Leading multiplex operator PVR INOX has announced plans to monetise non-core real estate assets in prime locations such as Mumbai, Pune, and Vadodara, as it transitions to a more capital-light growth strategy. According to its latest annual report, the company will close 60-70 underperforming screens in FY25 while adding 120 new screens, focusing on profitable growth.
Key Strategic Moves
To reduce capital expenditure on new screen additions by 25-30%, PVR INOX will partner with developers, shifting to a Franchise-Owned, Company-Operated (FOCO) model. This approach will allow the company to share capex for new screens while still operating them. PVR INOX is also exploring the monetisation of owned real estate assets to become a "net-debt free" company in the foreseeable future.
Expansion in South India
As part of its long-term strategy, PVR INOX aims to focus on expanding its presence in South India, which has a high demand for films but fewer multiplexes compared to other regions. Around 40% of its new screen additions will be in this underpenetrated market.
Profit-Driven Growth
In FY24, PVR INOX opened 130 new screens but also closed 85 underperforming ones as part of its ongoing portfolio optimization efforts. This rationalisation aligns with its goal to enhance profitability by exiting non-performing assets. Despite reduced capital expenditure, the company remains committed to growth, planning to open 110-120 new screens in FY25.
Financial Performance
In FY24, PVR INOX reported revenue of Rs 6,203.7 crore and a loss of Rs 114.3 crore, marking the first full year of operations for the merged entity. The company reduced its net debt by Rs 136.4 crore to Rs 1,294 crore.
During the year, PVR INOX saw ticket prices grow by 10% and food and beverage (F&B) spending per head rise by 11%, driven largely by synergies from the PVR-INOX merger. Looking ahead, the company expects more moderate growth in ticket prices and F&B spending, in line with historical trends.
Future Focus
PVR INOX aims to restore pre-pandemic operating margins by enhancing return on capital and generating free cash flow. The company is also focusing on driving customer footfalls through innovative acquisition and retention strategies while reducing costs through renegotiated rental contracts and leaner organisational structures.
With a renewed focus on profitability and expansion in high-demand regions, PVR INOX is positioning itself for sustained growth while maintaining a firm commitment to operational efficiency.