Shemaroo Entertainment Limited (SHEMAROO.BO) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q3 and 9 Months FY 2026 Conference Call of Shemaroo Entertainment Limited, hosted by Valorem Advisors. [Operator Instructions] I now hand the conference over to Ms. Purvangi Jain from Valorem Advisors. Thank you, and over to you.

Good afternoon, everyone, and a warm welcome to you all. My name is Purvangi Jain from Valorem Advisors. We represent the Investor Relations of Shemaroo Entertainment Limited. On behalf of the company, I would like to thank you all for participating in the company's earnings call for the third quarter and 9 months ended of the financial year 2026. Before we begin, a quick cautionary statement. Some of the statements made in today's call may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management's belief as well as assumptions made by and information currently available to the management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decisions. The purpose of today's earnings conference call is purely to educate and bring awareness about the company's fundamental business and financial quarter under review. Now I would like to introduce you to the management participating with us in today's earnings call and hand it over to them for their opening remarks. We have with us Mr. Hiren Gada, CEO; Mr. Arghya Chakravarty, COO; and Mr. Amit Haria, CFO. Without any delay, I request Mr. Amit Haria to start with his opening remarks on the financial highlights. Thank you, and over to you, sir.

Thank you, Purvangi, and good afternoon, everyone, and welcome to our earnings call for the third quarter and 9 months ended for the financial year 2026. Let me first start by giving you some of the key financial highlights, after which our CEO, Mr. Hiren Gada, will give you some of the operational highlights. For the third quarter of the financial year 2026, the revenue from operations stood at around INR 161 crores, which declined by 2% year-on-year. The company reported an EBITDA loss of INR 67 crores, while the net loss stood at INR 55 crores. For the 9 months of the financial year 2026, the revenue from operations stood at around INR 444 crores, which declined by around 8% year-on-year. The EBITDA loss for the period was around INR 178 crores for the period, while the loss stood at around INR 147 crores. With regards to the new initiatives, expenses in the third quarter of the financial year 2026 amounted to INR 34 crores. Adjusting for these investments, the EBITDA loss from existing operations for the quarter would have been around INR 33 crores. The same expenses in the 9 months of the financial year 2026 amounted to INR 99 crores. Adjusting for this investment, the EBITDA loss from existing operations for 9 months would have been around INR 79 crores. Digital Media revenues for the third quarter stood at approximately INR 81 crores, registering a year-on-year growth of 14%. Traditional media revenues for the quarter were around INR 80 crores, which was down approximately 14% year-on-year. Now, I would request our CEO, Mr. Hiren Gada, to give you operational highlights for the period under review.

Thank you, Amit, and good afternoon, everyone. For the period under review, we continue to witness pressure on our traditional businesses. The reentry of major broadcasters on Free Dish, a packed sports calendar and continued softness in FMCG advertising further intensified headwinds across the traditional media segments. This decline negated the growth we witnessed in our digital business. We are cautiously optimistic about a gradual recovery in FMCG advertising spend in the coming quarters with the impact of the GST rate cut now stabilizing. In other updates, for ShemarooMe Gujarati, the company released 6 new titles during the year -- sorry, during the quarter, spanning movies, web series and plays. The platform also saw world digital premiers of movies such as Jai Mata Ji Lets Rock, Auntypreneur, Shubhchintak and Vicki Ki Baraat-Hindi Dubbed. On YouTube, the flagship channel, Shemaroo Filmi Gaane surpassed 74 million subscribers during the quarter, and Shemaroo Entertainment crossed 61 million milestones. Our entire portfolio of channels garnered more than 9.5 billion views during the quarter, reflecting sustained digital engagement. As you must be aware, our margins are under pressure due to ongoing accelerated inventory charge-offs, a strategic initiative we began 8 quarters ago, which we expect, as guided earlier, to end by the end of this financial year. It is also important to highlight that these charge-offs are purely accounting adjustments and do not affect the monetization of our content or our ability to generate free cash flows. Looking ahead, we remain committed to strengthening our balance sheet, driving operational efficiencies and positioning the company to unlock substantial long-term value. With that, I open the floor for the question-and-answer session.

[Operator Instructions] We take our first question from the line of Devansh from [ Internal Cap ].

So, I saw that you changed the name from Chumbak TV to Shemaroo Josh and you rebranded it quite a lot. So, how has that helped the company? And what is the change that we've seen? And how has that improved the -- what we can get from there?

Sure. Actually, if you refer to -- so in the last quarter, we had spoken about it a lot in detail. Basically, Chumbak TV was a channel which was -- originally, it was created for programming for kids and youth, which had animation and various other content. And we decided to convert it into a movie channel, which is Shemaroo Josh. And 1st September was the date on which we launched Shemaroo Josh. It's about roughly almost 5 months old. So, the entire content programming, distribution, branding, everything -- the positioning, even on many networks, the local -- the LCN numbers and everything has undergone -- it's still undergoing changes. In fact, as we speak, some new cable networks are being activated on -- for the channel. So, this is now a full-fledged movie channel, which we have spoken actually at length in the last quarter's earnings call. Obviously, movies is a big core strength for Shemaroo. And in a way, this is -- hit home where our core strength lies. So this, in a way, aligns very well with our Bollywood portfolio and adds one more distribution stream. As far as the channel is concerned, we've seen a steady growth in the reach particularly. And secondly, on the programming, on the TRP side also, including client count. So, lot of numbers are on a growth path. But obviously, this is very early days. We are just 5 months old. I think it would be too premature to really -- because a lot of the investment and distribution, et cetera, is still coming in place.

