Imagicaaworld Entertainment Limited (IMAGICAA) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the Q1 FY '27 Earnings Conference Call of Imagicaa World Entertainment Limited. This conference call may contain forward-looking statements about the company, which are based on beliefs, opinions and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involved risks and uncertainties that are difficult to predict. Please note that this conference is being recorded. I now hand the conference over to Mr. Jai Malpani, Managing Director, Imagicaa World Entertainment Limited. Thank you, and over to you, sir.

Thank you. Good afternoon, everyone, and thank you for joining us on our Q1 FY '27 conference call today. Today with me, I have Mr. Dhimant Bakshi, CEO; Mr. Mayuresh Kore, CFO; along with SGA, our Investor Relations Adviser. It is a pleasure to welcome all our investors, analysts and stakeholders. As this is our first earnings call post Imagicaa coming into its new avatar, I would like to take you through in depth about who we are, what differentiates Imagicaa World today and how we are building the next phase of growth. Before I speak about the company, I would like to briefly touch upon the background of the promoter group. The Malpani Group is a diversified business group with interest across leisure and entertainment, commercial real estate, education, FMCG, renewables and several other businesses. Our association with Park industry goes back nearly 2 decades. We entered this industry in 2005 with the launch of our first water park, Our association with Park industry goes back nearly 2 decades. We entered this industry in 2005 with the launch of our first water park, Wet'nJoy Water Park in Shirdi. And since then, we have developed deep operational expertise in building, operating and scaling entertainment destinations. We understand this business. We understand what customers are looking for. And more importantly, we understand how to create sustainable and profitable parks. Today, Imagicaa World has evolved into one of India's leading diversified leisure and entertainment platforms. Our portfolio as of today comprises of 9 parks spread across multiple different catchment areas. These include theme parks, amusement parks, water parks and a spiritual theme park, along with a 287 Novotel hotel at Khopoli. In addition, we have recently entered the indoor entertainment segment through our exclusive partnership with Hello Park with 2 locations already signed, which are Hyderabad and Surat. One of the biggest strengths of our business is diversification. We are no longer dependent on a single destination or a single format. Our parks today serve multiple catchments across Maharashtra, Gujarat and Central India, while Hello Park gives us access to customers in urban locations through an indoor all-weather entertainment format for kids. Together, this creates a business that is more resilient, reaches a wider audience and allows us to engage with consumers throughout the year. An important milestone in our journey was this acquisition of Wet'nJoy Parks in 2024. These were highly quality operational parks with strong fundamentals, and we believe they would fit well within the Imagicaa World portfolio. Over the last 2 years, we have successfully integrated these 4 parks, implemented common operating systems, leveraged procedures, procurement and marketing synergies and strengthened overall performance. Today, these parks are integral part of our network and reinforce our confidence in pursuing similar opportunities in the future whenever the right assets become available. Before I move on to our growth strategy, let me share our perspective on the industry. The organized amusement park water park industry in India is still at a very early stage. A large part of our market remains fragmented with several regional operators running relatively small parks spread over a few acres. While these parks cater to local demand, the industry continues to face challenges around scale, standardization, safety and customer experience. Building and operating large format parks require significant capital investment, operational expertise and a long commitment, which naturally creates high entry barriers. At the same time, India remains a highly price-sensitive market. While consumers are willing to pay for high-quality experience, pricing has to remain relevant to the catchment and local demographics. Beyond a certain point, higher ticket prices can impact affordability and footfall. We believe the key to success lies in offering the right experience at the right price while maintaining the highest standards of safety, operations and guest satisfaction. We believe this industry -- these industry characteristics create a significant opportunity for organized players like Imagicaa World. As we look ahead, our vision is to build India's most diversified entertainment company. By 2030, we aspire to operate a portfolio of 12 parks, having kept targets of adding approximately 1 park every year. We see opportunities across both outdoor and indoor entertainment and our expansion will continue to be guided by disciplined capital allocation and healthy returns. For outdoor entertainment, we see significant opportunities in water parks complemented by a select mix of dry rides. Our sweet spot would be midsized parks anywhere in the range of 30 to 50-odd acres. This format provides an attractive balance of guest experience, capital efficiency and profitability. At the same time, Hello Park opens up an exciting avenue for growth through technology-enabled indoor entertainment centers that can be scaled rapidly across major cities. Geographically, we are actively evaluating opportunities across key markets such as Delhi NCR, Bangalore, Hyderabad, Goa and other large population centers. Our location strategy is driven by strong catchment areas, good connectivity, land availability and the ability to build long-term destination assets. Our approach to expansion will remain balanced. We are equally open to greenfield developments and strategic acquisitions. Wherever we find quality assets that complement our portfolio and meet our return expectations, we will evaluate them. At the same time, we have a healthy pipeline of organic projects that will continue to drive growth over the coming years. The opportunity for organized leisure and entertainment in India is still at a very early stage. Rising disposable income, improving infrastructure, increasing domestic tourism and changing consumer preferences are creating a strong foundation for long-term growth. We believe Imagicaa World is well positioned to benefit from these trends through our diversified portfolio, experienced management team and disciplined expansion strategy. We are excited about the journey ahead and remain committed to creating long-term value for all our stakeholders. I now hand over to Mr. Dhimant Bakshi, CEO, who will provide further updates on parks and operations.

