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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Ladies and gentlemen, good day, and welcome to the INOX Leisure Q1 FY '23 Earnings Conference Call hosted by Axis Capital Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Ankur Periwal from Axis Capital Limited. Thank you, and over to you, sir.
Yes. Thank you, Ranjit. Good evening, friends, and welcome to INOX Leisure Limited's Q1 FY '23 post-result earnings call. The call will be initiated with a brief management discussion on the quarterly performance, followed by an interactive Q&A session. Management team will be represented by Mr. Alok Tandon, CEO, INOX Leisure Limited; and Mr. Kailash Gupta, CFO, INOX Leisure Limited. Over to you, Alok ji for the initial comments.
Thanks a lot, Ankur. Hi, everyone, and a very good evening to all of you. I am Alok Tandon, and I have my colleague, Mr. Kailash Gupta, who's the CFO of the company with me. I welcome all the participants on this call. And this marks a very, very special quarter for us. Our Board has approved the quarterly results of Q1 FY '23, and the same has been uploaded on the website of the stock exchanges and the company's website. Today is indeed a euphoric moment for all of us as we have reported our best ever quarterly performance in our history. And what better quarter than this when we are celebrating 20 years of our glorious existence. What makes it the most cherished is the fact that it has come after 2 years of rigorous turmoil, 2 years of resilience, 2 years of probably the toughest professional challenges our teams would have ever faced. Friends, in the last 2 years, we kept talking about being resilient, being transparent, being forthright with our stakeholders and went about a task of holding fort. We were backed by the strong belief that we will make a comeback and here we are celebrating our best ever quarter. We are indeed grateful to all our stakeholders, including all of you, who have always wished the best for us through thick and thin and have stood with us strongly. From being totally shut a few months back to reporting our highest ever box office collections, our highest ever revenue, F&B collections, EBITDA, PAT and ATP. It has been nothing but short of a miracle. In Q1 FY '23, we have the highest ever quarterly total revenue of INR 589 crore, the highest ever quarterly EBITDA of INR 130 crore and the highest ever quarterly PAT of INR 74 crore. In Q1 FY '23, we have the highest ever quarterly gross box office and F&B collections put together. We have the highest ever quarterly ATP of INR 229. Today, we have a very strong liquid position. And as of 31st of July 2022, we had INR 250 crores in cash and cash equivalents. We are the only national chain that is net debt-free. And to top it all, we launched what's called the INOX merchandise in the quarter, which has just gone by. Today, when I look at the other numbers and if I compare it with Q1 of FY '20, and I'll do a comparison with Q1 of FY '20 as we all know that FY '21 and FY '22 are washouts. The revenue of INR 589 crores, which we clocked in this quarter was an increase of 19% as compared to INR 496 crores in Q1 FY '20, EBITDA is at INR 130 crores, which is 41% increase as compared to INR 92 crores in Q1 FY '20, and PAT has increased by 80% to INR 74 crore from INR 41 crore in Q1 FY '20. We had 184 lakh footfalls in Q1 of this financial year, which is a 6% increase as compared to 173 lakhs in Q1 FY '20. Our occupancy is at 29% as compared to 30% in Q1 FY '20. Our ATP is at INR 229, which is a 16% increase as compared to INR 198 in Q1 FY '20. And SPH is at INR 96, which is a 19% increase as compared to INR 81 in Q1 FY '20. When we compare Q1 FY '23 with Q1 FY '20 on per screen basis, we can see where our costs are concerned, we have seen a decrease in various parameters. We have really controlled our costs, and I would say that is nothing short of phenomenal what we have done with our cost control. Employee benefit expenses, which includes agency manpower, has gone down from INR 69.3 crores in Q1 FY '20 to INR 59.1 crores in Q1 FY '23. And if I look at this on a per screen basis, it has reduced from INR 12.7 lakhs per screen to INR 9.1 lakhs per screen, respectively, which is a 28% reduction. Talking about power and fuel and R&M expenses, they have increased from INR 43.3 crores in Q1 FY '20 to INR 48.7 crores in Q1 FY '23, as we have opened more screens in the last 2 years. But if I look at the per screen basis, it has reduced from INR 7.9 lakhs per screen to INR 7.5 lakhs per screen, which is a 5% reduction. Rent and CAM, again, as we have added more screens has increased from INR 91.5 crores in Q1 FY '20 to INR 122.5 crores in Q1 FY '23. On a per screen basis, it has increased from INR 6.7 lakhs per screen (sic) [INR 16.7 lakhs per screen] to INR 18 lakhs per screen (sic) [INR 18.9 lakhs per screen], which is a 13% increase. This 13% increase is in line with the escalation mentioned in the various agreements that we have with the landlords. Other overheads has gone down from INR 37 crores in Q1 FY '20 to INR 33.1 crores in Q1 FY '23. On a per screen basis, it has reduced from INR 6.7 lakhs per screen to INR 5.1 lakhs per screen, which is a 