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After an exceptional performance in Q2FY24, box office collections moderated in Q3, with a strong showing by select movies in the second half of the quarter. A few big-budget Bollywood movies did well in the quarter, ably supported by select regional movies, while Hollywood fell short of the mark this quarter. For broadcasters, growth is likely to be impacted by the Cricket World Cup in the first half of the quarter which resulted in diversion of advertising spends. However, the festive season should aid some sequential growth. Subscription revenue should stay stable.

Multiplex

After a disappointing start to the quarter, performance of select movies post midNovember resulted in decent box-office collections. Animal emerged as the second highest-grossing movie ever. Other Bollywood movies that collected in excess of Rs1bn include Dunki and Tiger 3. Among regional movies, Salaar: Part 1- Ceasefire and Leo were the standout box-office performers. No Hollywood movie managed to break the Rs1-billion barrier.

We expect footfalls to decline 22% QoQ to 37.5mn on account of a higher base in Q2 and an unfavorable mix with no Hollywood movies firing this quarter. ATP should moderate slightly to Rs270, after a record Rs276 in Q2FY24. SPH should also moderate marginally to Rs134, from Rs136 in Q2. A slightly more consistent performance of movies and the festive season should also aid advertising revenues, which are expected to increase 19% QoQ to Rs1.4bn. We estimate the EBITDA (pre-IndAS) to decline 53% QoQ due to lower revenue.

Broadcaster

The ICC World Cup should impact growth in the initial half of the quarter. FMCG companies continue to ramp up their ad spending, with sectors like Auto and Financial Services also seeing some growth, although their overall contribution is minimal. Subscription revenues are likely to remain steady. For Zee, other sales and services should see a sharp sequential drop on account of the higher base in Q2FY24. Zee’s market share should also be negatively impacted by the major cricket event in the first half of the quarter. Its margins are likely to decline on a sequential basis owing to lower revenues.

Music

Saregama’s revenue growth should be aided by seasonality, with the festive season driving Carvaan growth and higher YouTube advertising revenue. However, headwinds from the transition of select platforms to a paid subscription model should hit music licensing revenue. This quarter will also see the impact of the consolidation of ‘Pocket Aces’ for roughly half of the quarter. Margins are only expected to drop marginally QoQ.

Outlook

For PVR Inox, the pipeline of movies does not have too many big-budget Bollywood movies lined up in the near term. The Hollywood pipeline is also likely to be compressed by the recent strike, which lasted nearly four months and can have an impact on nearterm box-office collections. For Zee, the merger remains critical and we expect some progress on this front in the next couple of months.

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