UFO Moviez India Ltd
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Q1-2026 Earnings Call
AI Summary
Earnings Call on Aug 1, 2025
Revenue Growth: UFO Moviez reported consolidated revenue of INR 1,090 million for Q1 FY '26, up 15% YoY and 16% QoQ.
Profit Turnaround: The company recorded a net profit of INR 65 million versus a net loss of INR 42 million in Q1 FY '25 and INR 7 million in Q4 FY '25.
EBITDA Surge: EBITDA jumped 194% YoY and 64% QoQ to INR 193 million.
Advertising Recovery: Advertisement revenue grew 28% YoY, driven by corporate spending and increasing cinema viewership.
Margin Expansion: Management expects further margin improvement due to high incremental margins from ad revenue.
Central Govt Ads: Some early signs of recovery in central government advertising, but a full return to pre-COVID levels remains uncertain.
Positive Outlook: Management is optimistic for Q2 FY '26 due to a strong pipeline of high-profile film releases.
Q1 FY '26 featured a diverse lineup of films, including regional and mid-budget successes, as well as several blockbusters such as Raid 2 and Housefull 5. While some titles underperformed, the overall theatrical market was stable and saw encouraging audience engagement, with a total of 456 movies released during the quarter.
Revenue growth was broad-based across all segments: advertising revenue rose 28% YoY, distributor service fees were up 6%, lease rentals grew 2%, and digital cinema equipment sales increased 13%. The recovery reflects renewed consumer confidence in cinema over alternatives like OTT services.
Net profit turned positive after previous losses, supported by strong EBITDA growth. Cost optimization and higher-margin advertising revenue contributed significantly. Management emphasized that profitability is sustainable and expects further margin expansion as ad revenue increases, given its high incremental margin of 55–60%.
Advertising minutes sold nearly doubled YoY, and most of the growth came from corporate clients. Ad share as a percentage of revenue declined due to the structure of minimum guarantee contracts and rising revenue, but this dynamic supports both future revenue and margin growth.
State government advertising is steady, while central government advertising has shown only minor improvement from recent years. Although inquiries from central departments have increased, management cannot predict when spending will return to pre-COVID levels, but remains cautiously optimistic.
Management is optimistic for Q2 FY '26, citing strong consumer sentiment and a robust slate of upcoming film releases. The company expects increased advertising activity and continued profitability improvements, assuming current positive trends in content flow and viewer engagement persist.
Management highlighted significant operating leverage in the business: any increase in advertising minutes or pricing strongly benefits margins due to high incremental profitability from ad revenue. Historical trends show potential for further upside if government spending resumes or average minutes sold increase.
Ladies and gentlemen, good day, and welcome to the UFO Moviez Limited Q1 FY '26 Earnings Conference Call hosted by Ventura Securities Limited. [Operator Instructions]
Please note that this conference is being recorded. Before we begin, I would like to point out that this conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements do not guarantee the future performance of the company, and it may involve risks and uncertainties that are difficult to predict.
I would now like to hand over the floor to Mr. Amit Patil from Ventura Securities. Thank you, and over to you, Amit.
Thank you. Good day, ladies and gentlemen. On behalf of Ventura Securities, I welcome you all to UFO Moviez Limited's Q1 FY '26 Earnings Conference Call. The company is today represented by Mr. Rajesh Mishra, Executive Director and Group CEO; and Mr. Ashish Malushte, Chief Financial Officer. I would now like to hand over the call to Mr. Rajesh Mishra for his opening remarks. Thank you, and over to you, sir.
Thank you, Amit. Greetings, everyone, and thank you all for joining our Q1 FY '26 earnings call. Q1 FY '26 delivered a stable and encouraging theoretical performance marked by a diverse slate of films across languages and genres.
The quarter began with regional and mid-budget success led by Ajith Kumar's Good Bad Ugly, which saw pan-India appeal. Films like Thudarum, Jaat and Kesari Chapter 2 performed steadily, though titles such as Ground Zero, Phule, Detro, Underwelmed. Many saw a major boost, which Ajay Devgn's blockbuster Raid 2 and strong showings from Bhool Chuk Maaf and Tamil hit Tourist Family.
June sustained the momentum with franchisees success like HOUSEFULL 5 and Amir Khan's Sitaare Zameen Par, though a few titles like [indiscernible] and Kuberaa missed expectations, reflecting ongoing mid-tier market volatility.
Overall, Q1 FY '26 reflected a balanced theatrical quarter. While not all titles met expectations, the success of small and mid-budget films, select blockbusters and regional hits reaffirm the importance of strong storytelling, franchise value and audience connection.
With stable revenues and encouraging consumer sentiment, the outlook for business continues to improve heading into the second quarter. In totality, 456 movies were released, including versions and languages during the quarter compared to 476 in Q1 FY '25 and 458 in Q4 FY '25. On the screen network front, our advertising footprint now stands at 3,762 screens. This includes 2,251 multiplex screens and 1,511 single screens.