24% reduction. Our distributor share percentage for Q1 FY '23 and Q1 FY '20 are similar. But our F&B contribution has shown a great improvement. F&B contribution has increased from 75% to 78% for Q1 FY '20 when -- as against the number of Q1 FY '23, respectively. In terms of shareholding structure, as on 29th of July 2022, FIIs owned about 17.51% of the company, the DIIs owned 24.90%, Promoter & Promoter Group held 44.04%, and public and others owned 13.5% -- 13.57% of the company. The share price as on 29th of July 2022 was INR 591.65, which gives the company a market capitalization of approximately INR 7,238 crores. We have opened 3 properties, 17 screens with nearly 3,200 seats in Q1 FY '23. We opened AIPL Joy Street in Gurugram with 6 screens, Sattva Necklace Mall, Hyderabad with 7 screens, and we opened a 4-screen multiplex in Orchid Mall, Gulbarga. At present, we are operational in 18 and 1 union territory, present in 73 cities, have 163 properties, 692 screens and approximately 1.55 lakh seats. Based on the agreements already signed, I'm happy to share that beyond FY '23, we have signed up to the extent of nearly 117 properties, 834 and 1.52 lakh seats, which once when the entire pipeline is fully implemented, we will have 293 properties, nearly 1,600 screens and 320,000 seats. In Q1 FY '23, we had 4 blockbusters, namely KGF 2, Vikram, Bhool Bhulaiyaa 2, Doctor Strange in the Multiverse of Madness. And also we have the overflow of RRR. We are delighted to inform you that we have a healthy lineup of movies already waiting for release. We have an extremely rich pipeline with movies of all genres and languages in August, September and October, like Bullet Train, Laal Singh Chaddha, Raksha Bandhan, Liger, Brahmastra, Vikram Vedha, Ram Setu, and this is just to name a few. There are so many more such movies for which you can refer to our earnings presentation. As far as the CapEx is concerned, in FY '23, we have planned to open 77 screens, and we have already opened 17 out of that 77. And I'm very sure that we will be able to open the remaining 60 in this financial year itself. And all the CapEx for the screens that have already opened and for the upcoming screens are being funded through internal accruals. I would also like to reiterate that our liquidity position is very strong. As on 31st of July 2022, we have INR 375 crore with us, which includes undrawn limit of INR 125 crores. Alternatively, as we always say, INOX owns 6 cinema properties and a head office. And as to the market valuation, if required, we can raise close to INR 400 crores by doing a sale leaseback of these properties. As of 31st of July 2022, we have a broad debt of approximately INR 81 crore. Well, regarding the merger of INOX Leisure Limited and PVR Limited, we have got NOCs from BSE and NSE -- and NSE. And I would like to also inform you that we have already made an application to NCLT for the merger. So this was the brief description of the quarter gone by. And, Kailash and I will be very happy to take any questions from you.
[Operator Instructions] The first question is from the line of Abneesh Roy from Edelweiss.
Yes. And congrats on the 20 years and record-breaking performance. My first question is on the Telugu market standstill. It may not be impacting you too much, but want to understand what is your thought process on the current status there? And can other markets also face similar issue, because I think the issues are common, right, that the salary structure or the reward structure for the stars is extremely skewed in their favor? Second, the exclusivity window with double -- OTT is again a common issue across all markets. And third is, of course, after the record-breaking Q1, we have seen box office performance really weak across most markets. So do you think other states could also see similar issue, other languages could see other similar issues?
So Abneesh, let me tell you that what we have come to know though it's too early is that production has already started in Telangana and in Andhra Pradesh, where Telugu movies are concerned. It's an internal issue between the Telugu producers and their stars that they want the remuneration to reduce, and they're also looking at other ways of controlling costs where production is concerned. If it goes to -- or your question is that will it go to other parts of the country? I don't know is anybody's guess, but I doubt it will happen. That's what my personal opinion is. When you talk about box office going down in this quarter, yes, some movies have not done well, but that's a blip. It happens every time, it happens in every quarter and not all movies are supposed to be super hit. So as I said, that the lineup looks mouth-watering in August and September, we could have -- I won't use the word could, but I'm very, very confident that we'll have great numbers when the movies release like Bullet Train, Laal Singh Chaddha, movies like Raksha Bandhan, all those things which I spoke about in my opening statement. We are looking forward to lots of other movies even in Q3, like Ram Setu. We are looking forward to, Thank God, which is coming. We are looking to see The Ghost in Telugu and Godfather in Telugu. So the lineup whether its Q2 or Q3 looks absolutely good, Abneesh.
