PVRINOXNSEMay 16, 2025

PVR INOX Limited

9,131words

109turns

12analyst exchanges

6executives

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Management on call

Ajay Bijli

MANAGING DIRECTOR – PVR INOX LIMITED

Sanjeev Kumar

EXECUTIVE DIRECTOR – PVR INOX LIMITED

Gaurav Sharma

CHIEF FINANCIAL OFFICER – PVR INOX LIMITED

Kamal Gianchandani

CHIEF BUSINESS

Pramod Arora

CHIEF EXECUTIVE OFFICER,

Harsh Shah

AXIS CAPITAL LIMITED

Key numbers — 40 extracted

rs,

ad a chance to review them. Box office in FY '25 witnessed an uneven release slate across quarters, resulting in noticeable gaps in content flow and fluctuations in theatrical performance. Performan

cal performance. Performance of Bollywood and Hollywood films was below expectations leading to a 9% drop in overall gross box office collections of the company. Hindi box office dropped by 26% this

26%

to a 9% drop in overall gross box office collections of the company. Hindi box office dropped by 26% this year due to 14% fewer releases, no major superstar films and several postponements. Bollywoo

14%

all gross box office collections of the company. Hindi box office dropped by 26% this year due to 14% fewer releases, no major superstar films and several postponements. Bollywood collections were do

28%

releases, no major superstar films and several postponements. Bollywood collections were down by 28% due to the impact of previous year strike and weak lineup of the tent poles. On the other hand, H

150%

ike and weak lineup of the tent poles. On the other hand, Hindi dubbed collections surged by over 150% with titles like Pushpa 2 and Kalki resonating nationwide showing how audience tastes are shiftin

INR700 crore

towards big pan India stories. Chhaava was the biggest hit of the fourth quarter grossing around INR700 crores at the box office, followed by Sankranthiki Vasthunam, Sky Force and Empuraan. With lifetime c

INR125 crore

office, followed by Sankranthiki Vasthunam, Sky Force and Empuraan. With lifetime collections of INR125 crores, Empuraan became one of the highest grossing Malayalam films ever. In contrast, Sikandar starrin

INR30

Malayalam films ever. In contrast, Sikandar starring Salman Khan fell short of expectations and INR30-odd crores (inaudible : 130 crores). We welcomed 30.5 million guests across our cinemas in Q4 FY

130 crore

trast, Sikandar starring Salman Khan fell short of expectations and INR30-odd crores (inaudible : 130 crores). We welcomed 30.5 million guests across our cinemas in Q4 FY '25 and 136.9 million guests in FY

30.5 million

Salman Khan fell short of expectations and INR30-odd crores (inaudible : 130 crores). We welcomed 30.5 million guests across our cinemas in Q4 FY '25 and 136.9 million guests in FY '25. In terms of the fina

136.9 million

res (inaudible : 130 crores). We welcomed 30.5 million guests across our cinemas in Q4 FY '25 and 136.9 million guests in FY '25. In terms of the financial results for the quarter, the following numbers were c

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Guidance — 20 items

Harsh Shah

opening

“PVR INOX management will be represented by Mr.”

Ajay Bijli

opening

“With an aim to making cinema going more accessible and habitual, FY '25 saw the successful execution of 4 Cinema Lovers Days and 1 National Cinema Day, offering tickets at just INR99.”

Ajay Bijli

opening

“In fact, over a 5-year period from FY '20 to FY '25, on a per-screen basis, the company's total fixed cost per screen has increased by a CAGR of only 0.8% as compared to the CPI inflation rate of 5.3% in the economy.”

Ajay Bijli

opening

“As the strategy scales, we anticipate a significant reduction, in new screen capex intensity, reinforcing our focus on efficient and sustainable growth.”

Ajay Bijli

“I mean all these movies Sitaare Zameen Par, War 2, Housefull 5, Jolly LLB and all the various movies I basically talked about just now, they are all on track to come on the big screen.”

Ajay Bijli

“So I think that's a positive, and it will be ongoing.”

Ajay Bijli

“Even -- so this year also about 110-odd screens will be there.”

