Balaji Telefilms Limited (BALAJITELE) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Balaji Telefilms Limited Q4 and FY '25 Earnings Conference Call hosted by Adfactors PR. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectation of the company as on date of this call. These statements are not a guarantee of future performance of the company and it may involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I will now hand the conference over to Mr. Sanjay Dwivedi, Group CEO and Group CFO of Balaji Telefilms Limited, for opening remarks. Thank you, and over to you, sir.

Good afternoon, everyone. I would like to extend a warm welcome to everyone to Balaji Telefilms earnings conference call for the quarter and financial year ended March 31, 2025. On call with me today are Mr. Viren Trivedi, our Finance Controller; and Adfactors, our Investor Relationship team. I hope you all would have had the chance to go through our financial results, press release and presentation published on the stock exchange and our website. I am very pleased to address you all today, as the company stands at the cusp of a major turning point in its growth journey. Balaji Telefilms needs no introduction. It stands as a stalwart in the entertainment industry with the legacy of over 3 decades. Driven by creative geniuses, Balaji has delivered numerous super hit titles across all formats with a dominating presence especially in TV and now in movies. Over the years, our films has not only enthralled Indian audience but also captured the interest of viewers worldwide. Speaking of the key developments over recent past. It has been an eventful year for us marked with several milestones. As you all might be aware, we recently successfully completed the amalgamation of our subsidiary companies into one entity. As a result, ALT and Marinating Films Private Limited have been merged into Balaji Telefilms Limited. Consequently, content production operations will be consolidated, leading to better efficiency and utilization of pool resources. We aim to reduce redundancy and cost and overall get better synergies as a whole, marking a new chapter in our growth trajectory. The merger will also result in significant tax benefits. More recently, in June 2005 (sic) [ 2025 ], we entered into a long-term creative collaboration with Netflix for a range of exciting projects across different formats of storytelling. This association of two industry giants will usher a new era of delivering distinctive high-quality entertainment across formats, genres and audiences. We have in the past collaborated with Netflix, wherein we worked with them on popular titles such as Kathal, Pagglait, Jaane Jaan and Dolly Kitty Aur Woh Chamakte Sitare. Earlier this year, we successfully completed a fundraise activity to fuel our future business growth plans. We raised INR 130.7 crores through these issues, in which our promoters also participated. The proceeds from this are being utilized towards scaling up our movie distribution business, our digital platform and content business and enhance our intellectual property portfolio. Our business at present can be structured into three broad categories: digital, movies and television. Digital, which comprise our entire gamut of online streaming channels including ALTT, YouTube and other platforms which we partner with. Movies is our production house wherein we have and continue to offer blockbuster films. Television is, of course, our oldest line of business where we have dominated the prime time since years and delivered numerous popular shows. Starting with an update on our digital business. The pandemic expedited the shift to online digital platforms of content consumption, and we at Balaji have been well prepared for this paradigm shift. This quarter, we saw the highest ever subscription being sold standing at 3.29 lakh subscription. This includes 1,73,000 renewals. I'm thrilled to report that we have over 2 million active subscribers on the ALTT platform. This strong growth in subscriber addition is on the back of our continuous efforts to improve and widen our content library, coupled with unique marketing strategy and user-friendly subscription plan. This quarter, we added 11 new shows, taking the total number of original live on the platform to 170. More importantly, the uptick in subscription and renewal numbers which we saw reflect both strong acquisition and retention. Content engagement also improved further with the viewing minutes rising to 17.49 billion and total views growing to 1.79 billion. We believe that ALTBalaji today offers one of the most diverse content choices for its consumer. One of our unique advantage is that our TV and movie business and access to the wider content ecosystem, we have a leverage of producing great content at lower costs when compared to market rates. For example, we can harness talent from our movies and TV business to create a differentiated content offering as compared to the shows Balaji Telefilms produces on TV. Looking ahead, our digital thrust strategy is well positioned to unlock significant value and drive future growth. We are transitioning from a pure SVOD model to a hybrid SVOD plus AVOD framework, enabling us to expand our B2C subscriber base while diversifying revenue streams. A key initiative on this front is the launch of Kutingg, a new platform focused on short vertical episode-based content that caters to the evolving consumption habits. At the same time, we are strengthening our B2B partnership with multiple platforms, allowing us to reach newer demographics and geographies. Our strategic focus is on YouTube, particularly our content where we retain IP rights through a mix of repurposed material and exclusive new productions. Regional content remains a core pillar of our expansion with targeted programming for platforms like ETV and aha to engage diverse language-specific audiences. Additionally, we are scaling our advertiser funded program, AFP, producing branded contents on behalf of corporate clients, thereby adding another robust revenue system. With this multifaceted and forward-looking content strategy, coupled with expanding platform footprint, we are confident in achieving multifold top line growth from our digital channels in the quarters ahead. Coming to the TV business. Production has returned closer to the pre-COVID levels with almost 133 hours of content produced this quarter. We had 4 TV shows running throughout the quarter. While overall demand for content remains strong, there is some softness in the rates from the broadcasters, which reflect the shift in consumer trends away from traditional TV. Having said that, hit shows continue to command premium, and as you are aware, Balaji has a strong record of creating hits. We have a healthy content pipeline from the coming quarters and TV remains a strong backbone from our other lines of business. Finally, touching upon our movie business. We expect to see some rush by the producers to target the windows for release and feel the movie business would see some elements of fluidity for the next 8 to 12 months. We are able to complete the sale of existing ready movies to digital platform and cycle the capital well. We have a number of exciting projects and we expect these to get released over the next 12 to 18 months and, hence, believe it will be necessary to continue to follow a derisked strategy using presales and co-production agreements. In fact, we have been able to derisk our film business by recovering about 85% to 90% of the production costs even before the movie is released. This derisk model is designed to ensure greater revenue stability. Among our upcoming projects, some of the notable ones are Vrusshabha, which is currently in post production and is shaping up to be a significant release in our upcoming slate at Diwali. Bhoot Bangla, starring Akshay Kumar and directed by Priyadarshan, we have successfully completed the shoot in May 2025 and is now moving into a post-production phase. And finally, Vvan, a collaboration with TVF, starring Sidharth Malhotra, shooting which began at the end of June 2025. These projects, alongside others already in the pipeline, reflect the depth and diversity of our content slate. As seen in the previous fiscal, we continue to benefit from the healthy mix of presales and co-production agreement, which help derisk our investment while allowing us to capitalize on the upside potential. Overall, our growth strategy going forward is centered around a focus on the movie business, strategically supported by the enduring strength of our TV operations. In the Movie segment, we are building a robust pipeline that span diverse genres and targets both domestic and international markets. On the television front, we will continue leveraging our established presence in prime time slots through a mix of new and existing shows. Our thrust towards digital includes initiatives mentioned earlier such as hybrid model on ALTT, utilizing our YouTube channel on new content and diversifying our content for a wider audience demography with the leading OTT platforms. Additionally, the amalgamation of ALT and MFPL with Balaji Telefilms is a key move aimed at consolidating content production operation, enhancing operational efficiency and reinforcing our leadership position in the market. Now coming to the financial performance of the quarter and full year. Revenue for the quarter stood at INR 66.25 crores vis-à-vis INR 135.11 crores in the previous corresponding quarter. Loss before the tax is at INR 10.7 crores. PAT for the quarter stood at INR 94 crores vis-à-vis with a loss of INR 2.6 crores in quarter 4, while PAT margin came in at 142%. EPS for the quarter is INR 9.07. Coming to the full year number. Operational revenues for FY '25 stood at INR 453 crores vis-à-vis INR 625 crores in the previous fiscal year. Loss before tax for the year stood INR 12.2 crores. However, the PAT stood at INR 84.6 crores vis-à-vis INR 19.4 crores for previous year, while PAT margin was 18.67%. EPS for the year stands at INR 8.41. The group has a robust cash reserves at INR 172 crores in bank and mutual funds, thus being adequately funded. Moreover, our order book for digital B2B business for the leading OTT platform is over INR 300 crores. That is all from our side. We can now take any questions you may have. Thank you.

