Hits 'N' Misses
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Media - HITS ‘N’ MISSES Q4FY18 : Content starts delivering, to spur ad growth India Equity Research | Media Q4FY18 extended the spectacular performance of Q3FY18, primarily led by Padmaavat, one of the biggest grossers (INR3bn plus collection) of the year. Sonu ki Titu ki Sweety sprung a pleasant surprise as it surpassed expectations and collected INR1bn. Raid and Padman were the other movies that had a decent run at the box office. Among Hollywood releases, Black Panther met with strong response. In the base quarter Q4FY17, Raees (INR1bn plus), Kaabil (INR1bn plus) and Badrinath ki Dulhania had done well. We estimate LTL footfalls at multiplexes to rise to low single digits in Q4FY18 along with explosive growth in Ad revenues across multiplexes. We would closely monitor the Maharashtra government’s F&B policy for the multiplexes. \ Content finally clicking - aids footfalls and high ad growth We estimate PVR’s and Inox’s LTL footfalls to rise 2-3% YoY, respectively, in Q4FY18 due to good content. The quarter saw the release of many blockbuster movies like Padmaavat, Sonu ki Titu ki Sweety, Raid and Padman. Anticipation of good performance drives ad growth of multiplexes; blockbuster releases during the quarter would spur ad growth. We estimate PVR’s ad growth to be 27% plus YoY, with Inox likely to report 50% YoY ad growth on low base. Screen additions to accelerate in FY19; rentals remain high PVR added 49 screens in FY18 and has guided to add 90 plus screens in FY19. Inox added 26 screens in FY18 and is set to add 70 plus screens in FY19. We estimate PVR’s ATP to increase 7% YoY, while Inox’s ATP growth is likely to increase 10% YoY in Q4FY18. Other key developments: (a) PVR added 25 screens in the quarter, taking total additions to 49 for the year; (b) revival of alternate content exhibition vertical by PVR; and (c) rental costs of multiplexes shot up due to intense competition. Outlook: Star studded fare in Q1FY19 to give FY19 a good start Q1FY19 too has extended strong Q4FY18 run and has started on a good note with Baaghi 2 getting good response (INR1bn plus collection). Further, star studded movies like October (Varun Dhawan), Kaala (Rajinikanth), Dragon (Ranbir Kapoor) and Race 3 Abneesh Roy (Salman Khan) are also anticipated to do well. Also, strong line-up of English movies +91 22 6620 3141 [email protected] like Avengers: Infinity War, Deadpool2, Jurassic World: Fallen Kingdom and The Incredibles 2 will aid box office collections. Pertinently, the base (Q1FY18) was strong Monit Vyas +91 22 6623 3463 with releases like Baahubali 2, Half Girlfriend, Hindi Medium, Sachin - A Billion [email protected] Dreams and Tubelight. A recent court order asking the Maharashtra government to frame an F&B policy for the multiplexes poses a threat to the revenue of multiplexes. Alok Shah +91 22 6620 3040 We would closely monitor the developments in this case. [email protected] April 9, 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: Movies released in Q4FY17 Table 2: Movies released in Q4FY18 Total Total Movies (INR mn) Day 1 Day 2 Day 3 Collections