Shares of PVR Inox experienced a dip of nearly 2% on Wednesday, following the Karnataka government's proposal to cap movie ticket prices at ₹200. The stock initially fell as much as 1.98% to ₹970 apiece, before paring some losses to trade 0.77% lower at ₹989. This move by the Karnataka government aims to make cinema more accessible to the public.
The Karnataka government has issued draft rules to cap movie ticket prices at ₹200 across the state, inclusive of entertainment tax. This rule applies to all seating categories, eliminating distinctions between balcony or premium seats. Stakeholders have been given 15 days to submit any objections or suggestions. If no objections are received within this period, the draft will be notified as final.
This decision follows an announcement by Chief Minister Siddaramaiah in his budget speech for 2025-26. The government aims to standardize ticket pricing and encourage more audiences to watch Kannada and other language films in theaters. The pricing cap was formally implemented through an amendment to the Karnataka Cinemas (Regulation) Rules, 2014.
PVR Inox has a significant presence in Karnataka, with more than 215 screens, accounting for over 12% of the company's total screens. According to Karan Taurani, Senior Vice President at Elara Securities, Karnataka contributes around 8% to the Hindi box office and approximately 10% to overall collections, with an average ticket price of ₹260. The proposed cap at ₹200 implies a 30% reduction in the state-level average ticket price. Taurani estimates that this could lead to a 3.7% decline in consolidated average ticket price, potentially impacting headline revenues and EBITDA by around 2.2% and 1.8% respectively across FY26-28E.
The Karnataka Film Chamber of Commerce and the Karnataka Film Exhibitors Association have expressed their support for the move, believing the cap will help draw more audiences to theaters for Kannada films. However, multiplex owners have previously opposed similar measures, raising concerns about potential revenue losses.
A similar attempt to enforce a price cap of ₹200 in 2017 during Siddaramaiah's first tenure faced challenges. Multiplex owners contested the decision in the Karnataka High Court, resulting in the cap being lifted. It remains to be seen how multiplexes will respond this time.
The new rules remove all seat classifications, so every seat in a theater or multiplex will be sold at a uniform price of ₹200. The government hopes to make cinema more accessible, potentially increasing footfall in theaters and improving representation of regional films.
According to Fortune India, a uniform price cap could extend the payback period for capex-intensive formats such as IMAX and 4DX. Furthermore, Karan Taurani of Elara Securities suggests that the price cap could structurally impair franchise-led expansion of PVR-Inox by hurting franchise partner sentiments and return on investment (ROI) concerns.
