Box office rebound fails to offset revenue drop for Cineline in Q2; Future outlook bright

Cineline India Limited, the fourth largest film exhibition company in India, has released its unaudited financial results for the quarter and half-year ending September 30, 2024. Despite a weaker first quarter, Q2 witnessed a rebound with notable Bollywood and Hollywood releases contributing to box office collections. However, the company reported a year-on-year decline, primarily due to exceptionally successful releases in the previous fiscal year that had set a high benchmark.

Revenue Dips Despite Improved Admissions

The revenue for the film exhibition business dropped year-over-year, with Q2 FY25 seeing a total revenue of ₹5,614 lakhs compared to ₹6,482 lakhs in Q2 FY24. Half-year revenue also reflected this trend, standing at ₹9,306 lakhs for H1 FY25 versus ₹10,350 lakhs in H1 FY24. The decline was primarily attributed to a challenging Q1 and a comparative slump in blockbuster releases. The EBITDA for Q2 FY25 similarly saw a drop from ₹2,055 lakhs to ₹1,368 lakhs compared to the same period last year.

The company’s operating metrics indicated positive growth in terms of audience attendance, however. Admissions during Q2 FY25 were reported at 18.24 lakhs, a slight drop compared to the 21.56 lakh admissions in Q2 FY24. Average Ticket Price (ATP) also saw marginal stabilization with a decline to ₹231 from ₹235. Cineline’s Food & Beverage (F&B) collections came in at ₹1,561 lakhs, slightly down from ₹1,755 lakhs during the same period last year.

Luxury Cinema and Expansion Plans

Cineline’s CEO, Ashish Kanakia, noted that Q2’s performance was driven largely by new Bollywood offerings, such as “Stree 2” and “Kalki,” which collectively contributed to the highest-ever box office collection in the history of MovieMax. Furthermore, Hollywood releases, including “Deadpool” and “Wolverine,” helped draw crowds back into theaters.

In an effort to maintain their competitive edge, Cineline has announced its plans to launch an all-recliner luxury cinema experience branded as “MovieMax Edition.” The company intends to add several more luxury screens over the next 12-18 months, with a focus on enhancing the viewing experience. This move positions Cineline to attract the growing segment of the audience that is willing to pay a premium for comfort and exclusivity in movie-viewing.

New Innovations and Food Expansion

Cineline India also continued expanding its F&B offerings under the new “House of Food” concept, featuring multiple food brands and a wide menu selection. The introduction of QR-code-based food ordering dubbed “Skip the Queue” has been rolled out to improve efficiency and minimize customer wait times during screenings. As Mr. Kanakia noted, the focus remains on enhancing customer convenience, and this innovation is expected to be a key differentiator.

Moreover, the company is also rolling out a WhatsApp Chatbot aimed at enhancing customer engagement. With just a few taps, customers will be able to book tickets, explore upcoming films, discover the latest offers, and order food directly. These technological initiatives underline Cineline’s commitment to becoming a more customer-centric business.

Upcoming Releases Promise Better Revenue Prospects

Cineline’s management expressed optimism for Q3 FY25, thanks to the planned releases of big-ticket films like “Pushpaa 2,” “Singham Again,” and “Bhool Bhulaiyaa 3.” These releases have already performed well at the box office during their initial weeks, and they are expected to drive higher attendance. Additionally, a host of other popular films, including “Baby John,” “Dharamrakshak Sambhaji Maharaj,” and “Mufasa: The Lion King,” are scheduled to be released in the upcoming months, potentially boosting Cineline’s revenues.

Hotel Business Update

Apart from its core movie exhibition business, Cineline also operates a premium leisure hotel—Hyatt Centric in Candolim, Goa. The hotel division reported revenue of ₹1,223 lakhs for Q2 FY25, an increase from ₹1,180 lakhs year-on-year. Occupancy rates also rose to 85%, reflecting strong performance in the hospitality sector. However, the company has indicated that the sale of this hospitality asset is on track and expected to close by the end of this fiscal year. The proceeds from the sale will be used to reduce debt and expand their core cinema business further.

Expert Opinions and Future Outlook

Financial analysts noted that Cineline’s performance for Q2 was indicative of broader market trends affecting India’s entertainment industry. The analyst consensus appears to be cautiously optimistic, with hopes pinned on the upcoming movie slate as well as the company’s innovative expansion plans in luxury cinema. However, the competition from other cinema players and a broader consumer shift to OTT platforms remain challenges that Cineline will need to navigate strategically.

The company’s focus on expanding its luxury cinema brand and streamlining customer interactions via a chatbot are viewed as positive moves by industry experts. These initiatives are aimed at creating a differentiated experience that could help Cineline maintain audience loyalty even amidst growing competition.

CINELINE INDIA: LOOKING AHEAD

The financial year ahead for Cineline India remains promising, with its business focus clearly pivoting towards innovation, customer convenience, and high-end cinema experiences. The robust release calendar in the coming quarters, coupled with strategic investments in luxury formats and operational efficiency, positions Cineline well for a sustained rebound in the face of recent industry disruptions.