Ajay Bijli

“But if there are -- if there is something that comes up, which is not viable and it's not value accretive, that will be removed from the portfolio after taking all legal precautions.”

Ajay Bijli

“So I think we will be doing all 3 things.”

Ajay Bijli

“We will be doing the FOCO model, we'll be doing asset- light model and also whenever we do get an opportunity to where the -- all the things are in line, May 12, 2025 the rent is good, the location is good, and we can even spend our own capex as well.”

Risks & concerns — 12 flagged

Bollywood collections were down by 28% due to the impact of previous year strike and weak lineup of the tent poles.

— Ajay Bijli

In terms of the financial results for the quarter, the following numbers were calculated after adjusting for the impact of Ind-AS116 on lease accounting.

— Ajay Bijli

So last week, when the geopolitical risk was there, we did see one Hindi movie shift to OTT.

— Abneesh Roy

And given the weak footfalls over a slightly longer period now, would it impact your ability to ensure that developers are wanting to work with us and incur capex on their books?

— Kavish Parekh

We've opened 77 screens and just in the first month itself, we've opened 20, so we're not seeing any challenge in opening screens.

— Ajay Bijli

Where do you -- where are you seeing a challenge here?

— Ajay Bijli

And given the footfalls -- given that the footfalls have remained weak over a slightly longer period now, do you think this has an impact on developers' willingness to work with us and incur capex on their books?

— Kavish Parekh

So even in last financial year, despite a volatility in content and pressure on earnings, we were able to reduce our net debt levels by INR340 crores (1).

— Gaurav Sharma

As a result, we were able to sort of cushion the impact of operating cash flows, and we were able to achieve about INR350 crores (1) reduction in our net debt levels.

— Gaurav Sharma

Any specific reason why we are accumulating cash, especially since incrementally capex is expected to decline?

— Umang Mehta

And I don't think there's any impact of any views actors have on our business.

— Kamal Gianchandani

My question was more around whether if we have to choose between a FOCO model and the traditional model, I'm not very clear if the risk reward favors a developer given how the Bollywood and the exhibition business is performed?

— Abhishek Kumar

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Q&A — 12 exchanges

My first question is on the Hindi movie content. So last week, when the geopolitical risk was there, we did see one Hindi movie shift to OTT. So if you could discuss are there more such examples or it was a one-off because of the geopolitical issue at that time? And the Hindi pipeline, it is the last few quarters, always we are seeing bunching up and then weeks when no May 12, 2025 content is there. Is that issue getting resolved in terms of proper planning of the pipeline for the Hindi?

Ajay Bijli

Yes. I mean all these movies Sitaare Zameen Par, War 2, Housefull 5, Jolly LLB and all the various movies I basically talked about just now, they are all on track to come on the big screen. We also started off very well with Raid 2, before that Kesari 2 and Jaat also released. So I think the momentum of Hindi movies has been very good and people are coming back to watch the big screen and even the industry believes that the big screen is a place where the movie must be released. That was a one-off that happened and the matter is sub judice. Maddock last minute decided to release the movie whic

My first question is on your expansion strategy. So over the past few quarters, you have laid out plans to expand via the asset-light models. However, no new screens were opened in 4Q. So were there any execution issues that seem to have emerged in this new model? And given the weak footfalls over a slightly longer period now, would it impact your ability to ensure that developers are wanting to work with us and incur capex on their books? That was my first question. I'll take the second question later.

Ajay Bijli

No, I just want to get some clarification on your first question. We've opened 77 screens and just in the first month itself, we've opened 20, so we're not seeing any challenge in opening screens. Where do you -- where are you seeing a challenge here? No, no. I understand that fourth -- so as an end of 9 months and as an end of the financial year, we had opened 77-odd screen. In the fourth quarter, particularly no new screens came up. So I think that was on account of delays. Yes, yes, those got shifted to just now. So in the first month itself, we've opened 20. The ones which were to open in

I have 2. Firstly, sir, in your observations, how do you see the intensity from the OTT players on content buying currently? Is it coming down? Is the average window between theatrical and OTT releases increasing? Any sense on that would be helpful.