Thank you, Jai. Good afternoon, everyone, and thank you for joining us today. As Jai shared, Imagicaa World is entering an exciting phase of growth and personally a proud moment for us to be a part of this journey. Having been associated with Imagicaa since its inception from operating a single destination park to becoming a diversified leisure and entertainment platform with multiple parks and formats across different geographies. In my remarks today, I will take you through our operational performance for the quarter, provide an update on our park portfolio and share progress on some of our key strategic initiatives. FY '27 began on a strong note with revenue growing 20% Y-o-Y to INR 178 crores and footfalls increasing by 22%. Q1 is seasonally our strongest quarter, supported by school vacations and the summer holiday season. However, this year, despite an unprecedented heat wave leading to some nonoperational days at Khopoli Park, coupled with a shift in school holiday calendar in some catchment schools, company has yet put together a strong performance. With this strong quarter as a backdrop, it's worth stepping back and looking at how the portfolio behind these numbers have evolved. As our portfolio has expanded significantly over the last few years, we believe it is important to present our business in a manner that better reflects how we actually operate. Going forward, we will report our outdoor entertainment business across 4 key catchment areas, giving investors a clearer view of our growth drivers and regional opportunities. Currently, Mumbai-Pune remains our largest catchment and our core revenue engine, comprising of 4 parks, namely Imagicaa Theme Park, Imagicaa Water Park in Khopoli and Wet'nJoy Amusement Park in Lonavala. These parks primarily draw visitors from Mumbai and Pune while also attracting tourists from neighboring states such as Gujarat. Rest of Maharashtra consists of 2 unique destinations in Shirdi, Wet'nJoy Water Park and Sai Teerth, a unique devotional theme park. Together, they let us complement Shirdi's strong Pilgrimage traffic with leisure and family entertainment and also cater to extended catchment, especially for the water park segment, creating a differentiated offering for a wider set of visitors. Gujarat is also high-recall market for us, that's why Surat marked our first expansion outside Maharashtra and has built a strong presence in the south of Gujarat. Further, we have added Shanku's Water Park in Mehsana initially under an operations and maintenance arrangement. And I'm pleased to inform that as of last week, we have successfully completed the acquisition of a 50% stake in the SPV that owns this park, making it a subsidiary of the company. This is an important milestone in strengthening our presence in one of India's largest and fastest-growing markets, whereas Central India comprises of Aqua Imagicaa Water Park in Indore, serving visitors from Indore and surrounding places such as Ujjain, Dewas Mhow and other locations. This park has helped establish the Imagicaa brand in Central India, and it gives us a platform for future expansion in the region. Our 3-pronged approach to improve revenue with -- to build a footfall by increased targeted customer reach to increase dwell time through experiences and IP events to stay longer and thus increasing non-ticketing revenue and third being to drive repeat visitation through our unique magic Park program and tie-ups with various corporates and organizations. This balanced approach, we think and believe will sustain our revenue growth and profitability over time. This same growth philosophy is also shaping 2 important developments this quarter, one, deepening our existing outdoor portfolio and one being opening an entirely new format for us. Firstly, as mentioned earlier, we further consolidate our presence in Gujarat market. The company has announced an investment of INR 50 crores for a 50.02% stake in Mehsana next Parks Private Limited, the SPV that owns and operates Shanku's Water Park. We will partner with the existing owners to expand parks offering, create a unique proposition in the market while continuing to undertake its operations and maintenance and earning management fees in the range of 6% to 10%. MNPPL becomes a subsidiary of the company effective now, and we will see consolidation reflected from second quarter onwards. Secondly, entry into indoor entertainment space. A new chapter for us is our entry into indoor entertainment through an exclusive partnership with Dubai-based Hello Park. Hello Park is a phygital entertainment concept for children aged 3 to 13, blending an interactive digital technology with physical play. Unlike our destination park, it's an indoor format that complements our existing businesses and lets us engage customers year-round independent of the season. The format's biggest advantage here is scalability. Each center needs only 8,000 to 12,000 square feet of space and can be developed within a shopping mall or other commercial spaces in the heart of the city. It lets us enter large urban markets without needing significant land parcels while bringing the brand of Imagicaa closer to our consumers. Hello Park also provides the operating expertise and technology in the exchange for royalties of 5% to 7% investment center is expected to be INR 8 crores to INR 12 crores, making it an efficient capital-light growth format. We are on track to launch our first Hello Park in Hyderabad later this year at Lake Shore Y Junction Mall, and we have also finalized the second location at Phoenix Mall Surat. We will share more details about these developments as we progress forward. Further, we aim to add 4 to 5 Hello Park centers every year, building a pan-India indoor entertainment network over the coming years. We see indoor entertainment as a large underpenetrated opportunity in India. And combined with our portfolio of outdoor parks, Hello Park will help us build a truly diversified all-weather entertainment platform, strengthening our position as India's leading integrated entertainment company across formats and age groups. To sum up, our catchment-led portfolio gives us a clear and scalable growth framework and our recent moves, the Gujarat consolidation and our entry into indoor entertainment with Hello Park extend that growth into new formats and newer geographies. We remain focused on the fundamentals that drive this business over the long term, broadening our footprint, deepening engagement with our guests and growing revenue per visitors across every peak as we operate. We are confident in the momentum we carry into the rest of FY '27, and we remain committed to creating sustainable long-term value for all our stakeholders. With that, I will hand it over to Mr. Mayuresh Kore, CFO, who will take you through the financials -- financial performances. Thank you.

