KGF 2.0 release: Large-budget cinema drives audiences

Cinemagoers continue to gravitate toward large-budget and regional content. We believe regional content dubbed in Hindi is a structural trend, which augurs well for exhibitors, as it offers a variety of content and acts as a cushion if the film fails to succeed at the Hindi box office. This is a win-win proposition for the South Indian movie industry. 

 

KGF 2.0, the sequel to the successful KGF franchise, is slated for release on 14 April 2022 across 6,000 screens in India, one of the largest releases in recent times. This is as big a release as blockbusters, such as Baahubali 2.0 and RRR, were released across 6,500 and 7,500 screens, respectively. 

KGF 2.0 is estimated to have an opening of INR 1.0bn in the domestic net box office, which is close to Baahubali 2.0 and RRR –- films that have reported the biggest opening historically. KGF 1.0 had reported a net box office collection of INR 2.0bn pan-India (in 2018). 

 

“We expect an opening weekend of INR 2.5-3bn for KGF 2.0 and life-time earnings of ~INR 6.5bn (INR 3.5bn in regional languages alone), which is closer to the second- biggest film in terms of box office,” says Karan Taurani, Senior VP at Elara Capital. 

 

“RRR has collected INR 6.7bn to date and is slated to touch INR 7.2bn, which is in line with our estimates. Andhra Pradesh, Telangana and Karnataka combined could account for more than 60% of regional box office revenue for KGF 2.0; another Tamil release, Beast, also is releasing on April 14,2022, which is expected to do well in Tamil Nadu. In terms of Hindi share, KGF 2.0 life-time collection is estimated to be in the range of INR 2.7-3.0bn (~40% share in Hindi language), which is higher than KGF 1.0. It had reported a Hindi language share of a mere 25%. KGF 2.0 is likely to report an opening day collection of INR 0.35bn, which is a 35% share of the overall domestic box office in the Hindi language based on advances to date. Shahid Kapoor starrer Hindi film – Jersey has now been postponed to 22nd April instead of 14th April, 2022,” says Taurani.

 

Triggers

The success of RRR has raised producer confidence to create more large budget films, as they continue to be well received. The Hindi language continues to increase its share within regional films, helped by the success of Pushpa, RRR and now KGF 2.0, which too is expected to well in the Hindi circuit. We believe regional content dubbed in Hindi is a structural trend, which augurs well for exhibitors, as it gives them a selection of content and acts as a cushion in the event the film fails to succeed at the Hindi box office. Audience acceptance too continues to grow for regionally dubbed content. This is a win-win proposition for the movie industry in South India, as it helps drive box office revenue for regional films. 

 

“In Q1FY23E, we expect Hindi box office revenue to surge 60% vs pre-COVID levels (FY20), led by large content across genres; H1FY23 is estimated to grow 30% vs pre-COVID levels, as momentum is likely to continue even after Q1FY23 (best H1 historically – H1FY18 reported growth of 27% YoY, led by Baahubali 2.0). We expect overall Hindi box office revenue to breach pre-COVID levels in FY23E, driven by a strong content pipeline and positive surprises within regional content (Hindi dubbed). We estimate mere 2% growth (vs pre COVID levels) for Hindi box office revenue in FY23E, as we lack visibility for the release slate in Q4FY23; based on the updated slate, there is a high likelihood of box office revenue numbers being revised with an upward bias,” says the analyst. 

 

KGF 2.0 is likely to be the third-biggest release in terms of number of screens; it could breach collections of RRR based on positive word of mouth.