PVR Inox Cuts Down On Capex By 25%, 70 Screens To Get Axed

PVR Inox is an Indian multiplex chain based in Mumbai. It is formed by the merger of PVR Cinemas with INOX  Leisure multiplex. The company has reported muted Q4 earnings yesterday and it has decided to cut down its Capex by 25% in FY25.

PVR Inox to bring down FY25 Capex

Nitin Sood, CFO of PVR Inox group has said that the company is aiming to reduce its FY25 Capital expenditure to Rs.450  crores, representing a decline of 25% from Rs.620 crore in FY24. He added that, “Over the last 12-18 months, we have repositioned a lot of our existing contracts and have got significant developer contributions to fund part of the growth. We have also renegotiated some of our rentals in most of the new locations that have opened up. We eventually want to evolve into a capex-light model and reduce our capex by 30-50%.”

In FY25, out of the planned 120 new screens, around 15-20 will adopt the franchise-owned company-operated (FOCO) model. This means developers will primarily invest, with PVR Inox will be contributing around 20% of the capital.

Managing Director in Q4 earnings call

“We will be transitioning to a capital-light growth model for new screen additions. We will be selective in adding new cinemas and prioritise expansion efforts in South India. We will monetise Inox real estate inherited from the merger and plan to use the proceeds to reduce debt. Currently, the screen portfolio stands at 1,748 screens,” said Ajay Bijli, managing director of PVR Inox Ltd, in the Q4 FY24 earnings call.

PVR Inox saw a 14% increase in its rent expenses, rising to Rs.1,192.8 crore in FY24 from Rs.1,042.6 crore in FY23. Common Area Maintenance expenses rose by 14.89% to Rs.329.6 crore in the last financial year from Rs. 286.9 crore in FY23. The company’s net debt has improved by Rs. 136.4 crore in FY24 to Rs.1,294 crore from Rs.1,430.4 crore in FY23.

Conclusion: PVR Inox aims to reduce its FY25 Capital Expenditure by 25% to Rs.450 crores which will follow a strategic renegotiation of contracts. Additionally, around 15-20 of the 120 screens planned for FY25 will be operating under the franchise-owned company-operated (FOCO) model that will surround a significant investment from the developer. The stock of PVR Inox currently trades at Rs.1,276.70 a piece down by -1.5% from its previous day’s closing price.

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