Right. And second related question is the poor performance in the past few months after a blockbuster Q1, do you think this is only content or ticket pricing is also a challenge or because a content was bad, then there is a pushback because the family of the customers would have paid a lot of money. So they take a call that let us wait on the OTT or let us first wait for the positive review on social media on the movie. So what is the remedy? Because again and again, same thing is again happening. Content cannot be the only thing, right? Ultimately, some content has to be good. Now multiple movies have not done well.
So Abneesh, I think I answered that question in my -- that answer. I've already answered that in your earlier question. When I said that Q1 has been great, but after that, a few movies have not done well. And that does not mean that people will shy away from coming from the -- to the theaters. The movies, as I said, are looking good in August. In September also, we have some great movies lined up. And I'm very hopeful that these movies will click at the box office. 1 or 2 movies not working or 1 month not doing well does not mean that people will restrain from coming to the theaters to watch a movie or the entire pipeline is bad. So I repeat it's just a blip, nothing else. And if the content is good, people come back. And so will happen in the movies which are lined up for August, September and October.
Sure. Last question on the INOX merchandise, what is the thought process? This is more from a marketing angle or do you think there could be decent revenue potential? And on the NCLT, any time lines you have in mind or it's difficult to predict?
So answering the second question first, NCLT, it's difficult to say that what are the time lines. We have just filed it with NCLT. So that will take a couple of months. When merchandising is concerned, I think this will really catch on. It's a multi-billion-dollar industry world over. And we have started selling head caps. We have started selling slippers, t-shirts, mugs, headphones of various movies, which include Marvel movies, which include other franchisees, DC Comics, all those. And this I'm sure, Abneesh, will catch up over a period of time.
And this is not the exclusive, right?
Well, we have tied [Technical Difficulty], they can surely tie up with other chains also.
Sure. Okay.
Next question is from the line of Jinesh Joshi from Prabhudas Lilladher Private Limited.
Congratulations for a very good quarter. Sir, I have a question on our footfall. I think we were roughly 6% higher than the comparable pre-COVID base, whereas if I look at our other peers, I think they were down by about 7-odd percent. Now this is despite the fact that they have a higher number of screens in Southern India as compared to us? And in this quarter, there were a lot of blockbusters from the Southern market like KGF and Vikram. So any specific reason as to why we have done better than this?
Well, I can't compare why we have done better than anybody else, but I can talk about INOX, for sure, is that we gave a lot of push from a marketing team to get in more people. We came up with lots of schemes. And also we should remember that whether it was a Telugu movie or a Kannada movie or a Tamil movie, they were dubbed in Hindi, and we have a strong presence in West and North of this country. So we have people coming in to watch the movies which were not made in Hindi, but they were dubbed in Hindi. And for that, we got some good footfalls. KGF 2, RRR did very well in Hindi. And I think these are the few points which I can mention about apart from the great marketing work done by our team.
Sure, sir. 2 bookkeeping questions. If I look at our ad revenue, which was at about INR 30 crores, this is still 37% lower than the pre-COVID base. So any time line with respect to when we'll be able to achieve that peak? And secondly, if I also look at our employee cost per screen, it is lower by 28% and the fall appears to be quite substantial. So any specific reason on what is driving this and whether this is sustainable or not?
Okay. So the ad revenue, you're right, it's about INR 30 crores. It's about 34%, 35% lower than what we did in Q1 of FY '20. And this is because we all know that people who are waiting -- the advertisers who are just waiting and watching whether they should advertise or not do it. My sense is come Diwali and come the festive season, we should be back to normal or maybe a slight reduction in collections. But I don't see that this to be a big challenge. Q1, Q2, yes, should be a bit depressed, but Q3 and Q4, we should bounce back strongly. And this is a trend we have seen with various other mediums also that Q1 has been poor, but slowly, there is -- they are getting traction and things will improve. When you talk about the employee cost, yes, we have shown a 28% reduction, and this I would say is, I can break it up into 2 parts. One is that during COVID, we did a lot of multitasking and people were able to do jobs of others also. So we had to take in less people. But more work that we were very careful in recruiting people in April and May. Once we saw a steady increase of people coming in of movie lineup, that's the time when we ramped up and started getting more of our operation associates in cinema halls. So it's a mixture of having less number of associates in April and slowly ramping up our associate count, and number 2, of the multitasking which we have done. If you say this will continue, well, the answer is you will not see a 28% decline, you will see a maximum 7% to 8% reduction in manpower costs, that's purely because of multitasking.