Now turning to the key figures for the quarter ended June 2025. The consolidated revenue for Q1 FY '26 grew by 15% to INR 1,090 million compared to INR 945 million in Q1 FY '25 and increased by 16% from INR 940 million in Q4 FY '25. EBITDA grew by 194% to INR 193 million compared to INR 66 million in Q1 FY '25 and increased by 64% from INR 118 million in Q4 FY '25.
The company reported a net profit of INR 65 million in Q1 FY '26 compared to a net loss of INR 42 million in Q1 FY '25 and a net loss of INR 7 million in Q4 FY '25. The consolidated cash at the end of the quarter was INR 1,239 million, and the net cash was INR 537 million after considering outstanding debt.
Looking ahead, while the Q2 began on a mixed note with the release of films such as Metro In Dino, Malik and Aankhon Ki Gustaakhiya, Tanvi The Great, Nikita Roy, the strong box office response to Saiyaara was a promising indicator for the remainder of the quarter.
The outlook for the upcoming quarter remains positive with several high-profile releases slated, including Dhadak 2, Son of Sardaar 2, War 2, Coolie, Param Sundari, Baaghi 4,
Jolly LLB 3, The Conjuring: Last Rites and Vash Level 2.
With this robust lineup, we remain optimistic about continuing with the momentum and delivering an even stronger performance in the coming quarter. I would like to take this opportunity to thank all our stakeholders for their continued trust in the company. With that, I open the floor to take your questions.
My colleagues, Mr. Ashish Malushte, Chief Financial Officer; and Mr. Siddharth Bhardwaj, CEO, and I will be happy to take your questions. Thank you.
[Operator Instructions] The first question comes from Vaibhav Badjatya from Honesty and Integrity Investment.
Yes. So I just wanted to understand any update on the central government advertising and any update from the government [indiscernible] that when this advertising can be -- will be back to normal? If you can just provide an update on that, that would be helpful.
So our state government business continues to be at a steady rate. Central government has lagged behind in the past few years. But we have seen some minor traction in advertisement released from the central government, which is a good indicator for the future.
But by when it will return to pre-COVID levels, that remains to be seen because this is something totally controlled by the central government. But we are optimistic because we have been receiving inquiries from departments and ministries for the advertising. So we are hopeful of that.
The next question comes from [ Pooja Jain from Taneja Capital ].
So my question is the revenue grew 13% year-on-year with PAT. So what -- I want to know the primary revenue drivers. Was it film distribution advertising or anything else? And how sustainable is this profit turnaround?
So 2 parts of your question. Let me first take the first part about the revenue growth. So there has been a very democratic growth across all the revenue lines. So we have seen 28% growth in advertisement revenue. In the distributor service fee revenue also has seen about 6% growth.
Lease rental revenue, which is more or less in linked line or related to the number of installations that we have has remained flat with a very small growth of 2%. And the other line item that we have about sale of digital cinema equipment and related items, that has also seen a 13% growth year-on-year.
So as such, all the revenue lines have performed well on a year-on-year basis. This is primarily also a reflection of a slow and steady coming back of confidence of the viewers in cinema viewing over any other options such as OTT. And we're also seeing some of the -- some trends where the movies have started doing really well on box office, which was not really expected to do that well or not even aware of -- heard of rather.
So all this has slowly started translating into the number. The second part of your question was about the profitability growth, whether it is sustainable and will continue. Answer to that is yes. And let me explain you a little bit in detail.
Last year, during earnings call, we had explained that considering the situation -- post-COVID situation that was prevailing in the film industry, we went ahead and did cost optimization efforts. And in the process after December last year, it's a tremor organization with all the overheads brought under control.
Now on the back of it, now when we are seeing the business turning around, it certainly gets back -- adds to the profitability, more particularly the advertisement revenue, because advertisement revenue has an incremental margin percentage, the PBT margin percentage to the tune of 55% to 60%. So any improvement in ad revenue, which obviously is on the back of the improvement in the cinema viewing overall experience in the country is going to disproportionately add to the profitability of the company. So this is what I can tell you about last quarter and how we look at this -- I mean, this quarter as an indication going forward.
Got it. Are the margins expected to expand like the profit margin?
Yes. So again, taking a queue from what I said in the last -- as an answer to the last question that the advertisement revenue, which is the key contributor to the revenue growth going forward because distributor revenue and rental revenue are more or less flat in our case. That contributor adds to almost 55%, 60% in margin. So any increase in the advertisement revenue, therefore, is accreting to the overall margin, including EBITDA or PBT margin.
[Operator Instructions] Next question comes from Hemant Shah from Seven Islands PMS.