[Operator Instructions] The first question comes from the line of [ Nimesh Pandya ], an investor.

My question is, how will the strategic shift from a pure subscription video on demand to a hybrid SVOD plus AVOD, means, advertising video on demand, model for ALTT impact subscriber acquisition, retention and overall revenue collection? Just your view on the strategic shift.

Yes. So if you see, if you just go back 2 years before when we were having a cash burn of around INR 125 crores to INR 145 crores each year, that time, our original proposition was original exclusive not available elsewhere and binge viewing. So it was pure SVOD platform. Last 2 years, we have realized to kind of be dependent only on the SVOD model is actually a huge drag on to the financials. Hence, we wanted to derisk this total dependence on SVOD and move to our other revenue streams. Hence, SVOD model got little diluted with AVOD model. So it is shaping up well. Now our app is supported by ad-led as well as pure subscription-led model, that is both. And two, what we have started doing is we have started building digital strategy, which is YouTube for the shows which we have IP. And third is focusing on commissioned shows for the leading OTT platform, for which we have over INR 300 crores of order book as we speak. Three shows got delivered in the last fiscal, and out of which two had very successful run at the JioHotstar, and we are in talk for the second season 2, that is Power of Paanch and Kull. So we see a paradigm shift in that sense, moving from what we call as TV model, which seemingly look like a model which is on the decline, but there is a life ahead of TV also, but a gradual shift into an offtake for the digital content. And since we have been very successful in creating stories, we are the largest beneficiary of this uptake on the Indian content which gets played out on Netflix or Amazon or Sony or Hotstar. So we will be spread across all this leading OTT platforms. And what is happening also is the model of shows or the format of shows, which historically has been 8 to 10 to 12 episodes, we are seeing for Indian content, now it is becoming a 50-episoder, coming with the second season; or 100 episoder coming with the second season. So this kind of storytelling formats is where Balaji excels, which is drama, long-running episodes and that is where we see a huge interest from the leading OTT platform. So that's the way it will be. So it will not be -- when we say digital, it doesn't mean only ALTT. It will be having various things which will become a digital business. So ALTT will be a smaller piece in the overall digital strategy.

