RRR to have a bumper opening

Ace director SS Rajamouli’s (maker of Baahubali franchise) RRR is slated to open across 5,000 screens each in India and globally.
The film is set to release across 10,000 screens globally and could surpass Baahubali II’s record (historically, highest box office). RRR is the first large-scale film to hit cinemas post a complete unlock, as all states are open with 100% occupancy and without any time restrictions.
The film may have the biggest opening post-Baahubali II (released in 2017 or FY18) that had collected INR 1.22bn on its first day. Expect RRR to post first-day collection of INR 1.2bn (net), of which Andhra Pradesh/Telangana may have the largest share of ~70%.

The Hindi circuit is estimated to open with day-one collections of INR 0.18-0.2bn, says Elara Capital analyst Karan Taurani. RRR’s lifetime collections may depend on word of mouth in the opening weekend. However, we expect the film to post a lifetime box office collection of at least INR 7-8bn (net) from all regions, including Hindi. We believe the Hindi circuit may alone report lifetime collections of ~INR 1.25-1.5bn, much lower than Bahubali II’s (lifetime collections INR 5bn in Hindi belt). Positive word of mouth can lead to 25%-30% beat to our estimates. The next big film may be released in April-second week– KGF-2/Jersey (Hindi) – Till then, RRR may have good run with no competition.
Triggers

RRR’s success will be a key monitorable for the industry as the film is made at a cost of ~ INR 3.5bn (excluding key talent, who will be on profit share model). The film has already made 100% ROI on cost of production (COP) given its deal with sub-distributors across states, OTT and satellite rights. Lower-than-estimated box office collections for RRR may lead to significant losses for distributors, which may in turn mar producer/distributor confidence regarding future large films/projects.

RRR will be the first film to see a full opening in terms of occupancy – All states in India at 100% occupancy, currently. Regarding Hindi box office, Q1FY23 may post 43% growth versus pre-COVID levels, led by strong content pipeline. Full-year FY23 box office revenue should be in line with pre-COVID levels as of now, based on content pipeline visibility until Q3FY23. Also, Q4FY22, which was largely shut in the first half until second week of February 2022, has seen strong growth in occupancy, on release of many large Hindi/regional films, coupled with the surprise of Kashmir Files (may post INR 2.7-3bn lifetime collections; collected INR 2bn until yesterday). Recent performances – Bachchan Pandey – has been as estimated at INR 0.75-0.8bn, on lifetime collections. Hindi box office revenues in Q4FY22 may dip a mere 21% versus pre-COVID levels (ex Kashmir Files, the dip may be 50% versus pre-COVID levels), despite opening up from second week of February 2022. This indicates that March 2022 has seen Hindi Box Office revenue growth of at least 30-35% versus pre-pandemic levels (March 2019).