Daybreak - Why PVR Inox wants to run its cinemas like hotels

Episode Date: November 18, 2025

India’s largest cineplex chain, PVR INOX, has pulled off a major financial reversal, posting a ₹100 crore profit this quarter, a drastic recovery after bleeding nearly ₹12 crore last year. Over 40 million people showed up—but occupancy ratios are still struggling to cross 30%.To fix this, PVR INOX is expanding into new, non-metro markets like Gangtok and Raipur. But there's a major twist: the company is no longer footing the bill for expansion.Taking a page from hospitality giants like Marriott, PVR INOX is embracing an asset-light franchise model. Partners will now bankroll everything from projectors to seating, while PVR INOX manages the brand and operations. We explore this strategic shift—how it hedges risk, frees up capital, and whether betting on multiplexes in the age of OTT is a "Hail Mary" move.Tune in.Daybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.

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PVR Inox, India's largest Cineplex chain, has pulled off something of a plot twist. Last year, the company was bleeding nearly $12,000,000 in the same quarter. Now, they've officially turned the corner, posting a profit of more than $100 crore rupees. So what changed? Well, it helped that more than 40 million people chose PVR seats over their living room couches. That's a 15% increase from last year's numbers.

But here's the catch. Occupancy ratios still sit below the 25 to 30% range. That's quite a big dip from the 35% peak the chain once saw, right before the pandemic changed everything. Occupancy ratios, by the way, is the percentage of seats that are actually filled by moviegoers compared to the total number of seats available. Now, to fix this occupancy ratio problem, PVR Inox is stepping into new markets. It opened its first theatre in Gang Talks Sikkim this October. It also launched screens in non-metro cities like Raipur and Jabalpur.

That takes its total screen count to over 1,700, including 9 in Sri Lanka. And here comes another twist. Increasingly, PVR Inox isn't the one footing the bill for these. new theatres. It's taking a page from hospitality giants like Marriott and Hyat. These chains grew by letting franchisees own the property while they manage the brand and operations. Marriott, for instance, operates hotels in 140 plus countries, but owns only 1% of them. So with this new model, while franchisee partners bankroll the screens, PVR Inox can serve the popcorn and run the show. In some cases, real estate developers will go on the theatre.

Right now, five of the almost 50 screens added in FY26 work under this co-development model. The goal? A 50-50 split between company-owned theatres and these asset light ventures. The Kent reporter Akriti Bala spoke to Gora Sharma, the chief financial officer of PVA-Yanox. He told her that by opening screens in Tier 2 and Tier 3 cities with partners, they can hedge the risks that come with entering a new market.

The company knows that audiences today are happy watching movies at home. After all, Netflix and Prime Video are just a click away. So PVR Anox's new bet on movies may at best be a hail merry. Welcome to Daybreak, a business podcast from the Ken. I'm your host, Rachel Virgis, and every day, my co-host, Nektha Sharma and I will bring you one new story that is worth understanding and worth your time. Today is Wednesday the 19th of November. PVR Inox rolled out a low-cost model towards the end of FY24.

The plan was simple. Shift all expenses related to building theatres to franchisee partners. Everything from projectors and seating to flooring would be funded by the partner, not PVR. Take the new Gang Talk Theatre. Its franchisee, West Point Infra, pays PVR about 10 to 15% of its revenue as a franchise and management fee while still keeping ownership of the property. For both sides, this reduces the existential risk that began after the pandemic. An industry executive told us that before 2020, mall developers would actually compete to

sign cinema chains years before the mall even opened. In fact, demand was so high that mall developers picked the highest rent bid from among the exhibitors. But soon, the game flipped. Post-COVID, the footfall season. fell, fixed cost rows, and exhibitors wanted fewer screens, not more. They soon also began renegotiating long-term rental contracts, many of which were typically around 15 years long. And this wasn't just in India. Hollywood giants like AMC and Cineworld were also having a really

tough time. For PVR Inox, rents alone ate up nearly 20% of the revenue. Meanwhile, the company had sunk more than 2,400 crores into new projects between FY20 and FY24. This was based on pre-pandemic expectations. But after COVID, occupancies dipped and key costs like rentals went up, putting pressure on the margins.

Gaurav Sharma, PVR's CFO, who we mentioned earlier, said that this depleted the return on the capital they had already employed. Even more loan owners had a lot to lose if the Cineplex is pulled out. Think about it. Theatre spaces are custom built with high ceilings and very specific infrastructure requirements.

These spaces don't really translate to other use cases like, say, a retail store. A mall owner from Delhi told us that this was when PVR started studying hospitality models closely. Now today, it's also pursuing co-development deals with real estate partners. For instance, this year, PVR and DLF, you know the real estate giant, partner to open a light cost directors' theatre in Noida. In these arrangements, PVR will handle screens, sound, projection and food and beverages. The partner then will fund 40 to 80% of the investment, things like real estate, flooring, air conditioning, etc.