Thank you, Dhimant. Good evening, everyone. It's a pleasure to engage with the investors and analyst community once again. Let me now take you through the financial performance of the company for the quarter and discuss some of the key business metrics. We have started FY '27 on a strong note. On a consolidated basis, the revenue from operations grew by 20% year-on-year to INR 178 crores. These were driven by healthy footfalls across our portfolio and a sustained demand during the peak holiday season. Our focus on operational efficiencies, higher capacity utilization and disciplined cost management translated into strong profitability. EBITDA grew 24% year-on-year to INR 90 crores, while EBITDA margin expanded by 170 basis points to 50.7%. Profit after tax increased by 30% Y-o-Y to INR 58 crores with PAT margin improving to 32.4%, reflecting the operating leverage inherent in our business model. Coming to our operating metrics, our park business continued to witness healthy momentum during this quarter. Consolidated park footfalls increased by 22% to over 11.5 lakh visitors, resulting in a revenue growth of 22% to INR 161 crores, while ARPU has remained largely stable at around INR 1,395. The strong growth in visitor volumes more than compensated, thus demonstrating the continued demand for our offerings while maintaining pricing discipline. Looking at the performance across our catchments, the Mumbai-Pune catchment, which remains our largest contributor, delivered an 18% growth in revenue, supported by a 19% increase in footfalls. This reflects the continued strength of our flagship parks and the healthy demand from our core catchment markets. Our rest of Maharashtra catchment delivered an excellent quarter as well with revenue growing 33% on the back of 14% increase in footfalls. The ARPU also increased by 17%, reflecting an improved product mix and higher guest spending across the parks. The Gujarat catchment also continued to perform well with footfall increasing by 32% and revenue growing by 15%. While ARPU was lower on a year-on-year basis, this was primarily driven by a change in the visitor mix and a few promotional initiatives aimed at driving higher volumes. With the addition of the Shanku's water park to our portfolio, we remain optimistic about the long-term growth opportunity in this Gujarat catchment. Our Central India catchment was the fastest-growing region during this quarter with footfalls increasing by 48% and revenue growing by 44% Y-o-Y. This performance reinforces the strong potential of the Indore market and validates our strategy of expanding into high-growth regional catchments. Turning to our hospitality business. Novotel Imagicaa continues to maintain healthy operating metrics. The occupancy stood at 62% during the quarter, while the average room rate improved marginally to INR 9,657. The revenue remained largely stable despite a slight moderation in occupancy, reflecting the resilience of our hospitality business and its ability to complement our park business. Overall, we remain focused on maintaining a healthy balance between growth and profitability. Our strong cash generation continues to support investments in park enhancements, new attractions and expansion initiatives while maintaining a disciplined capital allocation framework. With a robust start to the year, continued investments in our existing parks and expansion into indoor entertainment through the Hello Park franchise and the addition of new assets to our portfolio, we remain confident of sustaining our growth momentum in the quarters ahead. We now open the floor for questions.

