While the State has passed the order, a 15-day public feedback window has been allowed. Exhibitors will try to lobby hard for this move not to happen. The tast time this came up in 2017, it was rolled back after court appeals, Taurani noted.
Ticket price caps are not new in South India. Andhra Pradesh, Telangana, and Tamil Nadu already have limits in place. But what’s different this time is the timing.
“Occupancy is still struggling to recover to 60-70% of pre-COVID levels. Had this happened six to seven years ago, higher occupancy could’ve offset the pricing impact,” he added.
The South is also a key expansion region for multiplex chains as more than 50–60% of new screens are coming up in the South. So this order, if implemented, will have a bigger impact on future plans, he said.
Also Read | PVR INOX shares in focus after Karnataka government proposes capping movie ticket pricesHowever, he sees little chance of other States considering similar price caps. “We haven’t seen such price caps in northern, western, or eastern states for decades. This seems unique to the South, where fan following and star power are strong, and the government wants cinema to be affordable.”
Still, there are longer-term concerns. If this cap is enforced, there won’t be a major change in target price, but valuation multiples could take a hit. With earnings already under pressure for over a year due to weak content and low occupancy, “We may not see multiplexes recover quickly because this is a structural issue.”
Multiplexes will need to reconsider expansion plans in Karnataka. “Bengaluru is a top metro city, so they will have to relook at their growth plans there.”
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