PVR INOX merger: What it brings to the industry and investors

45 shares, 73 points
PVR INOX merger

INOX Leisure and PVR Ltd have announced their merger on March 27, Sunday just before the end of the financial year 2021. The combined venture will be named PVR INOX Ltd but the branding of the existing screens to be continued as INOX and PVR and all the screens that will be added in the near future will be branded as PVR INOX.

After the completion of the deal, the merged company will hold more than 50% of the total multiplexes in India and will hold the box office revenue of more than 40%. Due to the pandemic, lost a lot of money and disrupted the market very badly but this deal has the potential to trend up the market share.


According to the FICCI-EY media and entertainment report, the total number of screens in India has fallen 1% from 2019 due to the pandemic also around 1000 screens that were opened last year in the meantime may not reopen again.

The new venture of PVR INOX Ltd will have 1546 multiplex screens across 341 properties across 109 cities among 3000 odd ones present in the country but if we include singles screens as well the share comes down to around 22% only. According to Elara capital the market share of PVR and INOX Leisure is very low when we talk about the regional movies 6% and 3% respectively its due to the fact that the regional content depends on the single screens more and gives around 60% of the total box office revenue.

The disruption caused by the pandemic made the revenue of both the multiplex giants hit rock bottom and made it hard to sustain in the market.


According to data collected more than 50% of revenue comes from the top 7 cities of India – Mumbai, Delhi, Kolkata, Bengaluru, Chennai, Pune, Hyderabad – but surprisingly the no. of screens presents there is only around 1950 or 28% of the total no. of screens listed in online booking apps. PVR and INOX Leisure have combined screens of more than 51% in these 7 cities which gives them better negotiating power with the film producers.

Merging into one entity will enable PVR-INOX to grasp better market share in terms of advertising and will definitely put the entity to earn additional revenue of 25%. Currently, INOX charges less for the advertising compared to PVR once the merge is done, they can match it. The dominant position can do the upside, the prices of the food and tickets can be surged to match up the pricing of both.

Indian market is hugely underserved so the joint entity will help in the process of screen expansion in the Tier II & III cities. From an industry point of view with the expansion, the amount of investment coming will surge as well paving the way for the rapid growth of the film industry.


When the negotiation will start for 1500 screens in place of 800 not only the ad revenue will increase but also the power of negotiation will increase. Brands like Panasonic, NEC, and Barco provide the projector in the movie halls and sound system brands like Dolby come to the game but when in the future new technology comes the entity will have an upper hand in time of bargain. The same will happen even in the case of the food agency, security agency, and agencies providing the carpeting and acoustics.


After the merge, the shareholders of INOX will receive 3 shares of PVR for every share of INOX they hold. The net debt of INOX Leisure is zero whereas the net debt of the PVR is RS 857 crore so the deal will favor the INOX investors. This was evident in the stock market as well, on March 28 INOX shares gained 20% price and PVR gained 10% becoming the top gainers for the day.

According to Elara capital after the share swap ratio, INOX is getting a valuation of RS 6400 crore whereas PVR is trading at Rs 11000 crore valuation.

As for promoter holdings, INOX promoters will hold a stake of 16.7% whereas PVR promoters will hold a stake of 10.6% in the merged company.

Many experts believe this whole operation ie. PVR INOX merger will take more than 6 months to complete as it needs many approvals from the Competition Commission of India (CCI), Securities and Exchange Board of India (SEBI), and National Company Law Tribunal (NCLT), stock exchanges and shareholders.


According to reports both the companies will add 1000 each screen in the next 5-7 years and for the recent future PVR will open around 120 new screens whereas INOX will do near about 100 screens which were delayed or held down due to the pandemic and each one them will not be in the vicinity of one another.

The merged entity is also looking forward to expanding its presence in the smaller cities in the near future. According to Siddharth Jain, Director of INOX Leisure to achieve the full potential of the multiplex in India a CAPEX of Rs 4000 crore is needed. He also added that this merge will benefit from the food and beverage and location selection done by the PVR.


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45 shares, 73 points
Ayan Mondal