Shares of multiplex cinema chain PVR and INOX Leisure dropped up to 4% on Monday amid rising Covid-19 cases in Maharashtra, the nerve centre of film entertainment in India. Amid a fresh spike in the coronavirus cases, the Maharashtra government made masks mandatory in public places except for open places. The decision was taken after Maharashtra reported a 54% growth in registered Covid-19 cases in the past 24 hours, with 700 of the new 1,018 infections recorded in Mumbai itself.

Investors feared that a spike in the infection rate would impact footfalls in theatres as people avoid crowded places like cinema halls amid concerns about transmission of the virus. The multiplex industry, which was one of the worst-hit sectors last year owing to the pandemic-induced lockdown, has gained some momentum this year, with gross box office collections climbing rising to around ₹4,000 crore in the first four months of 2022, driven by new movie releases and blockbuster performance of some south Indian movies.

Shares of PVR were trading 1.96% lower at ₹1,779.25 on the BSE, extending the loss for the second straight session. During the session so far, it declined 3.75% to touch an intraday low of ₹1,746.70 after opening marginally lower at ₹1,810, against the previous closing price of ₹1,814.75 on the BSE.

Similarly, INOX Leisure share price continued losing spree for the second session and tumbled as much as 4.15% to hit a low of ₹478.35 during the session so far. The stock opened marginally up at ₹500 against Friday’s closing level of ₹499.40 on the BSE.

In contrast, the BSE Sensex was trading 64 points lower at 55,705 levels, reversing more than 200 points early losses.

Earlier in March this year, PVR and INOX Leisure, the country’s largest multiplex chains, had announced a merger to create a network of over 1,500 screens across 109 cities in India. With PVR currently operating 871 screens across 181 properties in 73 cities and INOX operating 675 screens across 160 properties in 72 cities, the combined entity will become the largest film exhibition company in India operating 1,546 screens across 341 properties across 109 cities.

INOX will merge with PVR in a share swap ratio of three shares of PVR for every 10 shares of INOX, subject to their shareholder's approval, stock exchanges, SEBI, and other regulatory nods. The merged entity will be named as PVR INOX Limited with the branding of existing screens to continue as PVR and INOX. New cinemas opened post the merger will be branded as PVR INOX.

The mega-merger was announced in the wake of rising demand for digital over-the-top (OTT) platforms during the pandemic which has badly impacted the film exhibition sector. OTT platforms such Netflix, Amazon's Prime Video, and Disney Hotstar reached their peak during the Covid-19 pandemic in India as Cinema halls, theatres, multiplexes were closed to contain the spread of the virus.

Follow us on Facebook, Twitter, YouTube & Instagram to never miss an update from Fortune India. To buy a copy, visit Amazon.