Sure, sir. Thank you so much, and congratulations once again. All the best.
Next question is from the line of Arun Prasath from Spark Capital.
Just a couple of questions. One, I see that there is a escalation in the rent, which you explained is coming from the contractual obligations. And I also see that there is a ATP and F&B spend per head growth is also happening. Just my question is -- and the ATP and F&B growth is far higher than the rental growth, that is very clear. My question is, is this a coincidence because of the various factors that is affecting or the pricing of the ATP and F&B, or is it like is it well planned and executed? And can it sustain in the coming quarters as well?
Well, Arun, we always say that our pricing strategy is always scientific. We look at the cost structure for property. We look at the paying propensity of the people. And we look at the movie, the newness of the movie, which is coming. So it's not one-off. If you see that gradually, our ATP has gone up, and we've shown a steady increase in our average ticket price. And we always say quarter-on-quarter that our ATP will rise in line with inflation, where SPH is concerned, it's a cautious effort we are making to increase our spend per head. So we have seen a steady increase for the last 6, 7 years in SPH quarter-on-quarter and year-on-year. When we closed at INR 96 in Q1 FY '23, it is because of sales mix. It is because of strike rate getting improved. It is because of items per head of food increasing. And lastly, I would say by -- it's also due to increasing point of sale. So today, what we say is that the biggest put-off for a guest is to see long lines at the concession counter. So we've made an endeavor to have a point of sale in various parts of a lobby, so that wherever the guest is standing, he can just walk across and buy food. So I would say it's a lot of work has gone into it, so that our SPH keeps on increasing. And the F&B team has done a great job over the last couple of quarters to ensure that our F&B revenues go up and the SPH increases.
Sir, just to clarify, even that the ATP growth has -- will always have a certain impact on the footfall sensitivity. It's not like they are independent. At some point of time, you will have footfall affecting if we continue at this ATP growth at this level. Isn't that true, or are we -- or this quarter where the people are coming out of a long period of being shut in the home and hence for them like this quarter it doesn't work like this?
So Arun, let me tell you that there's a slight difference in this. I don't think that if they keep on increasing my ATP, footfalls will surely come down. But what we do at INOX is we'll always find that sweet spot between ticket pricing and the footfall which come in. So if I remember right, our FY '22, we had a INR 217 blended ATP for the entire financial year, which in Q1, because of more openings and because of some blockbuster movies coming, it went up to INR 229. So yes, you are true that if we just keep on increasing the prices, footfalls will be impacted, but that's never the case at INOX. We are cognizant of the fact that your ticket, you cannot charge extraordinarily higher from a patron, you have to find that sweet spot. And that's something our programming team and our revenue team keeps on doing is that to ensure that, as I said, that the SPH -- not the SPH, the ATP increases in line with inflation and does not affect our footfalls also, because we don't want footfalls to come down. If footfalls come down, yes, there will be an issue, with SPH, there'll be an issue with the advertisers and other people. So we have to find that price, which ensures that footfalls don't suffer.
Okay. Fair enough. My second question is on the number of screens to be added, the guidance. I see that we are maintaining around close to 75, 80 screens this year. One, shouldn't we expect more given that there could be a pent-up pipeline which was not executed in the earlier years, especially in the last 2 years, shouldn't at least in this year, it shouldn't be higher than the average that you have executed in the pre-COVID years?
So there's nothing as a pent-up for properties, Arun, because the reason is that the developer has to be ready with his mall and also he has to be ready with the cinema area to give it to us, so that we can start our fit-outs. Maybe a few more properties are added, but we are sticking with the guidance of opening 77 screens in this financial year. And if we get more properties from our developers to start a fit-out, that'd be a bonus, and we'll lap it up for sure, we won't refuse it. But as of now, we are saying that we gave a guidance of 77 screens and we are sticking to it.
Next question is from the line of Ankur Periwal.
So Alokji, 2, 3 questions here. So one on the -- continuing with the SPH part, qualitatively, how do you look at these metrics internally? Where I'm coming from is -- so there are 2, 3 key drivers here, right? One is probably a higher food option, greater food options and you did allude it towards that initially. But where is this growth that we are seeing is over the last couple of quarters coming from? Is it largely because of higher usage or higher spend per patron or more number of people opting for your F&B options there? And a related question to that is if I look at SPH to ATP as a metrics, first, is that a right metrics to look at? And secondly, because this number has been largely stable for us historically. So your thoughts there?