Okay. Understood. Got it, sir. Sir, I have another question.

And currently, I will just say the cash burn, which was close to INR 120 crores to INR 145 crores until, say, 2 years back, now the cash burn is around INR 35 lakh each month, though the P&L will also have a noncash item and all those stuff. But our cash burn currently on the app itself is INR 35 lakh per month.

Right, right. Right, sir. Got it. Sir, I have another question. Like considering the transition which has happened, so what would be the key performance indicators, right, to increase the subscriber base and the renewal rates also? Would like to have your view on this.

Yes. So the way it will be, see, TV yield will continue to be under stress. So I don't see TV yield improving in coming quarters or coming years. So we are still down by over 25% to the pre-COVID level. We've still not -- so TV will continue to be under stress in terms of margins. However, the shift will happen for the commissioned OTT platform for the leading channels like Netflix or Amazon. So there, there is a huge upside into the business. That's why we have this INR 300 crores of order book which we are talking about. Having said that, whether the margin which we used to get on TV, say, at 25%, 30% also, whether it will be there in digital business, it will not be in the same range, but more business is seemingly coming from this digital side. So we should be -- suppose if there is INR 300 crores, our endeavor is to get at least INR 100 crore revenue in each year, at least. And that's the way to go.

We take the next question from the line of [ Ritik Shah ], an investor.

So sir, I wanted to know whether what is the target IRR that you are actually targeting whenever you enter into preproduction or acquiring any movie after the release for your OTT platform?

So the way it is, we don't acquire films. So we don't trade in motion pictures business or we don't trade in content. Typically, the whole thing is homegrown. We greenlit the concept. We kind of work on the concepts. We go ahead and kind of fund those movies. The way we do is we totally derisk it because the moment we think this movie has a potential, we kind of try to get the feel from the rights holder, which -- where we monetize and see their interest. And also we get a fair indication of what will be the potential sales on these platforms. And once we see commercial feasibility, we greenlit the show for the production. Otherwise, until such time, there is no visibility, there is no definitive agreement in place for the digital rights, we don't greenlit any of the movies. And we don't trade in content. So it's not that fully made movie comes to us with -- and we pay premium to acquire those things, that we don't do it. So on an IRR basis or a return on capital employed, so if you -- see, movie typically gets distorted when you look at the financial statement because in 1 year, if you get 2 movies, then the revenue goes kind of substantially higher. And quarterly releases is still that none of the listed companies and also the unlisted ones have figured out how to do it each quarter because there are a handful of windows open for you to come on the theatrical side. But having said that, what we are trying to do is we clearly see over a period. So if you just see Balaji Motion Pictures over a period of 6 years, we have generated 22% return, taking all movies together, whether it is profitable movies or a loss-making projects. Overall, we have generated 22% return on the capital.

Sir, the participant [ Ritik Shah ] has left the call. We'll move on to the next question. [Operator Instructions] The next question comes from the line of [ Mayuresh Rao ] from [ Invest OTDU ].

My first question is how does the company plan to effectively deploy a strong cash reserve of around INR 172 crores to generate further growth and return beyond just scaling the movie business and IP creation as stated?

Yes. So basically, when we did this fundraise, we clearly outlined the utilization for the segment itself in the fundraise document, which movie business will take another INR 65 crores out of INR 131 crores. Digital and music expansions and exploring more rights there, it will be around INR 33 crores. And general corporate purposes, we have kept aside for any opportunities or anything which we think we should be doing it, that is around INR 32.5 crores. So largely the fund deployment will be into IP-led businesses, whether it is movie or digital. And on the motion pictures side, we clearly see a trend where the sequels are outperforming box office numbers if done it in a nicer way. So I think we will continue to do that. We had Dream Girl 1, Dream Girl 2. We have Ragini. We have LSD. We have Crew. We have Shootout series. We have Once Upon a Time series. We have Dirty Picture. So most of this will also get used into this -- developing this IP and this format. And in 3 years, I think movie will be the main source of business followed with digital, and TV will become the third line of business. So the pyramid will just turn upside down.