[Operator Instructions] First question is from the line of Jinesh Joshi from PL Capital.

I understand that we reported a healthy growth in this quarter. I think 1Q FY '26 was impacted by early monsoons and to that extent, the base was a bit low. And so if I compare your performance with 1Q of FY '25, I think we reported about INR 184 crores in revenue. And in this quarter, we are at about INR 177 crores. And this is despite the fact that we have operational additional park in Indore, which was not there in the base quarter, so on a like-for-like basis, apparently it appears that there is not much of a growth coming through despite the addition of one park, so are we seeing any kind of challenges on the footfall side, specially on the like-for-like growth and also if you can comment on the pricing because I think 1Q '25, the implied ARPU was 1390 and we haven't much achieved on that [indiscernible] coming from that.

So, as I mentioned in our commentary. You would have noticed that FY '27 first quarter has been truly an unprecedented quarter as regards to the kind of heat wave that we saw. I also wanted to inform that due to the crisis that we faced for about almost 2 weeks, Khopoli Park was kept operational, which led to some -- obviously, since it was not operational, that led to some drop in the revenue. But if we -- further, there was a shift opted by some of the CBSE schools that led to change in the holiday pattern. Now if you add these 2 factors primarily, and you would have seen that the hotel bookings also kind of tapered during this phase of heat wave. So we really think that if it were to be [indiscernible] of the Mumbai Police catchment region, that is where we saw a major impact really speaking. And a small impact that we noticed in the Shirdi Pilgrimage their visits as well. So if we add these 2 factors and if you were to, let's say, normalize this, I'm sure we would have been on a healthier side. But some of the things, unfortunately, we cannot change, so we believe that otherwise our readiness for the past or our pricing strategy so you also asked the question on the pricing strategy. So our focus this quarter was to propel the footfall and to really go on to propel the footfall and to really go on to increase the multiplier effect of the non-ticketing segments as well. So therefore, we consciously had opted for a slightly softer pricing strategy with regards to ticketing vertical. However, we think that over the next 3 quarters, we have headroom there, and we will make appropriate collections. So I hope I've answered your question. Jinesh, if you have any further questions, please let me.

I have certain follow-up, but I'll take them separately especially on the organic growth side. But I have two additional follow-ups. One is on the Hello Park side. I think in the opening comments, you mentioned that we plan to open about 4 to 5 parks each year and the CapEx will be in the band of about INR 8 crores to INR 12 crores. But if you can also throw some color with respect to how will the EBITDA margin be in this indoor entertainment [indiscernible] accounting for the rental part and how much royalty will be [indiscernible] over here any color on any indicative footfalls in ARPU in year 1 that we are targeting? how much royalty will be paying over here? And any color on the indicative footfall in ARPU in year 1 that we are targeting?

