Balaji Telefilms Limited ($BALAJITELE)

Ladies and gentlemen, good day, and welcome to the Balaji Telefins Limited Q4 and FY '26 Earnings Conference Call. 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 are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. Please note that this conference is being recorded. I now hand the conference over to Mr. Sanjay Dwivedi, Group CEO and Group CFO, Balaji Telefilms Limited. Thank you, and over to you, sir.

Good afternoon, everyone, and thank you for joining us for Balaji Telefilms Limited's Earnings Conference Call for the quarter and full year ended 31st March 2026. On the call today, I have with me our Finance Controller, Viren Trivedi; and our Investor Relationship team from Adfactors. I hope you had the opportunity to go through our financial results, presentation and press release shared on the exchanges. It is a pleasure to connect with you all over again. FY '26 has been a transformational year for Balaji Telefilms where we have built a strong foundation for future growth. While the financial performance reflects a transitional phase for the business and broader industry challenges, this year has been focused on building a stronger content pipeline, expanding our digital capabilities and repositioning the company for long-term growth across platforms. We believe the investment and strategic initiatives undertaken over the last few quarters are helping create a stronger base for future execution and monetization. Let me begin with some important developments from the recent period, which reinforce our future growth trajectory. One clearly is strengthening our OTT partnership. We expanded our collaboration with Netflix with 2 new web series currently under development, including a large-scale period drama and another premium show. This marks the continuation and deepening of our long strategic partnership and reinforces our position in the premium digital content ecosystem. We now have an order book of approximately INR 350 crores under this line, out of which we expect to realize over INR 135 crores or so within the ongoing financial year FY '27. Some of the shows under production here includes Lockup and Coke, which is tentatively title, which will be released during this financial year. We also have a show in pipeline, which is in collaboration with Amazon. recently entered into a strategic collaboration with Vertigo TV through Balaji Talesilm studio model to produce Hindi vertical micro drama tailored for mobile-first audiences. This is a new storytelling format focused on short immersive, high engagement content. It aligns with the evolving consumer behavior, especially among Gen Z and mobile-first users. We believe this format has the potential to emerge as an incremental growth and monetization opportunity over the medium term. We are also expanding our digital ecosystem through IP creation. During the year, we have continued to build our digital ecosystem, including scaling of cutting and AVOD-led platforms, strengthening of B2B digital content pipeline, continued focus on IP-led growth, launch of Astrloology app as a part of service diversification. We are seeing increasing traction in the digital segment, supported by improving visibility in the content pipeline and platform diversification initiatives. There are some new growth verticals. We have also initiated steps towards expanding our presence beyond traditional production, including building new creative and talent-led ecosystem within the digital segment, exploring new formats, partnership and content adjacencies. These initiatives are aimed at diversifying revenue streams and strengthening our long-term content pipeline. Just to briefly recap the key developments through the year, integration of alltminating films, which results into a huge cash saving as we got an input credit of INR 113 crores. And next 4 to 5 years, we expect Balaji will be 0 taxpaying company. Launch of new digital platforms and initiatives, strengthening of OTT partnership with content pipeline, continued investment in motion pictures and IP creation. FY '26 was essentially a year of building for the -- building the base for the future scale. Segmental breakup. digital business. Digital business to be our core growth engine. The addition of new formats like vertical micro dramas and expansion of OTT partnerships significantly strengthens our position. The B2B order book and platform strategy provides strong revenue visibility. We are building a multi-format, multi-platform digital ecosystem. Television business continued to remain an important business segment for us, although industry dynamics and viewership trends continue to evolve. This year saw temporary softness due to show transitions and overall paradigm shift away from the traditional TV. We are now rebuilding the pipeline, which will support gradual recovery. Business EBITDA in the TV segment grew sequentially from a loss of INR 7 crores in the previous quarter to a profit of INR 4 crores in quarter 4 FY '26, indicating a turnaround in this segment performance. With successful shows like Qi Sasbikavi Borosi 2 and Nagin 7 doing well, we expect this momentum to continue. Our motiontures business continues to be supported by a strong pipeline of upcoming projects and a calibrated presales-led approach. We remain focused on improving content monetization, enhancing revenue visibility and maintaining disciplined capital allocation, which we believe will support sustainable growth in this segment over the medium term. Our recent release Bhotamgla received excellent audience reception. In terms of our content slate, we have another 70 movies in the pipeline planned over the next 3 years, and we will have 4 movies released in this year, out of which 3 movies have already been presold of the cost recovered is 99%. As we have mentioned in the past, our film business model is such that we strive to recover almost all the COP before the release, thereby reducing our risk exposure on theatrical performance. This has been the case of Bhuj Bangla and the next 2 movies that will be coming. Financial performance. Coming to the financial performance, quarter 4 FY '26 was impacted by timing-related delays in content monetization and a softer contribution from the traditional television business. Revenue from operations for the quarter stood at INR 47 crores. EBITDA loss for the quarter stood at around INR 17-odd crores. while loss after tax was INR 14 crores. For FY '26, revenue from operations stood at INR 210 crores as against INR 453 crores in FY '25. EBITDA loss for the year stood at INR 65.8 crores while loss after tax stood at INR 49.6 crores. The performance during the year reflects the overall industry headwinds and changing landscape, lower activity levels in the television segment and continued investment towards strengthening our digital ecosystem and future content pipeline. Having said that, we believe several of these factors are transitional in nature. Our focus remains on improving monetization across the commission and digital businesses, strengthening content delivery across formats and leveraging our strategic partnership to drive growth. With a healthy liquidity position, we have over INR 165 crores liquid cash into the banks and mutual funds and a robust pipeline across television, films and digital platforms, we remain confident about the medium- to long-term growth opportunity for the business. Looking ahead, we expect FY '27 to be the year focused on execution, improved content monetization and gradual business normalization across segments. And this upside in the financial performance and its execution will be very much visible from the quarter 1 of FY '27. Execution of our OTT partnership, improving traction in the digital pipeline, newer content formats such as micro dramas, release of multiple films and gradual stabilization of the television pipeline are expected to support business momentum going forward. As we move forward, we expect digital scale and cinematic storytelling to play an increasingly role in our growth journey, while television will continue to remain an important backbone for us. With that, I would like to open the floor for any questions. The entertainment industry is rapidly evolving to a digital-first format diverse and IP-led content consumption. With strengthened OTT partnership, entry into new formats like micro series and a robust content pipeline across format, Balaji Telefilms is well positioned to build a scalable and future-ready entertainment business. With that, I would like to open for the question Q&A session.