Movies (INR mn) Day 1 Day 2 Day 3 Collections Badrinath Ki Dulhania 123 148 161 1,154 Padmaavat 240 320 270 3,014 Jolly LLB 2 132 173 200 1,169 Padman 103 137 161 817 Raees 204 263 131 1,375 Sonu ki Titu ki Sweety 64 93 108 1,038 Kaabil 104 187 98 1,038 Raid 100 139 171 723 Phillauri 40 52 60 267 Pari 44 55 55 271 Commando 2 51 44 62 251 Hate Story 4 38 42 47 200 Rangoon 51 48 47 207 1921 16 21 28 159 The Ghazi Attack 17 23 28 190 Aiyaary 34 41 44 182 Total 5,652 Total 6,405 Source: boxofficecollection, Edelweiss research Fig. 1: Race3 slated to release on June 15, 2018 Fig. 2: Kaala to release on April 27, 2018 Source: Industry, Edelweiss research Fig. 3: Baaghi 2 turned in good show in the beginning of Q1FY19 Fig 4: Padmaavat was the blockbuster of Q4FY18 Source: Industry, Edelweiss research Edelweiss Securities Limited 2 Sector Update Table 3: Movies line up in Q1FY19 Release Date Movie Title Language Cast April 6-Apr-18 Missing Hindi Manoj Bajpaee, Tabu 6-Apr-18 Blackmail Hindi Irfan Khan, Kirti Kulhari 6-Apr-18 Subedar Joginder Singh Hindi / Punjabi Gippy Grewal, Aditi Sharma 6-Apr-18 Peter Rabbit (2D) English Margot Robbie, Rose Bryne, Elizabeth Debecki 6-Apr-18 A Quiet Place English Emily Blunt, John Krasinski 6-Apr-18 Midnight Sun English Bella Thorne, Patrick Schwarzenegger, Rob Riggle 13-Apr-18 October Hindi Varun Dhawan 13-Apr-18 Mercury Hindi Prabhu Deva 13-Apr-18 Odiyan Malayalam Mohanlal 13-Apr-18 Rampage (3D Imax) English Dwayne Johnson, Malin Akerman, Jeffery Dean Morgan 20-Apr-18 Naanu Ki Jaanu Hindi Abhay Deol, Patralekha 20-Apr-18 Beyond The Clouds Hindi Ishaan Khatter, Malavika Mohannan 20-Apr-18 Omerta Hindi Rajkumar Rao 20-Apr-18 You Were Never Really Here English Joaquin Phoenix, Ekaterina Samsonov, Alessandro Nivola 20-Apr-18 Daas Dev Hindi Richa Chadda, Aditi Rao Hydari, Rahul Bhatt 20-Apr-18 Blumhouse'S Truth Or Dare English Violett Beane, Tyler Posey, Lucy Hale 27-Apr-18 Kala Tamil Rajini Kanth, Humma Qureshi 27-Apr-18 Bharat Ane Nenu Telugu Mahesh Babu, Kaira Advani 27-Apr-18 Bazaar Hindi Saif Ali Khan, Rohan Mehra 27-Apr-18 Avengers Infinity War Part 1 (3D Imax) English Tom Holland, Scarlett Johansson, Brie Larson, Robert Drowney Jr, Chris Evans May 4-May-18 Parmanu - The Story Of Pokhran Hindi John Abraham, Boman Irani, Diana Panty 4-May-18 102 Not Out English Amitabh Bachchan, Rishi Kapoor 11-May-18 Raazi English Alia Bhatt, Vicky Kaushal 11-May-18 Fry Day Hindi Govinda, Varun Sharma 11-May-18 3 Dev English Kay Kay Mennon, Karan Singh Grover, Kunaal Roy Kapur 18-May-18 Deadpool 2 Hindi Ryan Reynolds, Brianna Hildibrand, Tj Miller 18-May-18 When Obama Loved Osama English Mausam Sharma, Swati Bakshi 18-May-18 Khajur Pe Atke English Vinay Pathak, Manoj Pahwa 18-May-18 Book Club Hindi Diane Keaton, Jane Fonda, Candice Bergen 25-May-18 Harshvardhan Kapoor - Vikramaditya Motwane Next English Harshwardhan Kapoor 25-May-18 Gali Guliyan Hindi Manoj Bajpai, Ranvie Shorey, Neeraj Kabi 25-May-18 Solo Star Wars Anthology Film (3D Imax) English Emilie Clark, Woody Harrelson, Thandie Newton June 1-Jun-18 Veere Di Wedding Hindi Kareena Kapoor, Sonam Kapoor, Swara Bhaskar, Shikha Talsania 1-Jun-18 