Ajay Bijli

Well, you see the window is 8 weeks just now, and it is only going to increase. If you look at the recent announcement by even Aamir Khan's new movie, Sitaare Zameen Par, in fact, he's not releasing it on OTT at all. So I think people -- the content makers have acknowledged the fact that if you make a movie and release it theatrically, and there are N number of examples last year and this year has also started off with Raid 2 and Kesari proving that, that there's no upper limit to how much a movie can earn. So the biggest monetization window continues to remain theatrical, which was there pre-

Sir, I just want 1 clarification. I mean, out of the 100 to 110 screens that we plan to open in FY '26, how many of them will be on FOCO model because ultimately, those screens will not be consolidated into our P&L, and the actual opening number could be slightly lower. So can you just share the FOCO count for FY '26?

Gaurav Sharma

I can directionally tell you that bulk of -- more than 50% of the new screens will be under the capital-light and it will be a combination of FOCO and joint investment as above. Many of the screens are in the process of getting signed, the agreements are getting finalized. We've provided in our investor update also that out of 46 screens across 11 cinemas, we have signed under the FOCO model, and there are 55 screens across that that have been under the asset-light model. And typically, it takes about 12 to 18 months for all these screens to get fitted out in all the licenses in place and they

I just had a question regarding your FOCO model. So you mentioned that the revenue share will be around 8.5% of the revenue. But is there any incentive in terms of -- related to the performance of that particular screen if a screen does particularly well then, is there an incentive of a higher revenue share?

Pramod Arora

It's covered up in the percentage itself. The percentage remains consistent. So effectively, if you look at the success rate in terms of the proposals that come to the table, so it's about 20%. So if there are 10 people who end up approaching us for a FOCO model, only 2 get selected because there are very strong guardrails around the -- around the brand, which we end up working around. Unless the model is something that works for our development partner and us, we don't end up picking it up. So it is not a straight up franchisee model. While we call it FOCO, which is franchisee-owned company o

My question was on the cash balance. So while we acknowledge that gross debt has come down. Any specific reason why we are accumulating cash, especially since incrementally capex is expected to decline?

Gaurav Sharma

So as a strategy, Umang, we maintain a certain cash reserve in our balance sheet given the fixed cost heavy nature of our business. A lot of work has been done in terms of expediting collections across all our receivables. There's been a lot of work around working with the ticket aggregators in terms of advances on convenience fee. And as a result, quarter 4, we saw a significant buildup of cash. We will continue to be conservative in terms of making sure that liquidity levels are healthy, given the recent volatility in the last couple of years, we have seen in the business when there are gaps

My first question is this 1,800 movies a year, this number has been probably there for the last 10 years. But has the number of films who can do good at box office, like that number, has it stabilized? Like it's been on a downtrend, but has it stabilized? So that's question number one. And question number 2 is, sir, if you can give some idea on how this Bollywood content creators are thinking? Because see, how much ever we may say it does not affect this Bollywood boycott thing is probably big. And we saw this during the war period also that there are so many Bollywood actors who are either --

Kamal Gianchandani

To your first question, the -- there was a significant drop in midsized and big Hindi films post- COVID. And in fact, that number has been improving gradually. Year-on-year basis, that number has been inching up last year was we had in terms of quantity of firms, decent number of films. But unfortunately, we didn't have enough big films. We had midsized films and small films, but we didn't have enough big films. But overall quantity was -- in this year, quantity is a little better and the big films, sequels, mid- sized films, sequels again, that number has gone up, which is making the outlook

So I have 2 questions. First, I need a small clarity like in our FOCO model, where we are getting 6% to 10% of revenue sharing, is there any particular cost we will be inculcating in those screens or it will be only the revenue sharing or there will be no cost?

Pramod Arora

There's no cost that -- there's no physical cost, which is basically getting incurred in this model. So 100% of the revenue sharing we are getting will be transferred into our EBITDA, right? Yes, absolutely. So when the screens are under development, including the cost of people visiting those sites is incurred by the development partner. Understood. And in our recent year, our variable cost for movie exhibition has decreased a lot. So is it like something related to the mix of movie and the weeks the movies run on? Is it a structural thing we have done by the efficiencies? . Our film hire cos

My question is on the asset-light models. So we have signed around 11 cinemas and management contracts and 12 in asset-light model. So based on this, can you explain us what kind of developers are going for management contract and what kind of developers are going for asset May 12, 2025 light? Is there any commonality about this geography -- geographically or the size of the developer? Some light on this will be helpful.