Well, looking at your SPH to ATP, I don't think anything stable. It has increased, and this quarter, it's 42%. So that's one. When you talk about why our SPH has gone up, I would say it's not because of price increase. Price increase, Ankur, could be INR 10 or INR 15 only on certain items, not all across the food items. But it is the effort, and which I talk about is selling more items per head to a guest, ensuring the strike rate at the concession counter increases, which means that there are more people who come to the concession counter to buy food when they've -- compared to what or the number of people who were coming to the concession counter earlier. So these are a couple of things which we have really worked hard on. And how will people come to the concession counter is by having more touch points by having more point of sale. Today, when we design a new property, earlier the thought process was to have only one big concession counter, today, we are moving away from that. We are saying that when a person comes into the lobby or when he comes out of his theater, there should be food for him to pick up from there rather than for him to walk to the concession counter. So that's something different we have done, Ankur, in the last couple of years and that we have seen is yielding results. We have also ensured that the LED screens, which we have in our properties, people can go and buy food from there. What we have also done is, let's say, our app, and this is something we have always talked about in every meeting, but now I can see a lot of traction. The INOX App has got a food icon embedded in it. So people if they see -- a few people standing at the concession counter, they just take out their phone and they place an order for food using the app, and they can easily go and collect it from what we call the fast-forward counter or it is served to them on their seats. So I would say a couple of things we have done to ensure that more food is sold, and also doing a lot of survey to ensure that we cater to the local palates. The samosa in Jaipur will taste totally different from a samosa in, let's say, Nagpur or in Mumbai or in Delhi. So that is a research we have done where food is concerned. Yes, selling more items in the menu has also been on our cards, and we have been quite successful in doing it, because our mantra today is that a patron should eat food while watching a movie rather than before or after movie. And that I think over the past couple of quarters, we have been quite successful in doing it. So these are the few things which I can talk about, Ankur, of how our SPH is going up. And I'm very hopeful that this will continue happening in the coming quarters also.
Sure, sure, sir. Second, on the advertisement side, we have seen a good healthy recovery in Q1. But from a -- if I look at overall, the overall ad spends at the industry level are not as great. Will -- how do you see this recovery panning out? Is this more a function of good content coming in and then we'll see recovery maybe this quarter or with the festive season there? Your thoughts there?
Yes, festive season, for sure, I think we'll bounce back. Good content also is very important for our client, because he knows that a good content will have great footfalls, and there'll be more people seeing his ad, there'll be more eyeballs watching his ad. So that's there. But let me tell you that we are not disappointed by Q1 numbers. I think it's a healthy jump. It's only 34% or 35% less than Q1 FY '20. And we have seen a lot of traction from new-age clients. So new-age clients or fintech clients, they all are advertising these days in our cinemas. We are having a lot of interactive ads also being shown on our screens, where you interact with that particular ad. So people take out their phone, they click, they download a QR code, and then they play games or look at ads on the screen in which they are sitting. And that also has got them good traction with us in the last couple of weeks, I would say. So things are looking up, Ankur, but Q3, Q4, yes, we should do well. And then that's the time we'll be saying that we are back to normal and the ad revenues have increased.
Sure, sir. And lastly, on the screen addition side, you did mention around 75, 80 odd screens getting added this financial year. Most of these screens, if I look at FY '23 are coming from maybe a Tier 1 or a Tier 2 city. But structurally, I'm looking more at the longer-term sort of screen addition plans that we have. Are these mostly coming from Tier 1 and 2 only or probably Tier 3, 4 are also picking up slowly and steadily? And would the economics be very different between a Tier 3, 4 versus a Tier 1, 2?
So it's a -- the right mix of properties, Ankur, we as a company, yes, we have largely in metros and Tier 1, but we have never shied away from entering a Tier 3 or a Tier 4 city, we've never shied away, because we feel that the cinema hall has to be closest to a patron wherever he is in this country. When you talk about economics, well, I would say our IRRs and our payback remain the same, because we know that the paying propensity of the guests, the average ticket price will be less in those particular properties and so is our CapEx. We may not put a travertine or marble on the floor, but we may put a tile on the floor. We will not have a high-end finish on the concession counter in that Tier 3, we may have a granite on the concession counter. So these are the few things we look at, but our ROC, our payback, our IRR all remains the same.
Next question is from the line of Sanjesh Jain from ICICI Securities.
