Hits 'N' Misses
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Media - HITS ‘N’ MISSES Q2FY19: Strong content sets cash registers ringing India Equity Research | Media Q2FY19 clocked a strong box office performance over Q2FY18, primarily led by Sanju (~INR3.5bn collection), which became the highest grosser YTD. Stree sprung a positive surprise as it surpassed expectations with ~INR1bn collection. Satyameva Jayate and Soorma also had a decent run. Gold on the other hand, did not get rave reviews, but still managed to garner decent collection. Among Hollywood movies, Hotel Transylvania 3: Summer Vacation and Mission Impossible 6: Fallout received good response. We estimate multiplexes’ footfall growth to remain in double digits in Q3FY19 as well, riding a strong line up — Andhadhun, Thugs of Hindostan, ZERO, Venom, Aquaman and Simmba. We will closely monitor: (1) impact of F&B price cuts on volumes; and (2) change in Supreme \ Court’s stance on multiplexes’ F&B policy. Strong content boosts box office collections Sanju, Gold and Stree contributed ~70% to the overall domestic box office collections in Q2FY19, driving significant growth over Q2FY18. We estimate PVR’s LTL footfall (excl. SPI Cinemas) to increase by ~14% YoY in Q2FY19 led by strong box office content. We peg the company’s ad growth at ~9% YoY along with a ~20% YoY increase in F&B revenue for the quarter. PVR gaining heft with SPI buy, deal with Paytm and Bookmyshow PVR had a good run in Q2FY19 in terms of business expansion. With the acquisition of SPI Cinemas, PVR’s size has jumped 2x its nearest competitor in India, taking its total screen count to 700 plus. The buy gives it access to a wider audience in South India. Hence, we estimate improvement in ad revenue apart from the ordinary increase in ticket sales revenue for FY19. Moreover, to improve distribution, PVR has inked agreements with Paytm and BookmyShow.com (BMS) to use their online platforms for its ticket sales. With Inox Leisure (INOX) failing to close the deal with BMS, PVR will gain significantly in the ensuing quarter, which has an exciting movie line up. Outlook: Strong movie line up in Q3FY19; watch out for LBT We expect Q3FY19 to attract stronger footfalls on account of star-studded movies such as Thugs of Hindostan, ZERO, Simmba and The Accidental Prime Minister. Hollywood movies such as Venom, Spider Man: Into the Spider Verse, The Aquaman and Fantastic Abneesh Roy Beasts and Where To Find Them 2 are also expected to be crowd pullers. On the F&B +91 22 6620 3141 [email protected] front, legal bodies have provided comfort to multiplexes by ruling in their favour on the issue. With multiplexes cutting F&B prices, though we expect a marginal decline in SPH, Prateek Barsagade we envisage increase in volumes to keep F&B revenue buoyant. We estimate ad +91 22 4063 5407 [email protected] revenue to be healthy in Q3FY19 supported by the upcoming festive season. With the municipal bodies of Bhopal and Indore introducing local body tax on movie theatres, multiplex chains to be concerned about the contagion effects. October 09, 2018 Edelweiss Research is also available1 on www.edelresearch.com, Edelweiss Securities Limited Bloomberg EDEL <GO>, Thomson First Call, Reuters and Factset. Media Table 1: Domestic BO