I have 2 questions. First question is, I want to understand the forward guidance. What type of strategic levers are you prioritizing in FY '27 to strengthen Balaji's OTT platform Balaji and television content pipeline while managing risk from rising production costs and competitive streaming dynamics? That's my first question. I'll ask my second question after this.

So currently, Balaji is a content storytelling company across formats, across formats and across platforms. If I just let you know what we have built over the last 1 year, which will play out in this financial year of FY '27, if my commissioned shows, which is TV plus OTT, which is B2B business, which was around INR 160-odd crores in the FY '26, we expect it to be around INR 330 crores in the coming fiscal year. So that's a huge upside there we are seeing with 2 of the premium shows coming on Netflix in this financial year. One is a lockup and second one is Cent Title Coke, which will come in February. plus show on Amazon. So that's a huge upside, which we are seeing. We have an order book of over INR 350 crores plus around INR 50 crores gets added each quarter. So we will continue to build on those models. So whatever decline you are seeing in commissioning TV model gets compensated by the upside which we are seeing on the OTT-led content. However, I must admit here, the margin as compared to television and OTT vary differently and significantly, I would say. See in TV, what happens is the show is it runs for 6 months, 12 months, 18 months, 5 years. So the marginal costing and everything comes into play and you have a better yield, whereas the OTT-led platform typically will not have that kind of yield because these are all finite series. It gets short on schedule. So though even the top line increases manyfold, I believe the margin will not be as robust as television. That is on the television side. Now on coming to Motion Picture side, we hardly had any release last year. That was one of the issues which Balaji has been facing erratic cycle, erratic release of the movies. Now we have worked on a 3 year slate, 7 movie pipeline is ready. Each year, we will have 4 to 5 movies releasing. And we expect this year close to INR 400 crores top line coming from motion pictures itself as compared to only INR 15 crores, which was there last year. Then we have Balaji Studios, which is typically working with independent creators for the other leading platform. We had INR 8.5 crores revenue last year. We believe it will be around INR 70-odd crores this financial year. Plus, there is Meta which we just started last year with a revenue of around INR 6.5 crores. We believe that will be a -- which will be around INR 115-odd crores this year. Similarly, Balaji Muna, the talent agency, which we started just the last quarter of financial year, we have already have a talent pool of 50-plus artists. We have clocked a revenue of INR 1.5 crores last quarter. We believe this will be at least doing INR 12 crores in the coming financial year. And Balaji Estrog, which has been quite a successful app launched by us. We have app installed of around 1.8 million with the wallet recharge FY '26 was INR 56 lakhs plus, and we expect close to INR 6.5 crores to INR 7 crores in this financial year. So this is the broad strategy, which will play out in FY '27. Now I look forward to your second question.