Yes. Few questions from my side. First, I wanted to understand how does this tariff hike or the price increase in the screens work? I know what we gave is a blended of all, but it will be useful if you can explain us what is the relationship between the occupancy and the tariff increase? What is that occupancy you think when you hit, you're confident to increase the tariff? How does that economics work behind each screen for you?
So Sanjesh, we look at, as I said, that for us, quality of content is very important. If we feel that the movie will do well, and everybody feel still Thursday night that it will be a super hit movie, if we feel the movie will do well, and if you look at the buzz we just built around the movie, if you look at the advances which are there, we know that this could do well and our ticket pricing is high. But again, as I said, the ticket prices or the ticket pricing depends on where we are pricing it, whether it's Bombay, which part of Mumbai, is it Chennai, is it Delhi, which theater in Delhi. So it's very fluid. It is not that one ticket price will work for all 692 screens or all 163 properties. Properties, for example, Nariman Point in Mumbai will be priced differently than a Kandivali West in Mumbai or Malad will be priced totally different from the theaters in Dahisar. So that our programming team has been doing for the last 20 years and they are quite good at it. I always say that we have never outpriced ourselves. If you heard my other answer previously, which I answered is that for us, footfalls are also very important. And we have to strike that balance between footfall and average ticket price. So the ticket pricing is done by our programming team, who looks at various aspects, who is the Director of the movie, what's the star cast, how has that performed earlier, whether it's been a hit earlier or not. So all those things we look at before we price our tickets.
No, no, Alok, sir, I got that very clearly. My question was what is the occupancy level at which you're thinking or you become more confident, okay, now, yes, this location is now ready to go for a slightly higher level of pricing. So what is that sweet spot in the location?
Sanjesh, it is not property, again, I'm telling you, it is film-based. So an occupancy of film we can only come to know on a Friday, though our programming, our pricing is fixed on a Wednesday, 2 days before the movie is released. So occupancy, we will come to know later on, the pricing is done earlier. And I just explained the way we do our pricing. So there's [Technical Difficulty] a property, is to do with the occupancy of a particular movie. For example, in a property, let's say, there are 2 pictures which are running, one is running with a 70% to 80% occupancy and the other is running with a 20% occupancy, if I have already priced for that on a Wednesday, I will have to continue it for that particular week, I will not reduce it. But as I said, it's not property-dependent, it is a movie-dependent pricing which we do.
Got it. Got it. So then it is more subjective than number crunching or data analytics, right? So...
So let me tell you, Sanjesh, 20 years now there's nothing is subjective. We have enough data to crunch our numbers and to come up with a number which we feel or pricing we feel will do well. So today, I can use the word scientific. I won't even say a hunch, because we have data of all INOX screens for the last 20 years, and we know how people react to pricing, and we know that which genre of movies in which language garners what ATP.
No. Let me put it slightly differently then. What I wanted to understand is what is the occupancy on a blended level which we should see and feel as confident with this occupancy we should see a much faster pricing growth to come in? Is it right way to approach also?
No, I don't think that is right, Sanjesh.
Fair enough, sir. Fair enough. Fair enough. Second, on the consolidation side, are we seeing more footfalls coming into our screen? Have you done any analysis on that? Are we getting benefited? Because there are now fewer quality screen around the theaters we run. Are we seeing any such trend?
Sanjesh, it's very difficult for me to talk about it. But I can say that the trend which we have seen has increased because of reopening more properties, we going to destination malls and neighborhood malls, and what we have seen in the last quarter is the quality of content. So whether it is because of people not going to other chains or not, I don't know their numbers are not public, so I can't comment on it. But I can say, yes, that we've seen a healthy growth in our numbers because of we reaching out to our pan-India guests. We being present in 73 cities. But we're ensuring that we are present in a central business district or a high affluent residential area or a destination mall where our cinemas are concerned.
Fair enough, sir, my last question from my side. Earlier, we were quite particular that we will be largely present in the mall. Now that the single screens are slowly but steadily and gradually declining and there are certain iconic location, do we think that going forward, we may look at adding more screen on a single screen basis?
Sanjesh, we always say that we're a multiplex company. And though we have 3 single screens with us, but these are very iconic single screens, where the occupancy is good. But let me tell you that we all know multiplexes came in because of programming flexibility that we could have more shows per day. We could have more titles per day. We could have movies in different Indian languages of different genres. So that's the reason why multiplexes came into existence. I would say that will never go away now. Maybe you're saying that a few properties are shutting down, let's see, but that's not on a radar as of now. So today, on a radar is only a multiplex and not single screens. You may ask a question that what if you take a single screen and make it into a multiplex, well let me tell you that chances are difficult or less. Reason being that today, if I have to make a new multiplex, we have to follow today's rules and regulations. We have to follow all municipal bylaws. We have to follow all cinematographic acts for a multiplex. Maybe that single screen, the plot area is less that we may not be able to build 3 or 4 screens. So that could be the reason. But otherwise, if you ask me directly that whether are we interested to acquire single screens, my answer would be preferably not. We are a multiplex chain and we will continue adding multiplex screens only.