Got it, sir. Okay. Sir, now on a more general perspective, I just wanted to understand what the revenue and the EBITDA guidance would be for the -- at least for the short term, I think, and -- because I was seeing that a lot of inventory write-offs have been happening. So, if we remove that, how will it go forward?

So, there are 2 parts to this. Obviously, the inventory charge-off part. I just want to kind of give a sense of the journey that we have -- so this is now the eighth quarter. So exactly 2 years ago, December '24, we were at -- December FY '24, which is December '23, we were at around INR 727 crores of inventory, which is currently in this quarter, it has come down to INR 417 crores. So, we have reduced inventory by -- so that whole exercise that we started in terms of making the balance sheet light, I think we are -- we have already walked a long distance on that. And we have now one last quarter remaining, which is the March quarter. So, obviously, considering that March will also have the last part of the extraordinary write-off, March quarter is going to be a loss quarter because there is going to be an accounting charge over there. Now, the way forward and how do we look at the way forward. So, our annual operating plans for next year are still being kind of finalized as we speak since we are in January. So, we are not able to give a more crystallized picture or how we see the way forward. But directionally, what we want to say, in fact, I think I'll ask Arghya to maybe talk about how we are looking forward to the next financial year and what are the factors that will come into play.

So Devansh, I think -- this is Arghya here. So, I think as Hiren said, I mean, the extraordinary charge-off on the inventory will continue into the next -- into the quarter 4 of this financial year. So that quarter will be a loss and a challenged quarter because of this charge-off. But as we said, we are in the process of going through our AOP planning for next year. But we are looking at -- and it is right now difficult to give an absolutely clear picture. But we are definitely looking forward to the next year with lot of confidence and positivity because of largely 3 factors. One is this charge-off obviously is going to end, so in March. So, in next year, we will not have the impact of this charge-off on our P&L. Secondly, there are 2 other factors which impacted overall business this year was, one, the entry of the big 4 broadcasters in the Free Dish GEC space, which was something which was -- which created a bit of uncertainty in the market in the first 6, 7 months of this year, coupled with a quite soft advertising scenario, especially from the FMCG advertisers. However, that part of the core entry of the big 4 broadcasters have now stabilized, and there are not going to be any further large disruption. So, we will be able to plan significantly better going forward because we know what the situation is going to be. And if the advertising market improves slightly, even slightly, I think we would be looking at a significantly better bottom line and top line year next year. Right now, that's as much as we can say because once the planning process is over, we would be able to give a much better picture maybe in the next couple of quarters.

I will add just one more small point over there is that the way we are seeing digital having done this year, I think it's obviously going to be a significant part of the focus. Already it is and even in the way forward, there is a significant focus on the digital side through many different initiatives. And already, we are well poised in the current landscape itself. So, I think we have a lot of positives and hope to look forward in the next financial year once this whole charge-off gets over.

We'll take our next question from the line of Rajath Shah, an individual investor.

Just had a couple of questions. Sir, how much inventory has been written off this quarter? And how do the numbers look without that write-off or charge-off? And how much inventory is still left, which will be written off in the March quarter?

Amit?

So, in the past also, we have said that the inventory write-off that is taking place, the accelerated write-off is in the region of INR 30 crores and INR 35 crores. And on that lines, for the Q4 also, around that number would be written off.

Around INR 30 crores, INR 35 crores for both Q3 and Q4.

Yes, each. INR 30 crores, INR 35 crores each quarter.

Also, sir, I was looking at the balance sheet figures, and we have [indiscernible] of inventory left in the September quarter. So, if I total both of these INR 270 crores, so INR 400 crores more of inventory will be on the balance sheet. Is that like usable good inventory? Or will that eventually be written off or reduced?

Just to correct that, as I spoke in the earlier answer that we are -- as of December, we are down to INR 417 crores inventory and we have one more quarter to go. So, we'll end somewhere below 400. I don't know where it will end. Now to answer your question, I don't think there is a question of good or bad. I think we have spoken or discussed about this in the past also that there is -- this is -- all of this is valuable content, which gets monetized across various medium on a daily basis, monthly basis and yearly basis. So, this is merely an accounting policy. It does not reflect accounting estimation change. It does not reflect the monetization potential or the cash flow generating ability of this content or inventory. So, this is -- I mean, movies like Jab We Met or Welcome or Golmaal or Phir Hera Pheri et cetera, which we own perpetually or many movies which we own long-term rights like Housefull and Mujhse Shaadi Karogi and many such movies. I think arguably, as you will appreciate, have a very strong consumption momentum across television, across YouTube, across various media. So, there is no doubt in our minds about the ability of the -- or the value of this content. In fact, arguably, I would actually say the value is substantially higher than what will remain or what, in fact, even was at the starting point of this, which is why we were always comfortable, but this whole thing was done because there was a lot of feedback. So, we thought that we'll take this onetime exercise and get the whole balance sheet in a better place.

Next question is from the line of Vishal Bhalara, an individual investor.

I actually had a question that, I guess, in the last quarter, you had mentioned about some syndication deals that were deferred. So, can we get some update on those deals, please?

Yes. Those -- in fact, we had -- that time also mentioned that those deals have actually been closed subsequently. And some of those billings, even by the time the earnings was announced, those had actually materialized. So, all those deals actually went through, and we -- it's part of this quarter's revenue.

We'll take our next question from the line of [ Hethni Shah ], an individual investor.

I just wanted to know that is it safe to assume that the viewership share number stabilized after the reentry of the big players in the FTA earlier this year?