They would also usually be the owners of the mall as well. Sharma told us that this would free up cash for PVR, which would then allow it to expand into newer markets and manage the capital more. efficiently. Let me put this in perspective for you. A typical screen earlier cost the company at least 3.5 crore rupees. Under the low cost model, that spend drops almost by a crore. It's the same idea that makes hotel chains work. While the brand pulls in customers, the partner can take care of the capital. As CFO Goroff Sharma said it, we don't want to put in our capital. We want to sweat our brand instead. But there's one major difference between who's the

hotels and cinemas. Hotels often run at 80% occupancy. Theaters, on the other hand, struggle to cross 30%. More on that in the next segment. PVR Inox believes that cinema is still the cheapest form of out-of-home entertainment, and the only way to reach more people is to scale up. Sharma told us that even though India produces the most films in the world,

it has fewer than 10,000 screens. In comparison, the US has over 4.4.5. 40,000 and China has 90,000. So while the company sees opportunity, it also has to be cautious with its finances. In the first half of FY26, revenue grew by almost 20%. And while average ticket prices also rose to 260 rupees, long-term growth had slowed. Between FY20 and FY25, revenue grew at a rate of about 10% annually. This is far below the almost 20% rate in the 5 years before COVID, which was after the INOX merger. PVR has tried multiple avenues to increase its revenue.

First, it merged with Inox, which was then the second largest chain in India to increase its footprint and to cut costs. Then it boosted food and beverage sales, increasing per head spend from a little less than 100 rupees to more than 130 rupees in 5. years. Now this is their latest move, reducing ownership costs. Having franchises and co-developers shoulder risks that PBR once used to carry a loan. But this plan isn't without its critiques. A former executive at Ticketing Platform Book My Show said that a low-cost model may work in smaller cities, where rents are low and demand is steadier. That's because investors in a metro

wouldn't be satisfied with the unit economics of this plan. An analyst from Bastion Research, a Sebi-registered research analysis firm, explained why. They said investors would expect at least a 15% return, which is hard to achieve when occupancy ratios remain below 30%. Ankyt Canodia, the founder of Bangalore-based Zenaysh, a Sebi-registered investment advisory, also shared his take. He said that the model can work only where demand already exists. but it looks like people aren't flocking to theatres as they used to before. The analyst from before also shared that in cities like Surat, local chains like Valentine Multiplex already draws strong footfalls

with their low-priced food and good enough amenities. It shows that premium branding isn't a necessity to fill seats. Despite that, PVR Inox says many are interested in being franchisee partners because PVR promises them good money back. No matter where the theatre is, PVR aims to give partners more than a 20% yearly return and help them recover the money they invested within three to five years. Sharad Nagpal, the retail head at Real Estate Consultancy, JLL India, told us that across the industry traditional lease structures are changing.

Cinema operators are moving towards revenue sharing and management contracts. This means landlords become eligible to hold more control and a bigger share of revenue. But under the brand's ethos. Stay tuned. The former Bookmai Show executive shared with us a hard truth. He said that cinema operators have basically become dinosaurs. The industry is facing what he calls a triple whammy. The COVID impact, the rise of OTT, and the deteriorating quality of Bollywood films.

He doesn't see the glory days returning. That's also because consumers have plenty of leisure options now. Think music, consults, stand-up comedy shows, plays, fine dining and more. Eternal, the parent entity of FoodTech firm Zomato, acquired the movie and entertainment ticketing business from Ptm in 2024. It then integrated all its going out offerings under the district app. Still, movies haven't made it to the priority list. Dining and other events take up the top spot.

even Book My Show, which was primarily a cinema booking platform, has diversified into offering tickets for other live events. Remember when Coldplay, the British rock band came to India earlier this year? People were ready to pay as much as 10 lakh rupees for a ticket that was originally 35,000 rupees. That said, some analysts feel that PVR-Rinox's measures aren't quite disruptive enough. Developers can build as many swanky theatres as they want. But at the end of the day, they don't control the box office. Unlike hotels, where guests check in regardless of a wedding season or a cricket match, cinemas live or die based on the strength of a Friday night.

And that's exactly what makes BBR Inox's pivot a gamble. Not only does it hinge on the fickleness of audiences, but also in the willingness of landlords to play along. Daybreak is produced from the newsroom of the Ken, India's first subscriber-focused business news platform. What you're listening to is just a small sample of our subscriber-only offerings. A full subscription offers daily long-form feature stories, newsletters, and a whole bunch of premium podcasts.

To subscribe, head to the ken.com and click on the red subscribe button on the top of the Ken website. Today's episode was hosted and produced by my colleague Rachel Varghis and edited by Rajiv Sien.