Great, sir. Great. Great. And best of luck for the future quarter.
[Operator Instructions] Next question is from the line of Kapil Jagasia from Edelweiss Financial Services.
Sir, 2 set of questions. First of all, if we look at our ATP increase over the last 3 years, it is round about 5% CAGR over Q1 FY '20. So which is good and in line with our long-term average. But looking over the same period for SPH, it is 6% in CAGR terms. So I believe there would be significant scope for this higher SPH going forward as the pricing improvement in this metric used to be 8%, 9% -- 8% to 9% before. So is my understanding correct over here?
No. Sorry, could you repeat that, please, Kapil.
Sir, if I just compare our ATP as on Q1 FY '23 to Q1 FY '20, there is a 5% CAGR in that. But similarly, if you see for SPH, it is like 6% in CAGR terms over -- for the same period. So I guess previously, our growth used to be around 8% to 9%. So right now, we are at a lower side. So is my understanding correct over here? So we have a good scope to increase and to make up the gap here?
Absolutely. There's a lot of headroom. And as I said that we have started various activities now. And if you see that when you look at CAGR for FY '20, FY '21, FY '22, there was nothing to talk about. There were hardly any footfalls, everything was less. But going forward, we have a lot of healthy, I would say, lot of headroom to increase the SPH. We are also increasing, as I said, various activities we are taking, various steps we are taking to increase our F&B spend and that will continue. Our endeavor is to increase it by about 8% to 10% quarter-on-quarter -- or sorry, year-on-year. So that's what our endeavor is. And we are working towards that only, Kapil, to ensure that more SPH is there. And also for that, we are doing a lot of food promotions, a lot of menu enhancement, more -- lots of touch points I spoke about and having quite a few premium screens now.
Just looking at the long-term, like for, say, 5 years or probably 5 years beyond, are we going to reach around, say, 70%, 75% of ATP levels, say, like can we reach there, or it would be like...
[Foreign Language], I hope it happens. But to do that, our endeavor is to increase the SPH and ATP ratio as much as possible, and the endeavor is surely to have much more than what we are clocking today, Kapil.
Great, sir. Great, sir. Sir, my second question is our other multiplex operator has indicated the premium screens right now is around 12% of total standing. Also, there have been a lot of launches in their space. So like for us what percentage of premium screens would we be having and our plans for expanding these in future?
Well, today, premium and special formats, we have the same, we have over 12% with us. If I can -- if I'm not mistaken, out of 692, we have about 80 to 85 screens, which are premium and with different formats. Our endeavor is to have more premium format screens. And again, don't take me wrong. It is not at the cost. I would say it's not at the cost of the regular screens. When I say premium means I also add different formats to it, I add ScreenX, MX4D, KIDDLES, BIGPIX, CLUB, ONYX, all those things which I had. So our endeavor also is to take different formats to different parts of the country, so that more Indians can get a feel of special formats which we have and which will increase the movie viewing experience as well as getting more footfalls. So our endeavor is also to take it up from 12% to higher what number is anybody's guess. But now every new property of INOX at least has one special format. If it's a small 3 to 4 screen property, they may not, but if it's more than 5, 6, and surely, we'll have one special format in all our properties.
And sir, what would be like the ATP and SPH in the premium screens, just a ballpark number could do?
Kapil, please repeat that.
Sir, in this premium screens, what would be our ATP and SPH in this 12% of screens?
If I look at our premium screens, I don't have this number off hand, but I think it will be 1:1 our SPH to ATP, that's how it will be. But it's very difficult for me to say that -- because also what happens, Kapil, is that when people are watching movies in a premium screen or a luxury format, they come out also to the normal concession counter to buy food. So very difficult for us to have that data with us. But if my guess is right, premium screens could be 1:1.
Great, sir. All the best.
Next question is from the line of Utkarsh Somaiya, an individual investor.
What is your operating cash flow for this quarter?
INR 110 crores.
INR 110 crores. And you expect to maintain this level of cash flow as a percentage of your EBITDA?
Percentage, no. So preferably, yes. But at the same time, the -- over the period of time, we are expecting that CapEx will go up. So I mean while operating EBITDA will be maintained, the net cash flow would be slightly lower.