Karwan Hindi Irrfan Khan, Dulger Salmanmithila Palkar 1-Jun-18 Adrift English Shailene Woodley, Sam Claflin, Luna Campbell 1-Jun-18 Love Simon English Josh Duhamel, Jennifer Garner, Nick Robinson 8-Jun-18 Jurassic World Fallen Kingdom (3D Imax) English Chris Pratt, Bryce Dallas Howard 8-Jun-18 Hereditary English Toni Collette, Gabriel Byrne, Alex Wolff 15-Jun-18 Race 3 Hindi Salman Khan, Jackqueline Fernandes, Vicky Kaushal, Daisy Shah, Bobby Deol 15-Jun-18 The Incredibles 2 (3D Imax) English Holly Hunter, Samuel L Jackson 15-Jun-18 Ocean'S Eight English Richard Armitage, Olivia Munn, Matt Damon, Caate Blanchett 22-Jun-18 Tag English Anabelle Wallis, Jon Ham, Leslie Bibb, Jeremy Reener, Ilsa Fisher 29-Jun-18 Soorma Hindi Diljit Dosajh, Tapsee Punnu, Angad Bedi 29-Jun-18 Sicario 2 Soldado English Josh Brolin, Benicio Del Toro, Catherine Keener 29-Jun-18 Sanjay Dutt Biopic Hindi Ranbir Kapoor Source: Industry, Edelweiss research 3 Edelweiss Securities Limited Media Table 4: Quarterly comparison - Inox vs. PVR PVR Inox Q1FY17 Q2FY17 Q3FY17 Q4FY17 Q1FY18 Q2FY18 Q3FY18 Q1FY17 Q2FY17 Q3FY17 Q4FY17 Q1FY18 Q2FY18 Q3FY18 Net revenue 5,622 5,542 5,309 4,826 6,366 5,554 5,573 3,369 2,974 2,980 2,885 3,874 3,113 3,259 EBITDA 1,065 930 799 467 1,120 905 1,003 621 272 317 251 759 444 463 PAT 428 291 235 (0.40) 445 247 292 250 16 37 3 321 117 132 ATP (INR) 195 202 199 190 214 204 212 174 183 182 174 193 186 199 Net box office (INR mn) 3,080 2,809 2,721 2,646 3,433 2,993 2,931 2,135 1,794 1,764 1,788 2,392 1,856 1,879 Ad revenues (INR mn) 515 624 784 527 674 688 867 213 238 302 209 334 321 403 F&B revenue (INR mn) 1,475 1,396 1,349 1,285 1,646 1,423 1,438 807 702 676 656 882 671 731 Footfalls (mn) 20.7 18.5 17.9 18.2 21.0 18.7 17.4 15.5 12.7 12.5 13.0 15.8 12.8 12.1 No. of screens 551 557 569 579 587 600 612 425 440 446 472 476 481 488 SPH 79 84 82 78 87 91 92 61 65 63 59 65 65 70 Zone wise screen break up North 191 191 191 194 197 200 203 86 94 94 94 99 99 102 East 18 18 18 22 22 22 22 69 72 72 72 72 72 72 West 217 223 235 238 238 248 245 170 174 180 206 206 211 215 South 125 125 125 125 130 130 142 100 100 100 100 99 99 99 Total screens 551 557 569 579 587 600 612 425 440 446 472 476 481 488 Key metrics Ad revenues per screen 0.9 1.1 1.4 0.9 1.1 1.1 1.4 0.50 0.54 0.68 0.44 0.70 0.67 0.83 EBITDA margin (ex ad revenues) 10.8 6.2 0.4 (1.4) 7.8 4.5 2.9 12.9 1.2 0.6 1.6 12.0 4.4 2.1 EBITDA margin 18.9 16.8 15.1 9.7 17.6 16.3 18.0 18.4 9.1 10.6 8.7 19.6 14.3 14.2 ATP/SPH ratio 2.5 2.4 2.4 2.4 2.5 2.2 2.3 2.9 2.8 2.9 2.9 3.0 2.9 2.8 Footfalls per screen ('000) 37.6 33.2 31.5 31.4 35.8 31.2 28.4 36.6 28.9 28.0 27.5 33.2 26.5 24.9 YoY growth ATP 6.6 8.0 (0.5) 4.4 9.7 1.0 6.5 5.5 8.3 1.7 4.2 10.9 1.6 9.3 Net box office 12.3 2.3 8.3 23.4 11.5 6.6 7.7 10.5 (8.6) (5.3) 15.1 12.0 3.5 6.5 Ad revenues 12.7 35.3 13.1 16.0 30.9 10.2 10.6 2.8 11.2 2.4 7.7 56.8 34.9 33.4 F&B revenue 13.7 16.8 18.8 23.9 11.6 1.9 6.6 9.2 1.4 3.2 15.1 9.3 (4.4) 8.1 Footfalls 8.9 (1.6) 8.5 19.0 1.4 1.1 (2.8) 7.2 (12.4) (3.1) 13.0 1.7 0.4 (3.0) Source: Edelweiss research Here is a relevant extract of the order by the Bombay High Court on food & beverage (F&B) pricing.