CRISIL has placed its rating on the long-term bank facilities and debt instruments of PVR Limited (PVR) on 'Rating Watch with Negative Implications'.
The rating action follows the closure of movie theatres across India by orders of state governments to contain the spread of Novel Coronavirus (Covid-19). While the present closure is valid until March 31, 2020, it could be extended if the pandemic worsens. Prolonged closure may significantly impact credit profiles of the film exhibition industry, including PVR.
PVR has been taking proactive steps to reduce its cost and augment liquidity. Lease is a major fixed cost for PVR, and it has invoked the force majeure clause for lease agreements with mall developers. PVR expects no payment of leases during the closure. PVR is also looking to conserve cash by reducing workforce, deferring maintenance, and capital expenditure (capex) outlay.
Currently, PVR has liquidity (cash and bank balance, undrawn committed bank lines, and other liquid investments) in excess of Rs 250 crore, which should sufficiently cover its curtailed operating costs as well as debt servicing for the next few months. PVR is looking to further augment its liquidity to enhance the cushion.
CRISIL will continue to engage closely with PVR to ascertain that operations are being run at curtailed costs and will closely monitor its liquidity position. CRISIL will remove the ratings from watch and take a final rating action once there is clarity on resumption of operations.
The rating continues to reflect PVR's strong market position and well-established brand, healthy operating efficiency, and a significantly improved financial risk profile. These strengths are partially offset by exposure to risks inherent in the film exhibition business.
Shares of PVR LTD. was last trading in BSE at Rs.1205 as compared to the previous close of Rs. 1313.95. The total number of shares traded during the day was 95937 in over 7771 trades.
The stock hit an intraday high of Rs. 1301.4 and intraday low of 1153.5. The net turnover during the day was Rs. 116747679.