Yes, very pertinent question. So -- Hello Park is quite a scalable format in terms of time to market from the day we identify a property. And just for the benefit of all the members out here, it's a global franchise of one of the world's leading chains in digital entertainment, Hello Park from Dubai. So we have signed an exclusive India franchise with them. And the target is indeed to open at least 2 to 3 centers, if not higher because of the short time to market. And in this consideration, we have 5% royalty on the revenues of each center to be paid to Hello Park. That's typically like any other franchise a model and this is [indiscernible] revenues of a particular centre and in return we get all their IPs, all the updates, all the latest technology that Hello Park R&D centre -- accross all the centers in the world. And you mentioned correctly about the typical investment in a single Hello Park franchise would range from about INR 8 crores to INR 10 crores or at the best INR 11 crores for a slightly larger center and an average of 10,000 square feet inside a good footfall mall is the template going ahead. And the average CapEx required is around INR 10 crores for a 10000 square feet centre observed rightly because will be inside the margins would be similar to the water parks or the parks that we operate. It would be around 24%, 25% margin if we account for the rentals to the malls as well. And the typical payback that we are looking is between 3 to 4 years for individual location. And the tickets would be -- currently, we are targeting a ticket price of INR 800 to INR 900 on an average for the Hello Park entry tickets. And in here also, there will be non-ticket revenues such as F&B and merchandise. So typical ticketing revenues would be around 70% 65% to 70% on an average. I hope that answers your question.

Just one last question from my side. I think there is some promoter warrant conversion that is due. So if you can just highlight what is the time line? And I think the conversion price is INR 73.5. And given where the stock price is right now, will the promoters go ahead and subscribe to the warrants is my last question.

Yes, very pertinent question, Jinesh. I will pass on the question to Mr. Jai Malpani from the promoter family and Managing Director. Yes.

Jinesh. So, from the promoter group, we are very positive on the business and overall long-term prospects of it. So the conversion will happen before the given date and requirement, which is there. So we are very positive and we look forward to converting.

Next question is from the line of [indiscernible] from [indiscernible].

Congratulations on a great set of numbers and a good summer. So just wanted to get some basic details on the parks, first of all. So like let's just say moving forward, we do have an aspiration of putting up parks that might be similar to our one in Khopoli right. So per park, my understanding is that we would have to import rights from the ER for the U.S. So what kind of cost would be looking at per park? And like in this 30 to 50 acre park, how many rides would we be looking at [indiscernible] and how many water rides would be there and how many would be land? Any rough idea on that?

Yes, [indiscernible] thanks for the question. So if you are referring to Imagicaa parks, this is the -- obviously, the outlier in the portfolio of parks today, which is part of the legacy business, which the Malpani Group has acquired. So to be frank, currently, there is not an intent to replicate a similar Imagicaa park across the country given the economics and feasibility around it. So definitely, we are looking more to water parks to start with and with mix of amusement elements there. And even metro cities, we may look at slightly larger parks compared to the average parks that we -- if you can take Indore, which we've opened last year. I terms of ride mix, there will be 1 or 2 marquee rides and which could be imported from abroad. And most of the rides, the water park rides currently in our new parks are sourced from the highest quality vendors in India. And 1 or 2 rides may get imported from Turkey or Canada as the case may be. And going ahead, that's the kind of model which we are focusing on unless it's a very heart of the city metro kind of a project in a Grade A metro, else we will not replicate the kind of Imagicaa investment that has been made across other geographies.

So per park, it can vary between INR 200 crores to INR 450 crores to INR 500-odd crores based on which location and size and scale of the park we go for based on the location and demography?

So the reason now you have invested in a [indiscernible] park is that going through some interviews at [indiscernible] CapEX for the future, so maybe [indiscernible] INR 1,000 crores over the next 6 years. So would you be able to comment on where exactly [indiscernible] would the trader dilute or do you think [indiscernible] enough maybe correct me if I'm wrong on any of these accounts?

So if we are going for -- as Jai mentioned, the range of investment that we are looking for in our expansion project. If it's for INR 200 crores, it's from a mix of internal accruals and some moderate debt that we could take since this is a asset-heavy kind of investment, except if we get the land on a long-term lease, these are upfront CapEx. So hence, it will have to be funded by a mix of debt to equity internal accruals. And currently, we have a healthy set of cash flows going and if we are to get a larger project, which is in a metro and which would entail CapEx of INR 400 crores to INR 450 crores. So that typically 3 years kind of gestation will be there where again, we will be able to use internal accruals from our existing parks. But we have banking limits also with a couple of leading banks in the country having approved limits. So however, the debt to EBITDA of the company, we have been clear in this regard, that will be kept in a certain range. And at best, it could be 3 to 3.5x for a limited period, but the average debt to EBITDA would be in the range of around 2.5 to 3x is what fiscal discipline that we intend to continue.

