Shares of India’s foremost moviehall chain, PVR Inox, slumped sharply in Monday’s trade as fresh corporate-governance worries, centred on an internal probe into alleged kickbacks. This overshadowed the company’s recently announced share buyback plan.
The stock saw one of its steepest single-session falls in recent months as it hit an intraday low of ₹1,125.70 on the NSE on Monday, down about 9 per cent from Friday’s close.
The selloff came after an ET exclusive report stated that PVR Inox had in April asked a senior executive to leave after an internal investigation into alleged payments from developers involved in building cinema properties.
ET reported that the alleged kickbacks could total up to ₹200 crore and that the company’s board has discussed the matter in recent meetings.
The executive, who oversaw growth and investments, was said to be close to the promoters, adding to investor unease about how long the alleged arrangements may have been in place.
The governance cloud comes just days after PVR Inox unveiled its first post-merger buyback, promising to return capital to shareholders through a tender offer of up to ₹300 crore at ₹1,450 per share.
Despite the report, the company recently showed signs of recovery. For the June quarter, PVR Inox posted a consolidated net profit of ₹56.5 crore, reversing a loss of ₹47.3 crore a year earlier. Revenue from operations rose to ₹1,622.2 crore from ₹1,449.6 crore.
YTD, the PVR Inox shares have gained 15 per cent. But the stock is still down 37 per cent over the past three years. For now, investors seem to be weighing the positive from the buyback against the potential fallout from the alleged kickbacks, despite a marked improvement in the company’s cash flow.