My second question is what type of capital allocation framework have been applied in '26 to '27 to balance investments in digital content while sustaining the profitability margin, given all Balaji's subscriber churn and rising distribution costs. Just want to understand your view on this.

So television doesn't typically require a huge capital outlay, television and commissioning model OTT platform because it is also funded by the platform themselves. So maybe 3 months of capital, which will be around INR 50 crores to INR 55 crores gets locked into these kind of segments. Whereas on motion picture side, we try to presell all those movies. And what happens is 50% of the COP gets funded by the presales, which we do. So just to give an example, if Ghangla, now this number, I'm just giving an example, if my Gh Bangla was costing around INR 100 crores I have got around INR 48 crores funded by the platforms and balance was funded by us. So the way we approach now each business is turnaround time and return on capital. That should be the fundamental going forward instead of sometimes movie takes 2 years, 1.5 years, and we invest INR 100 crores and get INR 10 crores out of which typically is a very poor yield at times. So the focus we have changed. We clearly look at capital return now and all those things will play out in this FY '27 starting quarter 1 itself. And typically, we will have investment of around INR 125 crores to INR 150 crores at any given point of time because certain movies will be on floor, certain movies will be nearing release and certain movies will be in advanced stage of discussion and rolling out for the next schedule.

And digital business, not more than INR 10 crores to INR 15 crores, we require working capital to run that stream.

We have the next question from the line of Shah, an individual investor.

As you have mentioned, G Bangla cost has been recovered. Could you give a guidance on how much we have earned from the movie and also our share in the net box office collection...

So we don't give that kind of guidance note in the conference call -- but I can assure you we have got a very significant returns on this capital employed, which will be visible in the quarter 1 numbers, yes. The film has done exceedingly well at the box office. The numbers is there for everybody to see.

Okay, sir. So we can expect the numbers in the Q1 release.

Absolutely, absolutely. Absolutely. We have the next question from the line of , an individual investor.

So my question is regarding the recent amalgamation of -- at Digital Media Entertainment and with our Balaji. It was effective from. So what specific operational synergies or cost rationalization have we realized in FY '26? And what incremental benefits can we expect in FY '27?

So I would just lay down to 2 broad indicators of the benefits which will be reflected in the financial statement. So if people would recollect that -- at was burning around INR 125 crores to INR 145 crores each year when, say, 2 years back. The whole idea was to make it leaner, make it more cash efficient. Last year, our cash burn was INR 50 lakhs, thereabout per month. So it is around INR 6 crores of cash loss on the total digital initiatives, including the newer launches like say, Astro or we do whatever initiatives. So that way we have brought it down to bare minimum. The turnaround is expected in FY '27 with overall digital business will be cash positive. Two, the other major initiatives or the significant benefits which will arise for the parent company, which is Balaji Telefilms is the huge input credit from GST, which is around INR 117-odd crores. So we have that asset, which remains to be utilized. And plus, I believe next 4 to 5 years, there won't be any incidence of direct tax also, which will be reflected in the P&L statement. So that's the key benefits coming out of it. And plus there is operational efficiency and all those things which happens, which is getting reflected in the cash saving, which I just mentioned, we are burning around INR 50 lakhs per month and which is seeing a downward trend there also.

