Multiplex - Jinesh Joshi - Research Analyst, Prabhudas Lilladher Pvt Ltd
Prabhudas Lilladher Pvt Ltd
On 14th July 2023, the Screen Actors Guild – American Federation of Television and Radio Artists (SAG-AFTRA), an American labour union representing media professionals went on a strike amid ongoing labour dispute with Alliance of Motion Picture and Television Producers (AMPTP). AMPTP is basically a trade association in the US that represents TV and film production companies.
Apart from SAG-AFTRA, the Writers Guild of America (WGA) that represents screenwriters is also on a strike that started in the beginning of May. After 1960, this is the first occasion when Hollywood is facing a double strike (SAG-AFTRA and WGA) amid failed negotiations between actors/screenwriters and production companies.
Key reasons for the strike include:-
§ Deadlock over residual payments (financial compensation paid to actors in case of re-runs, syndication or streaming media)
§ Use of Artificial Intelligence (AI)
While it has just been 11 days since SAG-AFTRA strike; roughly 3 months have elapsed since the WGA strike. List of historical Hollywood strikes along with duration is given in the table below.
Exhibit 1: List of historical Hollywood strikes
| Year | Particulars | Duration |
| 2023 | SAG-AFTRA strike | Ongoing |
| 2023 | WGA strike | Ongoing |
| 2007-08 | WGA strike | 14 weeks |
| 2000 | Commercial actors strike | 6 months |
| 1988 | Commercial actors strike | 3 weeks |
| 1988 | WGA strike | 22 weeks |
Source: Wikipedia
Our view: If the current strike continues for long it can upset the delivery pipeline of movie/TV/OTT industry. In fact, given the strike production of some notable movies like Avatar-3&4, Deadpool-3, Gladiator-2, Mufasa: The Lion King etc has already been suspended. In FY23, Hollywood (English), as a genre (language), contributed 16%/12% to PVR-Inox’s/Industry’s BO collections. Though contribution from Hollywood is not very high, a prolonged strike can impact the delivery timeline of upcoming movies. Nonetheless, given strong movie pipeline on Bollywood (Rocky Aur Rani Ki Prem Kahani, Gadar-2, OMG-2, Dream Girl-2, Jawan) and Regional (Jailor, Bhola Shankar and Salaar) front we do not expect any major content related risk for PVR-Inox. Retain BUY on the stock with a TP of Rs1,704 (14.5x Sep-24E EBITDA).
PVR Inox (PVRINOX IN)
Rating: BUY | CMP: Rs1,483 | TP: Rs1,704
Key Financials - Consolidated
| Y/e Mar | FY22 | FY23 | FY24E | FY25E |
| Sales (Rs. m) | 13,310 | 37,507 | 65,649 | 75,297 |
| EBITDA (Rs. m) | 1,057 | 10,477 | 21,959 | 25,815 |
| Margin (%) | 7.9 | 27.9 | 33.4 | 34.3 |
| PAT (Rs. m) | -4,882 | -3,243 | 3,254 | 5,786 |
| EPS (Rs.) | -80.1 | -33.1 | 33.2 | 59.1 |
| Gr. (%) | NA | NA | NA | 77.8 |
| DPS (Rs.) | - | - | 2.5 | 2.5 |
| Yield (%) | - | - | 0.2 | 0.2 |
| RoE (%) | NA | NA | 4.3 | 7.1 |
| RoCE (%) | NA | 2 | 7.1 | 9.1 |
| EV/Sales (x) | 10.2 | 5.9 | 3.4 | 3 |
| EV/EBITDA (x) | 128.9 | 21.2 | 10.2 | 8.6 |
| PE (x) | NA | NA | 44.6 | 25.1 |
| P/BV (x) | 6.6 | 2 | 1.9 | 1.8 |