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Poor box-office collections are likely to lead to a weak performance for PVR Inox in Q4FY24. Lack of big budget movies in Bollywood and Hollywood, coupled with no sleeper hits, should result in sub-par occupancies in the quarter. While the box office collection of regional movies was steady, PVR Inox’s lower market share in the South is likely to lack any meaningful contribution. For Zee, nearterm pain is set to remain elevated, as the company embarks on a medium-term plan of accelerating revenue growth and driving margin improvement. Saregama’s music licensing revenue growth should remain impacted by the transition of select OTTA platforms to paid subscriptions, in our view, while release of two films should add to the Films and TV serial segment revenue.

Multiplex

We reckon PVR Inox would report a weak quarter, given no movie managing to cross the Rs2.5-billion mark in Q4. Only two Bollywood movies managed to breach the Rs1-billion barrier – Fighter and Shaitaan, while the Hollywood pipeline was weak owing to limited releases due to the recent writers strike. As regards regional films, three movies – Hanuman, Guntur Karaam and Manjummel Boys – managed to garner more than Rs1bn at the box office. We expect footfalls to decline 14% QoQ to 31.4mn – the lowest in FY24, given the lackluster movies performance. ATP should also sharply reduce, to Rs234 In Q4 from Rs271 in Q3, driven by poor movies performance coupled with promotional offers for several movies. SPH should decline slightly, to Rs128 in Q4 from Rs132 in Q3. We expect advertising revenue to fall 29% QoQ to Rs1bn.

Broadcaster

Zee’s quarterly performance is likely to remain muted in the aftermath of the merger breakdown, as the company is now focusing on enhancing its performance towards a targeted recovery in the medium term. Contribution from FMCG has been steady, with sectors like Auto and Financial Services also seeing some growth, while new-age sectors continue to curtail their spending. Zee5’s revenue growth should also be muted, as the company focuses on improving its margins. We estimate reported EBITDA margin to decline by 490bps QoQ to 5.3%, as content costs remain elevated along with additional costs related to ILT20 and severance payouts.

Music

Saregama’s music licensing rev. growth should continue being impacted by transition of select platforms to the paid subscription model in Q4. Also, Q4 is the 1st quarter when Pocket Aces will be consolidated for the entire quarter. Saregama is poised to benefit from the release of 2 movies this Qtr, leading to growth for the Films & TV Serial vertical.

Outlook

Near-term pipeline for PVR Inox remains weak, with only few big-budget Bollywood movies scheduled for release. The Hollywood pipeline continues to be impacted by the writers strike and should take another couple of quarters to normalize. After the merger breakdown, Zee aims to regain its lost glory, via targeting a sustainable revenue CAGR of 8-10% and EBITDA margin of 18-20% by FY26E, though the transition period can be painful. Also, Q1FY25 performance is likely to be impacted by the IPL, leading to diversion of ad spends. Regarding Saregama, the management aims to return to normalized growth in the music segment Q1FY25 onwards, after the impact of transition of select platforms to paid platforms gets factored in

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