Correct, sir. Sir, another question is regarding this AI automation and IP, which are the 3 pillars for the company going forward. So could you like elaborate on how are we using AI and automation? Is it for content production? Is it for distribution targeting or like for measuring some efficiency or something like that? How are we using AI?

Yes. We have set up our own AI team into the company. There is a captive team, which sits here and works on the various formats which we do. We have done many newer things using AI tools. One is the creating a short format, reels and shows, and we also won awards for it. Two, we have also generated AI music library, which is doing very well on the Internet. And we are bullish on this segment. We are a little cautious on the investment side, and we gradually hope to scale it up as time passes, and it will be a full-fledged AI team integrated into the overall production efficiency model, which we have in-house. So this is going to play a critical role here too. including BFX. Those things we are developing in-house so that we have the skill within the company to -- because we are present in all the formats, be it TV, be it digital, be it motion pictures and web series. So it makes more sense to have a specialist in the company to run the show for 24 hours.

That answers. Another question, sir, is regarding inventories. So it rose from around INR 73-odd crores to somewhere around INR 207 crores. So could you give us a little breakdown on this inventory, how much is movies under production versus digital? And what is the expected delivery time line or maybe when we start...

Inventory is coming out of motion pictures. So what you see as of March is largely your Bh Bangla 1 and Hiroki Horin. That 3 movies inventory is residing there. So typically, what happens with an accounting is when you sign talent and when you give advances, it resides as an advance on to the balance sheet. The moment it grows on float, it gets translated into inventory. till you see the first monetization. When the first monetization you do typically that is theatrical. From that time onwards, we start kind of amortizing these inventories.And on the last leg of the monetization, this inventory is fully written off. So we don't carry any intangibles to the balance sheet post the last monetization.

Got it. And sir, last question from my side. The cash and the investments that we have, have declined from INR 178-odd crores to nearly INR 127 crores in FY '26. So could you explain the difference between the balance sheet figures and the current level right now?

The earlier question will kind of answer your -- the last question on cash and cash equivalents. So if you see a liquid cash, we have around INR 165 crores and balance is into inventory.

Okay. And sir, what is the minimum liquidity threshold that we are comfortable with going forward?

Into motion pictures?

Yes.

Close to INR 125 crores to INR 150 crores.

We will take the next question from the line of Vansh Rathod with JJ Investments.

So I had just 1 question. Shows like Kyunki Saas Bhi Kabi Bahu Thi and Nagin 7 are doing so very on PRT basis. What do you think -- how confident the management is about this momentum for FY '27? Or are you seeing a slow down?

Okay. So I think on the television side, they are not kind of innovative enough in terms of the show format. So in terms of the content which they want to play, you will find more of this TV business are playing very safe in the conventional model. the yield is going down. In fact, if we just compare the yield to the pre-COVID year rate, we are still down by 25% to 30%. So there is a -- the investment into the content from the broadcast side has significantly slowed down and considerably reduced. As a result, all the production houses will see their margin getting depleted. And it affects Balaji Telefilms also. So the kind of efforts which we put in and the kind of reward which we get because it is primarily the IP is owned by the broadcast. So it is becoming less liquidity for a production house to kind of run this kind of business where the is year-on-year is degrowing and the tenure of the shows also is getting reduced. Earlier, the show is to run for a year, 2 years, 3 years and there was enough and more opportunities for production house also to make a decent return. With the tenure of the shows, very few shows run more than a year. These days just can the each of these broadcast companies will find 6 to 9 months is becoming the norm. So everybody is going through the tried-and-tested formula for those play. We intend to build our own IP around that and take it from there on. So IP retention will be key rather than just doing work for higher business. I think that's the way currently it is looking like. But I still believe television as a medium still has a life. I think 10, 12, 15 years, it can still survive, but they need to invest into content, which I currently don't see them doing it. However, they are bullish on the OTT segment. So that's another challenge for them. They bleed on OTT, but the profit is getting generated. They are not investing so much of content.

