Imminent recovery for multiplexes pushed to FY23 by third wave: Report

The ongoing third wave of the COVID pandemic will push back the "imminent recovery" for multiplex operators to first quarter of next fiscal, a domestic rating agency said on Friday. It can be noted that in order to arrest the surge in new cases, many states have adopted measures including shutting down of cinema halls if not imposing full lockdown.

Icra said the revenues in the December quarter are expected to be the highest since the onset of the pandemic but the same will drop in the last quarter of the fiscal.

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 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," the agency's sector head for corporate sector ratings Jay Sheth said.

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

"This is despite some restriction on occupancies in key states of Gujarat (60 per cent cap) and Maharashtra (50 per cent 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, contribution from another high-margin revenue source viz. advertising income (comprising 10-11 per cent of overall revenues) also remained low," he said.