.5%.

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Delhi Chief Minister Arvind Kejriwal, who held a high-level meeting on Tuesday, said that as the COVID-19 positivity rate has been above 0.5% for the past few days, the government is enforcing Level-I (Yellow alert) of the Graded Response Action Plan.

The shares of PVR and Inox Leisure were both trading lower by more than 2 per cent after the Delhi government decided to close cinema halls and multiplexes on Tuesday.  

At 10:45 am, shares of PVR Ltd corrected by Rs 31.05 or 2.41% on the BSE to trade at Rs 1254.95 per share. Similarly, Inox stocks traded lower by 2.12 % or Rs 7.45 to Rs 344.10 around the same time.  

VK Vijaykumar, Chief Investment Strategist at Geojit Financial Services said Delhi government's decision to shut down theatres and multiplexes will certainly hit the revenues of these businesses. "The greater concern is whether other governments too will follow the suit as the Omicron variant spreads. The hit to the revenues of multiplexes is reflected in the reaction of stock prices. Both PVR and Inox leisure are around 30 percent off from their November highs," said VK Vijaykumar.   

He said there is a view gaining ground that the Omicron variant is less virulent, though fast-spreading, and therefore, might be indicating the imminent end of the pandemic. "If this holds true, then the closure of theatres and multiplexes may be short-lived and stock prices will bounce back," he added.

Earlier, Shahid Kapoor-starrer Jersey, which was slated to hit the theatres on December 31, release date was postponed due to the rising cases of Omicron.  

Another big budget movie '83' too failed to make expected collection at the box office as Ranveer Singh-led movie collection worldwide stood at just Rs 95 crore on the Day 5 of the release.  

Looking at the current box office collection and rising Omicron cases, SS Rajamouli's magnus opus ‘RRR’, which is scheduled to hit theatres on January 7, may also be postponed. Akshay Kumar’s ‘Prithviraj’ is also scheduled for January 21.

PVR Ltd, the market leader in terms of screen count in India, currently operates 846 screens in 176 cinemas in 71 cities in India and Sri Lanka with an aggregate seating capacity of approximately 1.82 lakhs seats. It has 30% screens each in Noth India and West India, while maximum 34% theatres are in South India, as per Zee Business TV report.  

Inox claims to have 667 screens in 158 multiplexes across the country. Inox has 40% of the screen space in West India, 24% in North India and 22% in South India, said the report.