Okay. Sir, regarding -- you mentioned that a particular show runs for approximately 6 to 9 months. So do we -- for example, do we prepare a future thing where the K pipeline [Foreign Language]

Yes. So we do because it's a business, we have to have active discussion with the broadcast if my show is coming to an end, what is the show, which we should be pitching. So but there is a lag between -- by the time the ends and when the time the shows go air. Hence, what we are doing is we are building the B2B business of the -- with the leading OTT platforms. So whatever dip you will see in the top line of the television traditional business will get compensated by the business which we generate from the OTT platform.

Okay. So this is 1 of the security measures for the dip. Any other steps you take?

Yes. Because in OTT business, you can see a swing there is an upside there. So we believe this whatever decline you see on TV will get compensated by that media.

Done. Sir, if I can ask 1 more. Regarding the merger of Alt and MFPL, so what are the specific cost savings or anoperational synergies that will be reflected?

I just covered it in the earlier questions. So -- but largely, the financial benefit I can lay out for you as well. One is the indirect tax benefit of around INR 117 crores we have an input tax credit. That's a state cash savings on to the balance sheet. And next 4 to 5 years, the company will not be paying any tax because of the brought forward losses of all businesses. And that's again on the P&L side. Other operational efficiencies I have already illustrated in the earlier questions which the gentleman had asked.

[Operator Instructions] We will take the next question from the line of [indiscernible] Deshpandem an individual investor.

My first question is how should investors think about Balaji's business for the next 2 to 3 years?

I would put it this way. So historically, Balaji was known as television production company I believe in next 2 to 3 years, this parameter will shift and Balaji will be more an IP-led content creator with the movie contributing more than 50% to the top line and profitability, followed by digital business. and television will be the least contributor to the segment. That's my take. So there will be more IP television. Anyway, we were not having IPs. It was more like contract for hire. And in the long term, though it is to give us a strong kind of profit but over the years, since last 5 years, the margin has been depleting the content production cost is under pressure, broadcasts are not investing much into the television space. So we clearly see an upswing into the OTT side. And we believe this Balaji Motion Pictures will be more of an IP-led company where we intend to retain IP, we build our own scale. So motion pictures will become the key business for the Balaji Telefilms. We have a strong pipeline of 17 movies over the next 3 years with 4 to 6 movies in each year, and we continue to build on it. with a proper derisk formula where we resell all the movies before we go on floor. And the clear focus will be on the TAT, turnaround time, which we have for the projects, how quickly we can turn around. And clearly, the last and the most important feature, which we've introduced internally is the capital return on the motion pictures. So quick return healthy returns and virtually risk-free business model.

Okay. And sir, How much of that revenue visibility are we currently seeing for FY '27?

So FY '27, if I say, we will be expecting close to around, say, INR 800-odd crores top line, largely driven by motion pictures, Movie will give almost 50% of it.

Okay. And how scalable is the current digital content plant?

So digital business, I believe, when I say digital wins, it's B2C, the way we see digital business is B2C, whatever we do for leading OTT platform, we still call it commission model. So television plus commission model will be close to around INR 300-odd crores. Motion pictures will contribute around INR 400 crores. And B2C business, where we own IP, we retain everything with us and be monetized. I think that will be contributing around INR 100-odd crores in this financial year.

[indiscernible] business vertical is seeing, currently seeing a strongest traction.

Sorry, I didn't get you.

Which business vertical is currently seeing the strongest traction?

Yes. It's motion pictures followed by digital.

[Operator Instructions] Ladies and gentlemen, as there are no further questions from the participants. We now conclude the question-and-answer session. I now hand the conference back to Mr. Sanjay Dwivedi for the closing comments. Thank you, and over to you, sir.

Thank you. Thank you all. And hopefully, quarter 1 number when we release it will reassure most of the people and investors about the strategies which we have worked upon last year. We were hard at work. And I think all the efforts which we have put in last year should play out in the year to come. More specifically, I am quite clear from quarter 1 itself, it will be seen in the financial numbers. With that, I would like to thank you all for taking the time to join us today.

Thank you. Thank you, members of the management. On behalf of Balaji Telefilms Limited, we conclude this conference. Thank you all for joining with us today, and you may now disconnect your lines. Thank you.