Pramod Arora

So the way it really happens is the process of selection is strategic in nature. So in many of the territories where we already have an existing release model, we may perhaps go for an asset- light model. And the new territories wherein we do not have cinemas or we have cinemas which are sparsely spread out, we may go in for a franchisee-owned company-operated model. So that is one distinction that we end up using in the selection process. Other than that, there are certain metrics that we end up using wherein if the economies of scale happen to favor in the FOCO model, then we will choose the

My question is also on the FOCO model. Thanks for all the explanation. I'm still not able to figure out why is it attractive for a developer? I mean this is a business where you despite the scale and so much efficiency are making -- barely breaking even. And in that, if the developer has to give you 10% of the revenue, for him with little expertise and a little benefit of scale, how will he make money? Isn't it more beneficial for him to just take 15% as rent of revenue and leave the operations and the cost associated with it to you?

Pramod Arora

So absolutely, a great question, but we should have that availability from a top of the mind recall operator to be in his mall. So usually, shopping centers work on the principle of 5 Fs, which is fun, food, fashion, film, fitness. These are the 5 Fs, which gets covered in a shopping center development. Now in this -- so in this -- the film side that we represent, we are talking about the fact that if he wants to be in bed with the top operator, then perhaps if the FOCO model or an asset-light model is available, he will or may consider us. So it's an optionality, which is there. Most of the s

Three quick questions from my side. First one, your thoughts on Karnataka government budget announcement on capping the movie prices at INR200. Where are we -- how much impact do you see? Have you gone back to the government and asked for further concessions out there?

Pramod Arora

So the government has not taken any -- yes, Kamal, go ahead. No, no, go on, please. Sorry. So as of now, this has not basically been implemented by the government. So as of now, it is in abeyance. So until such time the matter comes up, there's no -- there's no need of any analysis to be done on that count. Second question is around the use of cash. So assumption is there is nothing inorganic as an opportunity probably out there. So would the Board have thought around doing dividends again or some buyback? Is there a sort of conversation happening around or not really? I think, as I said earli

Thank you, everyone. Thanks so much for joining this call, taking out time today, and we're very happy to address your questions. In case there is any further questions that you may have, you can reach out to the Investor Relations team at PVR INOX or you can write to me. Thank you so much.

Management

Speaking time

Gaurav Sharma

Pramod Arora

Moderator

Ajay Bijli

Arun Prasath

Kavish Parekh

Sameer Gupta

Jinesh Joshi

Kamal Gianchandani

Abneesh Roy

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Opening remarks

Harsh Shah

Yes. Thank you, Nadia. Good afternoon, everyone, and welcome to PVR INOX Limited Q4 and FY '25 Post Results Earnings Call. The call will start with brief management remarks on the earnings performance, followed by an interactive Q&A session. PVR INOX management will be represented by Mr. Ajay Bijli, Managing Director; Mr. Sanjeev Kumar, Executive Director; Mr. Gaurav Sharma, Chief Financial Officer; and other senior management personnel. Over to you, Mr. Ajay, for your initial comments.

Ajay Bijli

Thank you. I'd like to invite you all to discuss the audited results for the quarter and the 12 months ending March 31, 2025. We have uploaded the earnings presentation and the results on our company's website as well as the stock exchange's website earlier today, and I hope you had a chance to review them. Box office in FY '25 witnessed an uneven release slate across quarters, resulting in noticeable gaps in content flow and fluctuations in theatrical performance. Performance of Bollywood and Hollywood films was below expectations leading to a 9% drop in overall gross box office collections of the company. Hindi box office dropped by 26% this year due to 14% fewer releases, no major superstar films and several postponements. Bollywood collections were down by 28% due to the impact of previous year strike and weak lineup of the tent poles. On the other hand, Hindi dubbed collections surged by over 150% with titles like Pushpa 2 and Kalki resonating nationwide showing how audience taste

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