InvestorQ : Why are multiplex stocks down so sharply in the last few months? In fact, PVR and INOX are at their 52-week low?
sara Kunju made post

Why are multiplex stocks down so sharply in the last few months? In fact, PVR and INOX are at their 52-week low?

Answer
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4 months ago


You are absolutely correct that multiplex stocks have taken it on their chin ever since the lockdown started. Two largest players; PVR and INOX corrected 60% since the lockdown and are at their 52-week lows. Firstly, it is the lockdown that is hurting. In the last 2 months, all the multiplexes have been shut due to COVID-19. There is no visibility on when multiplexes will reopen. Even after they open, it is expected that footfalls may be thin due to worries over social mingling and pandemic fears. Each day their multiplexes idle, PVR and INOX lose crores but fixed costs like salaries, maintenance, license fees and rentals continue. But there is a larger business challenge called OTT. Over the top (OTT) refers to platforms like Amazon Prime, Netflix and others that bring high quality content right into your drawing rooms. The lockdown has given a boost to OTT demand. There are now seven films being released directly on Amazon Prime. If more producers adopt this model, then multiplexes may lose out on the lucrative first week sales. That could hit profits badly in coming quarters.