PVR INOX plans monetisation of real estate assets
PVR INOX, a leading multiplex operator, has revealed its plans to close 70 non-performing screens in FY25 and monetize its non-core real estate assets in prime locations such as Mumbai, Pune, and Vadodara, according to its latest annual report. The company aims to achieve profitable growth while adding 120 new screens in the coming year.
Transitioning to a capital-light growth model
To reduce capital expenditure on new screens, PVR INOX will partner with developers to jointly invest in screen expansion through a franchise-owned and company-operated (FOCO) model. By adopting this approach, the company expects to decrease capex by 25 to 30 percent in the current fiscal year.
Additionally, PVR INOX is evaluating the potential monetization of its owned real estate assets, highlighting its goal of becoming a “net-debt free” company in the foreseeable future. While addressing shareholders, Managing Director Ajay Kumar Bijli and Executive Director Sanjeev Kumar emphasized the company’s redefined growth strategy.
Expanding in underrepresented markets
PVR INOX aims to speed up its expansion in underrepresented markets, particularly in South India, due to the high demand for films in this region and the comparatively low number of multiplexes. Approximately 40 percent of the company’s total screen additions are expected to come from South India.
In the past year, PVR INOX opened 130 new screens across 25 cinemas while also closing 85 underperforming screens. This rationalization of its portfolio aims to optimize the company’s operations and enhance profitability.
Financials and merger integration
Despite the challenges posed by the pandemic, PVR INOX recorded a revenue of Rs 6,203.7 crore in FY24, along with a loss of Rs 114.3 crore. The merger of PVR and INOX enabled the company to achieve a 10 percent growth in ticket prices and 11 percent growth in food and beverage spending per head. Going forward, the company aims to restore pre-pandemic operating margins, enhance return on capital, and drive free cash flow generation.
Moreover, in terms of merger integration, PVR INOX successfully achieved 80-90 percent of the targeted synergies in 2023-24. These synergies were primarily driven by the integration of PVR and INOX and contribute to the company’s overall growth.
Real estate monetization and future growth
By monetizing its non-core real estate assets in prime locations such as Mumbai, Pune, and Vadodara, PVR INOX aims to optimize its resources and focus on its core business operations. This strategy aligns with its objective of becoming a debt-free company in the future.
While implementing a capital-light growth model, the company plans to continue its expansion in underrepresented markets, especially in South India with a high demand for films. By adopting innovative customer acquisition and retention strategies, renegotiating rental contracts, streamlining operations, and controlling overhead costs, PVR INOX aims to drive revenue growth, boost footfalls, and increase profitability.
Looking ahead
PVR INOX’s plans to monetize its non-core real estate assets and optimize its operations demonstrate its proactive approach to adapt to changing market dynamics. By redefining its growth strategy and focusing on underrepresented markets, the company aims to sustain its industry-leading position and drive profitability. Through the implementation of a capital-light growth model and strategic partnerships with developers, PVR INOX aims to achieve its growth objectives while reducing capital expenditure and debt.
As the entertainment and leisure industry continues to evolve, PVR INOX’s endeavors to enhance its financial performance through real estate monetization and expansion in high-demand markets showcase its commitment to delivering value to its stakeholders and providing an unparalleled cinema experience to its customers.
