PVR Inox shares were trading in the red on Monday after the company said it would look to shut down a number of screens to shore up profits and reduce debt even as it looks to expand into the south.

What Happened: India’s largest multiplex chain plans to shut down 70 underperforming screens in the fiscal year 2025 as part of its strategy to enhance profitability. These closures are aimed at removing screens that have been a drag on the company's earnings.

The company said it will exit almost 60-70 screens that are non-performing and negatively impacting its profitability, according to the theatre chain’s latest annual report.

In addition to these closures, PVR Inox is looking to monetise non-core real estate assets in key locations such as Mumbai, Pune and Vadodara.

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Focus On South India: At the same time, the company plans to continue its expansion plans, looking to add 120 new screens in FY25. South India will be a major focus as PVR Inox sees high demand for films in the region but a relatively low number of multiplexes compared to other regions. The company estimates that around 40% of its new screens will be in South India.

In a shift towards a capital-light growth model, PVR Inox aims to reduce capital expenditure on new screen additions by 25%-30% this fiscal year. The company is also exploring the monetisation of its owned real estate as it works towards becoming a net-debt free entity in the future.

Major Challenge: Over the past year, PVR Inox opened 130 new screens and shut down 85 underperforming ones. The company acknowledged that the high number of closures is part of its efforts to optimise its portfolio following the merger of PVR and Inox.

As of FY24, PVR Inox reported a net debt of ₹1,294 crore, a reduction of ₹136.4 crore from the previous year. The company generated revenue of ₹6,203.7 crore but recorded a loss of ₹114.3 crore, marking the first full year of operations for the merged entity.

PVR Inox saw a 10% increase in ticket prices and an 11% rise in food and beverage spending per head in FY24. Looking ahead, the company expects ticket prices and F&B spending to grow in line with historical trends.

The multiplex giant also aims to restore pre-pandemic margins, acknowledging that current occupancies are still below pre-pandemic levels. To boost revenue, PVR Inox is focusing on increasing footfalls through fresh customer acquisition and retention strategies. The company is also working on cost efficiencies, including renegotiating rental contracts, closing underperforming screens and streamlining its organisational structure.

Price Action: PVR Inox’s share price was down 0.26% at ₹1,510.55 on Monday morning, giving up early gains near the start of trade.

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