collections in Q2FY18 Table 2: Domestic BO collections in Q2FY19 Total Total Movies (INR mn) Day 1 Day 2 Day 3 Collections Movies (INR mn) Day 1 Day 2 Day 3 Collections Toilet : Ek Prem Katha 131 171 213 1,342 Sanju* 348 386 467 3,483 Baadshaho 126 156 151 784 Stree 68 109 136 1,218 Jab Harry Met Sejal 153 150 155 643 Gold 253 100 100 1,087 Jagga Jasoos 86 115 131 560 Satyameva Jayate 205 79 92 908 Mubarakan 52 74 104 556 Dhadak 87 110 139 742 Munna Michael 67 63 87 535 Soorma 32 51 212 324 Shubh Mangal Saavdhan 27 56 62 425 Batti Gul Meter Chalu 68 80 108 320 Bareilly Ki Barfi 24 40 52 344 Manmarziyaan 34 41 44 246 Total 5,188 Total 8,326 Source: boxofficecollection.in, Edelweiss research *Day1, 2 collections are for June29 and 30 2018 respectively Fig. 1: Sanju was the biggest blockbuster in Q2FY19 Fig. 2: Badhai Ho to release on October 19, 2018 Source: Industry, Edelweiss research Fig. 3: Aquaman slated to release on December 21, 2018 Fig. 4: ZERO to release on December 21, 2018 Source: Industry, Edelweiss research Edelweiss Securities Limited 2 Sector Update Table 3: Movies line up in Q3FY19 Release Date Movie Language Distributor Cast October 2-Oct-18 MEREY PYAREY PRIME MINISTER HINDI 5-Oct-18 STAR IS BORN (IMAX) ENGLISH WARNER BROS. 5-Oct-18 VENOM (IMAX) ENGLISH SONY PICTURES 5-Oct-18 LUPT HINDI 5-Oct-18 LOVERATRI HINDI SALMAN KHAN FILMS AYUSH SHARMA 5-Oct-18 ANDHADHUN HINDI VIACOM 18 TABU, AYUSHMANN KHURANA 12-Oct-18 FIRST MAN (IMAX) ENGLISH UNIVERSAL PICTURES 12-Oct-18 HELICOPTER EELA HINDI AJAY DEVGN FILMS KAJOL 12-Oct-18 JALEBI HINDI 12-Oct-18 TUMBBAD HINDI EROS INTERNATIONAL SOHUM SHAH, MOHD SAMAD, ANITA DATE, JYOTI MALSHE 12-Oct-18 FRYDAY HINDI PVR PICTURES GOVINDA, VARUN SHARMA 13-Oct-18 KAAGAZ KI KASHTI HINDI PVR LIVE 19-Oct-18 BHAIAJI SUPERHITTT HINDI 19-Oct-18 NAMASTEY ENGLAND HINDI VIPUL SHAH PARINEETI CHOPRA, ARJUN KAPOOR 19-Oct-18 BADHAAI HO HINDI A A FILMS SANYA MALHOTRA, AYUSHMANN KHURANA 26-Oct-18 GOOSEBUMPS 2 : HAUNTED HALLOWEEN ENGLISH SONY PICTURES 26-Oct-18 HALLOWEEN ENGLISH UNIVERSAL PICTURES 26-Oct-18 LIFE ITSELF ENGLISH SONY PICTURES 26-Oct-18 MARUDHAR EXPRESS HINDI 26-Oct-18 5 WEDDINGS HINDI NARGIS FAKHRI, RAJKUMMAR RAO November 2-Nov-18 THE NUTCRACKER AND FOUR REALMS ENGLISH DISNEY 8-Nov-18 THUGS OF HINDOSTAN HINDI YASHRAJ 9-Nov-18 THE GRINCH ENGLISH UNIVERSAL PICTURES 16-Nov-18 FANTASTIC BEASTS AND WHERE TO FIND THEM 2 (3D / IMAX 3D / 4DX) ENGLISH WARNER BROS. 23-Nov-18 THE GIRL IN THE SPIDER'S WEB ENGLISH SONY PICTURES 23-Nov-18 RALPH BREAKS THE INTERNET: WRECK-IT RALPH 2 (3D / IMAX 3D) ENGLISH DISNEY ALAN TUDYK, JAMES CORDEN, JOHN C. REILLY 23-Nov-18 SECOND ACT ENGLISH PVR PICTURES 23-Nov-18 MARD KO DARD NAHI HOTA HINDI RSVP 30-Nov-18 CREED 2 ENGLISH WARNER BROS. 30-Nov-18 BRIGHT BURN ENGLISH SONY PICTURES December 7-Dec-18 THE FRONT RUNNER ENGLISH SONY PICTURES 7-Dec-18 TOTAL DHAMAAL HINDI FOX STAR STUDIOS MADHURI DIXIT, ANIL KAPOOR 14-Dec-18 SPIDER-MAN: INTO THE SPIDER VERSE 3D ENGLISH SONY PICTURES 14-Dec-18 MORTAL ENGINES ENGLISH UNIVERSAL PICTURES 21-Dec-18 BUMBLEBEE ENGLISH VIACOM 18 21-Dec-18 ALITA: BATTLE ANGEL (IMAX / 4DX) ENGLISH FOX STAR STUDIOS 21-Dec-18 ZERO HINDI EROS INTERNATIONAL SHAHRUKH KHAN, KATRINA KAIF, ANUSHKA SHARMA 21-Dec-18 THE ACCIDENTAL PRIME MINISTER HINDI 25-Dec-18 MARY