Inox Leisure Rises 20% and Reaches a New High; PVR Rises 10% Due to the Merger

With 1,546 screens, the combined organization would become India’s largest film exhibition corporation, with a 50 percent multiplex screen market share and a 42 percent box office collecting market share.

In intra-day trading on the BSE on Monday, shares of PVR and Inox Leisure soared by 20% after the two biggest multiplex owners declared a merger in which Inox and PVR would be combined into one company. Inox shareholders shall receive 3 PVR shares in exchange for ten Inox shares.

Trades of Inox

Inox Leisure has achieved Rs 563.60 in recent transactions, gaining 20% in the intraday session. The stock hit a new high of Rs 510.80 on February 25, 2020, surpassing its previous high of Rs 510.80. The stock traded 15% higher at Rs 540 at 09:17 a.m., versus a 0.06 percent loss on the S&P BSE Sensex.

On the other hand, PVR jumped 10% to Rs 2,010, its 52-week peak on the BSE. The stock reduced its gains slightly and closed at Rs 1,925.25, up 5%. On February 20, 2020, it reached a new high of Rs 2,081.

PVR promoters would hold 10.62 percent of the combined firm, whilst Inox promoters would own 16.66 percent, with fair participation on the board, with two positions each for promotional entities in a 10-member board. PVR INOX Limited would be the merged entity’s name, with current screens continue to be branded as PVR and INOX, respectively. The new cinemas which open as an outcome of the merger would be known as PVR INOX.

Combined entity

With 1,546 screens, the merged organization would become India’s largest film exhibition corporation, with a 50 percent multiplex screen market share and a 42 percent box office collecting market share.

They’d also have more clout inconvenience fee partnerships (such as with Bookmyshow plus Paytm) and distribution revenue. It’s also feasible to reduce administrative costs by reducing overlaps. Given greater market share, reach, and synergy, even the merged entity target multiple plus future market valuation could be rerated.