Got it sir. Before I jump back in the queue, just one small follow-up on the commentary that you made and you [indiscernible]. So, the 1 park for your [indiscernible] does that also include smaller parks or is that just like the 30 to 50-acre parks that you are referring to?

Yes. So it could include smaller parks as well. But the indoor center will be over and above that. So the indoor entertainment centers of Hello Park that we referred to, that would not be there. So for example, this year, we will also have Shankus park in our portfolio, which is a -- which is an existing park. The coming year, the Sabarmati Park. So, that's likely to get operational partly at least. So irrespective of the -- we are talking about outdoor parks, small or large, to answer your question.

Next question is from the line of Ankit Kanodia from [indiscernible].

Congratulation on good set of numbers. Sir, my first question is related to the different kind of businesses we have. I think it would be great if you can share segmental breakup in terms of revenue and margin, at least EBITDA margin. That would be very helpful for us because when you look at something like [indiscernible] pilgrimage [indiscernible] hotels and indoor, they would all have different economics compared to our core theme park business. So anything you can expect from the subsequent quarter?

Question, Ankit. So currently, we -- at the start point, we have broken our parks into clusters and catchments and accordingly, we have initiated reporting. Your question about devotional park is right. However, currently, there is one park is a portfolio. If we are increasing the number of parks in that space of devotional and spiritual, so we will definitely consider your suggestion. And at this juncture, because previously, we used to report overall on a company level, we've broken them currently into after due deliberation into catchments, which would enable one level more of analysis. And so far as hotel is concerned, the number we are reporting separately is the hotel division and that you could get from our annual report and given in our commentary. So that analysis could come separately but your feedback is well noted.

The main reason for asking for this request was that when I look at our quarterly numbers I think, predominantly we are still [indiscernible] Q1 in the first quarter and Q2, Q3 and Q4 bunched up together almost at the same level which is generally a typical case of any theme park business. When we have these segmental value, it will be easy for us to see where we are going and when the dependancy on theme park is going down comparatively. So that's [indiscernible]. That was the main point.

I'll give you a [indiscernible] suggestion and accordingly [indiscernible].

And my next question is [indiscernible]. You mentioned or alluded to appoint where you want to leave the thinking of integrating Dave & Busters which is right now at a promoter level but sometime in the future do you think we put that in the company. Can you throw some more color on the timeline to when we can expect that to happen and how it can happen.

So, on Dave & Buster, that was our first foray into indoor entertainment and indoor entertainment as a whole, we have seen smash and other players as well. So we wanted to get the model right in that case. And we are, I think, still along the way of getting that model of F&B as well as bigger centers in place. So at the group level, once that decision is done and the model is more stabilized, then we'll plan to do it. And whenever it's decided, we'll get back and inform the investors about the same.

So is it fair to assume that probably not in FY '27?

So whenever it is decided, we'll get back and confirm the same to all.

But not in the immediate next 3 to 4 months is once that we can confirm.

Next question is from the line of Vipul Kumar Anup [indiscernible] from Sumangal Investments.

I hope this tradition of conference call will be continued in the future. So, if I see your Gujarat ARPUs, they have dropped very sharply. So what is the reason for that, sir?

So in case of Gujarat, we've seen that in certain markets like Surat, there has been a bit of price sensitivity that we had observed. So this year in this particular quarter of Q1 FY '27, we decided to test waters and see how the price elasticity to demand was really playing out. And while you see that the footfall and the ARPU did have a drop, we've been able to sustain the revenue numbers higher than the FY '25 numbers as well. So we think that over a period of time, we are -- we'll be able to correct and refine the model so that we strike a good balance between the ARPU and the overall volume that we can derive.

Just to add to that, currently, as part of the Surat Park, there are adjoining other components of the location which are still not fully operational. So in the next couple of years, we are expecting that the adjoining hotel, adjoining mall to also get activated, which will result into more organic visitation into the same property. And hence, we will be in a better position. But your point well noted, and this is something, as Dhimant mentioned, we've tried to get to more the market penetration this time, and we are working on this.