Okay. And the cost-cutting which you've done in this quarter given that the occupancies will be maintained, do you think the costs will also remain at this level?
Well, as I mentioned about cost earlier, manpower costs may not show such a big dip, that may not show such a big dip. Power and fuel, yes, we are very confident of savings on a per screen basis because of the various steps we have taken to control heat, light and power. That's one. Rent and CAM is not in our hands. So there'll be no reduction over there. Other overheads, surely. The entire team is working that how do we increase or how do we decrease those numbers. So I think you'll see a slight reduction in costs going forward year-on-year because of various activities we have done, as I mentioned earlier. But not to the extent where you've seen in the employee benefit expense for this quarter compared to Q1 FY '20. But in other aspects, yes, you will.
Okay. Any guidance on the margin?
Sorry, I couldn't hear that question.
Could you give a guidance on the margin?
Guidance on the merger, I already said that we have got NOCs from BSE and NSE, and we've already made an application to NCLT for the merger.
No, not the merger. I said margin, margin, the EBITDA...
I can't hear, your voice is fading. Your voice is fading off, Utkarsh ji.
Am I audible now?
Yes, now you are.
I was asking for a guidance on the margin.
On the margin, well, the endeavor is to continue with what we are doing, whether it's the EBITDA percentage or on PAT, our endeavor is that. And I would say that we all are working to ensure that the margin does not dip. It's about 22%, where EBITDA is concerned and about 12.5% where PAT is concerned. So my guidance -- I can't give a guidance, but I can assure you that the company is working towards ensuring that these margins don't slip and only go up north.
Can you give me your cost -- CapEx cost per screen? Is it INR 3 crores, if I'm not wrong?
So yes and no, Utkarsh ji. If it's a premium property, it is more than INR 3 crores. If it's an average property, we do between INR 2.75 crores to INR 3 crores. But it depends on where we are making, what we are making, how much revenues we want -- we can generate -- can we generate on that place, so it depends on that. But ballpark is, let's say, INR 2.75 crores to INR 3 crores for an ordinary screen and about INR 3.5 crores to INR 4 crores for a premium screen. But for your modeling purposes, I think you can take anything between INR 2.75 crores to INR 3 crores per screen.
Okay. And just as a general understanding, over the long-term, 30% occupancies are what we expect to maintain. It can always dip or go up from quarter-to-quarter. But is that something -- is that our general range, 30% occupancy?
Yes, the endeavor is to have a 30% occupancy quarter-on-quarter. And if -- or more, or more, that the endeavor is, that's why the entire marketing team is working on to have more footfalls. But the issue is it's absolutely content-based though we try our level best to ensure that people come to INOX to watch movies. But at the same time, if movies don't do well, it's -- if they don't gather steam after Friday, Saturday, Sunday and Monday to Thursday, there are no footfalls, then yes, there will be a dip in occupancy.
I understand that. What I...
But, Utkarsh, we used to have 30% and more.
Yes. All I was trying to understand is when you plan your capital expenditure, what kind of occupancies do you assume you're going to do when you plan those expenditures? Just to understand the industry more than guidance. I was...
Yes. So this is very, very property-specific. If we are looking at a property down South, we look at about 75% to 80% occupancy. If you look at in the Hindi-speaking belt, because one should remember one thing, that the most South we go in the country, there are more languages spoken. If I look at Bangalore, a classical example, we have 6 national languages spoken over there. But the more North we come up, the number of languages reduce, but that does not mean that footfalls will not be there. Footfalls are there, but on a blended basis, we take less occupancy up North and more down South. However, when we look at our luxury format, even up North, I'm not now talking about down South. Even up North, we have a higher occupancy level in our properties up North if they are special formats and if they are premium. So it all depends on property. It depends on location. There's no one right answer, Utkarsh ji, which I can give you. I can just say that it's very, very property-specific. And again, a lot of thought process goes in number crunching of that critical property before we sign it. What occupancy we will get, how many people per day will come, what will be the average ticket price, the spend per head and including the forecast of advertising revenue of that particular property. So various aspects go into it before we sign one. It's difficult for me to give you one answer of what occupancy levels we take when we sign on our property.
Fair, sir. That was actually very helpful. And best of luck.
Thank you. As there are no further questions, we have reached the end of Question-and-Answer Session. I would now like to hand the conference over to the management for closing comments.
Well, I thank -- I would like to thank all of you for the interest you are taking in the company and with the assurance that we are trying our level best to have great numbers in the future also. So thanks a lot for taking interest. Thank you.
Thank you. On behalf of Axis Capital Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.