I just have one question with respect to the average minutes sold. This quarter, average minutes sold was around 4.31 vis-a-vis 2.35 last year, as per the Slide #10. And with respect to that, the advertisement sharing has been reduced. I mean what is the correlation between the 2? And can we expect a little bit more minutes to be sold going forward, seeing the good traction at the beginning of the year?
So most certainly, let me take the -- there are 2 parts of your question. One is relating to the ad share. And the other one is ad minutes sold and the potential of these minutes to go up. The second part, I would request Sid to -- Siddharth, who is with us on the call, our CEO, to take that question. But before he takes that question, let me explain you about if there is any correlation between the 2 and how do you -- how do we see the ad share percentage.
So you're right, the ad share has dropped percentage-wise to the revenue. And that happens because in our network, now we have given sort of a minimum guarantee to most of our key screens and the key screens in our presentation, if you see the multiplexes have exceeded 2,200 screens in the overall network of 3,700. So we have a concept of giving minimum guarantee to the theaters as a revenue share.
And since that minimum guarantee is relatively at a higher level as compared to the sharing that we used to do in the past as 25% sharing. What happens is as the revenue keeps going up, this fixed amount of minimum guarantee as a percentage of revenue keeps going down, and that is exactly what you're seeing now. And as the revenue will grow from here, this percentage reduction will continue. But of course, at some stage, the minimum guarantee would convert into a sharing, but that will be some time from now.
Till that time, you can keep seeing this reduction of percentage of ad share as a percentage of revenue. For the second part, and as such, there is no correlation between the 2, minutes going up and the amount of ad share. But the percentage of ad share will certainly go down if the minutes go up. So I would request Siddharth to throw some light on this number of minutes and the potential of these minutes to grow in future.
Hemant, this is a very valid question. I think over the last 4, 5 years, post-COVID, we have been trying to up the number of minutes sold, keep the ER intact so that -- and it all largely depends upon how the content flow of films is there and how it is realized.
So we see the sentiment towards cinema going has dramatically improved. And the good thing is it has improved in the first quarter itself. So what it essentially does is positively discourse the advertisers to commit to cinema advertising for the year.
So a lot of good -- in the last month of this quarter, quarter 1, a lot of good happened where the cinema admits increased and which in turn positively dispose the advertisers towards committing to cinema advertising. So we are confident that the number of minutes will definitely go up.
And as it is as a trend, I think H2 and Q2 are generally on the higher utilization of minutes because PSU and government, whatever little it happens, that also helps push number of minutes sold. And even the corporates, they are more forthcoming to spend in quarter 2, quarter 3 and quarter 4 on cinema because large part of quarter 1 is eaten away by IPL, where a large part of advertising is committed to IPL. And now the runway is fairly clear for advertisers to keep coming back in case content supports. I hope that answers your question.
Sure, sure, of course. Can I squeeze in one more question, please?
Yes, sure.
Okay. So in the past, what was our average -- highest average minutes sold in any quarter in the past, maybe before COVID?
So we have -- let me pull the quarterly information. The yearly information is available in the same presentation, Slide 20, Slide 20.
Yes, quarterly, I'm just asking, quarterly.
So if you want specifically which quarter did the best...
And I mean not which quarter, what was the highest minutes sold? I mean, that's just ballpark.
About which quarter did best in terms of number of minutes sold. So that is 7.4 minutes in Q4 FY ' 18 and 6.8 minutes in Q4 FY '19, but let me tell you an important point here. In both these years, you see the spike in Q4, and that is the time when government used to do a very active spending in Q4. And therefore, the government share in this 7 or 7 minutes would be at least 60%.
I think that is the election, I guess.
Not really election. So government has an allocation, which generally expires in the ministries have allocation expiring in March. And therefore, we have their -- we used to up their spend from festive season peaking into Q4. But since the central government spends have, in a way, dried down, post-COVID, we changed the strategy and we started focusing more actively and intensely on corporate. And point to be noted is the current spend that you see of 4.31, of which 3.3 minutes have come from corporates, which is probably the best so far. But certainly, the OpEx is very high from here. Average minutes can go as as 12, 15 minutes.
Okay. Okay. So I'm just trying to figure out the operating leverage which can be played out if the minutes -- average minutes sold increases from, say, 4.31 to just 5.2. I mean, can we expect a lot of operating leverage in terms of PBT at PBT level?
Absolutely. So in one of the previous questions, I said exactly the same thing that it has a huge operating leverage because any incremental ad revenue translating from incremental ad minutes has almost 55% to 60% PBT margin.
Both the pricing as well as volume going up is very, very accreting to the margins and the absolute...
There are no further questions. Now I hand over the floor to Mr. Rajesh Mishra for closing comments.
Thank you all for joining today's call. Our teams are available to provide any further information or clarification you may need. We appreciate your time and continued support. Thank you very much, everyone. Thank you.
Thank you, sir. Ladies and gentlemen, this concludes the conference call for today. Thank you for your participation. You may disconnect your lines now. Thank you, and have a good day.