Elara keeps PVR INOX buy call despite Mumbai’s proposed theatre-tax increase

Elara Capital estimates Mumbai’s proposed entertainment tax of Rs 400 per show, versus Rs 60, would cut FY27 EBITDA by about 0.8% annually. The brokerage expects improving occupancy, a stronger content slate, premium pricing, F&B growth and asset-light expansion to cushion the impact.

— Source publishedFri, 25 Sept, 2026, 10:55 IST·First seen Fri, 25 Sept, 2026, 11:50 IST·Source NDTV Profit

What happened

Elara retained its buy view on PVR INOX, saying Mumbai's proposed multiplex tax increase would have limited EBITDA impact. It expects recovering occupancy,

Key facts

  • Mumbai entertainment tax proposed at Rs 400 per show, up from Rs 60
  • Estimated annualised EBITDA impact: Rs 7.4 crore
  • Impact equals about 0.8% of Elara's FY27 EBITDA estimate
  • If implemented from October, FY27 impact: Rs 3.7 crore or 0.4%
  • Occupancy improved to around 26% from roughly 24%
  • Second-half occupancy could reach 28-29%
  • Pre-Covid occupancy was above 30%

Why this matters

The limited tax impact reinforces the strategic value of expanding asset-light, premium and ancillary-revenue formats that reduce reliance on ticket economics.

What to watch

  • Final Mumbai entertainment-tax notification, effective date, per-show rate and applicability by screen or format.
  • Whether the tax is restricted to Mumbai or adopted by other Maharashtra municipalities or states.
  • Mumbai admissions, occupancy and average ticket price trends after implementation.
  • Premium-format share, F&B spend per head and loyalty-program transaction frequency.
  • Quarterly EBITDA margin commentary and management guidance on tax pass-through.
  • Hindi, Hollywood and regional film slate strength, especially sustained multi-week blockbuster performance.
  • Use differentiated pricing by city, format, daypart and film demand rather than a uniform ticket-price increase.
  • Accelerate premium-screen, recliner, IMAX and experiential-format mix in Mumbai to improve revenue per occupied seat.
  • Increase F&B attach rates, loyalty offers and bundled concessions to offset fixed per-show tax costs.
  • Prioritise asset-light expansion and rationalise underperforming leased screens to protect return on capital.
  • Engage Maharashtra and Mumbai authorities on tax design, exemptions, implementation timing and potential caps for lower-priced shows.