POPPINS RETURNS ENGLISH DISNEY 28-Dec-18 THE AQUAMAN (3D / IMAX 3D / 4DX) ENGLISH WARNER BROS. 28-Dec-18 SIMMBA HINDI PHANTOM FILMS RANVEER SINGH, SARA ALI KHAN Source: Industry, Edelweiss research 3 Edelweiss Securities Limited Media Table 4: Quarterly comparison - PVR vs INOX PVR INOX Q1FY17 Q2FY17 Q3FY17 Q4FY17 Q1FY18 Q2FY18 Q3FY18 Q4FY18 Q1FY19 Q1FY17 Q2FY17 Q3FY17 Q4FY17 Q1FY18 Q2FY18 Q3FY18 Q4FY18 Q1FY19 Net revenue 5,622 5,542 5,309 4,826 6,366 5,554 5,573 5,849 6,963 3,369 2,974 2,980 2,885 3,874 3,113 3,259 3,236 4,149 EBITDA 1,065 930 799 467 1,120 905 1,015 944 1,372 621 272 317 251 759 444 463 439 835 PAT 428 291 235 15 445 259 289 262 522 250 16 37 3 321 117 132 577 370 ATP (INR) 195 202 199 190 214 204 212 209 217 174 183 182 174 193 186 199 193 199 Net box office (INR mn) 3,080 2,809 2,721 2,646 3,433 2,993 2,931 3,124 3,849 2,135 1,794 1,764 1,788 2,392 1,856 1,879 1,895 2,419 Ad revenues (INR mn) 515 624 784 527 674 688 867 720 718 213 238 302 209 334 321 403 332 400 F&B revenue (INR mn) 1,475 1,396 1,349 1,285 1,646 1,423 1,438 1,571 2,027 807 702 676 656 882 671 731 777 1,114 Footfalls (mn) 20.7 18.5 17.9 18.2 21.0 18.7 17.4 19.0 22.7 15.5 12.7 12.5 13.0 15.8 12.8 12.1 12.6 15.6 No. of screens 551 557 569 579 587 600 612 625 634 425 440 446 472 476 481 488 492 512 SPH 79 84 82 78 87 91 92 87 94 61 65 63 59 65 65 70 67 76 Zone wise screen break up North 191 191 191 194 197 200 203 203 203 86 94 94 94 99 99 102 102 109 East 18 18 18 22 22 22 22 22 22 69 72 72 72 72 72 72 72 76 West 217 223 235 238 238 248 245 245 245 170 174 180 206 206 211 215 219 223 South 125 125 125 125 130 130 142 155 164 100 100 100 100 99 99 99 99 104 Total screens 551 557 569 579 587 600 612 625 634 425 440 446 472 476 481 488 492 512 Key metrics Ad revenues per screen 0.9 1.1 1.4 0.9 1.1 1.1 1.4 1.2 1.1 0.50 0.54 0.68 0.44 0.70 0.67 0.83 0.67 0.78 EBITDA margin (ex ad revenue 10.8 6.2 0.4 (1.4) 7.8 4.5 3.2 4.4 10.5 12.9 1.2 0.6 1.6 12.0 4.4 2.1 3.7 11.6 EBITDA margin 18.9 16.8 15.1 9.7 17.6 16.3 18.2 16.1 19.7 18.4 9.1 10.6 8.7 19.6 14.3 14.2 13.6 20.1 ATP/SPH ratio 2.5 2.4 2.4 2.4 2.5 2.2 2.3 2.4 2.3 2.9 2.8 2.9 2.9 3.0 2.9 2.8 2.9 2.6 Footfalls per screen ('000) 37.6 33.2 31.5 31.4 35.8 31.2 28.4 30.4 35.8 36.6 28.9 28.0 27.5 33.2 26.5 24.9 25.7 30.5 YoY growth ATP 6.6 8.0 (0.5) 4.4 9.7 1.0 6.5 10.0 1.4 5.5 8.3 9.0 4.2 10.9 1.6 9.3 10.9 3.1 Net box office 12.3 2.3 8.3 23.4 11.5 6.6 7.7 18.1 12.1 10.5 (8.6) 13.5 15.1 12.0 3.5 6.5 6.0 1.1 Ad revenues 12.7 35.3 13.1 16.0 30.9 10.2 10.6 36.5 6.5 2.8 11.2 55.7 7.7 56.8 34.9 33.4 58.9 19.8 F&B revenue 13.7 16.8 18.8 23.9 11.6 1.9 6.6 22.3 23.2 9.2 1.4 18.6 15.1 9.3 (4.4) 8.1 18.4 26.3 Footfalls 8.9 (1.6) 8.5 19.0 1.4 1.1 (2.8) 4.4 8.1 7.2 (12.4) 8.7 13.0 1.7 0.4 (3.0) (2.8) (1.1) Source: Edelweiss research Table 5: PVR Q2FY19: Result Preview Q2FY19E Q2FY18 YoY (%) Q1FY19 QoQ (%) Revenue 6,690 5,554 20.5 6,963 (3.9) EBITDA 1,097 905 21.2 1,372 (20.0) Reported Profit 310 259 19.7 522 (40.6) Other income 20 42 43 Tax 168 140 283 EBITDA margin (%) 16.4 16.3 19.7 Source: Edelweiss research; Note: Numbers for Q2FY19E are inclusive of SPI Cinemas PVR had a strong quarter with the release of box office revenue generators like Sanju, Dhadak, Gold and Stree; other movies in the line-up also garnered good revenue.