Okay, okay. And sir, could you throw some color on your Netflix deal and your current order pipeline [indiscernible].

Yes. So we announced Netflix deal on Ekta's 50th birthday. And there are still some definitive agreements pending under discussion, we will sign it out. But the basic thing is it's not a one-show deal, one-movie deal or one-format show. It's a long-term deal, so it covers a 3, 5, 7 years type zone, and it is across the format. We will do direct to OTT movies, we will do reality-based shows, we will do telenovela and we will also do binge viewing format shows. So that way it is a long-term and enduring relationship which we have entered into. Details will come in the following quarters, the moment we crystallize the numbers and the way to go ahead. But in principle, this relationship is sealed.

The next question comes from the line of [ Mamta Shah ] from [ Fresh Capital Advisors ].

Sir, my question is, sir, your revenue per hour seems relatively stable if you see year-on-year. So do you expect any meaningful improvement here that will -- because of the shift to digital and branded content?

Yes. So when you see year-on-year and quarter-on-quarter, you will see a stability in the revenue per hour or revenue per episode. But what is to be noticed is this is still down by 25% over pre-COVID levels. So to say, this -- though it has got stabilized, but we have not got even inflationary price rise to improve upon the yield on the television side. I believe this trend will continue, and we will not reach the level which we had before COVID in terms of realization per hour. So TV business will continue to be volume-led rather than revenue per episode. And what is happening on the commissioning side? Of course, because there is a huge upside which is there on the digital content and we, as a storytelling company, we are one of the biggest beneficiaries, so whatever drop you see on the television side will be adequately and more than that, it will be compensated by the digital B2B business which we will have, for which we have over INR 300 crores of order book as we speak.

Okay. And sir, do you have any volume target for movies and digital content for the year and...

So you said volume?

Target for movies and digital. Sir, currently...

So typically, we have always tried to do 3 to 4 movies in a year. We intend to up to 6 movies in a year, that's our target. In the year, 1.5 years, we will be there. And we'll continue to build movie slates like that. And every quarter, we are adding INR 50 crores of B2B digital content into our order book. But just to kind of convey this, that it takes a bit of time before the contract gets signed and then finally the show gets greenlit to a production level. Whereas TV is far more predictable. Every day you deliver an episode, you book a revenue. Whereas for digital business, the gestation period is a little longer than what you see on TV.

Okay, sir. Sir, can you throw light on the period for digital, like how long it takes?

So typically, if it is a 8 episoder or, say, 12 episoder, it takes 1 year, 1.5 years from the discussion stage to completion of the shoot. And then when digital channel finds the window, it gets released. But if it is a big budget movie, call, INR 90 crores, INR 100 crores, then it takes 2 years, 2.5 years also to make.

[Operator Instructions] The next question comes from the line of [ Kritik Shah ], an investor.

Sir, I wanted to know if you are entering into ultrashort video content, that is like YouTube shorts or reels? And another question would be like are you going to towards other regional languages like other, Gujarati, Tamil, Telugu?

So currently, what we are seeing on the regional side is we'll go into Tamil and Telugu to start with because we see there is an interest there and the market is sizable for one more player to enter and take a cream of it. So that's the way to go. We are only targeting Tamil and Telugu right now. And second is on the platform side, the micro drama or you call it reels or whatever you call, it's Kutingg, which is there, it's one of the features of the app itself. So -- and it is showing a strong traction. It is showing some strong interest. And then we see -- we have just launched it. We have to see a quarter, and then we'll probably go all out on that.

We take the next question from the line of [ Anchal ] from Desvelado Advisory.

So in financial year 2025, 30% of revenue came from movies and 11% on digital. Do you expect digital to reach 20% to 25% over the next 2 years? And what are your key levers to get there?

So I will give you a horizon of 2.5 to 3 years, where movie will be the key driver to the group followed with digital, and the third segment will be television. So the way we will see is the content business, whether it is TV or it is digital; then we have motion pictures business; and then we have digital business which is purely B2C, which we do on our own, whether it is on the YouTube side, on the Meta side or we do through app. And there are some exciting innovations which we are working upon. And hopefully by September, when we do a September investor call, we will be able to present it to you. So focus will be on motion pictures, IP-led business and digital. Historically, if you see TV, the prime time has always remained 7 to 11. The prime time has not increased and there are 4 key broadcasters. So basically, even if you do any math, you can't go beyond 8 shows on this because no channel will give you more than 2 or 1 shows. So you will end up with 7 to 8 shows or 6 to 8 shows in a year. And the yield and the revenue per episode is there out with you, we have already disclosed. So that's the number which I see television will continue to be. So INR 250 crores to INR 350 crores is the range in which TV business will operate. And that's where it is getting stagnated, rather. Going forward, I think the drive will be more on digital side and motion picture side.

The next question comes from the line of [ Aniket Redkar ], an investor.