UFO Moviez India Limited (UFO) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the UFO Moviez India Limited Q1 FY '27 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. Company is represented by Mr. Rajesh Mishra, Executive Director and Group CEO; Mr. Ashish Malushte, Chief Financial Officer; and Mr. Siddharth Bhardwaj, CEO of the company. I would now like to hand over the call to Mr. Rajesh Mishra for his opening remarks, post which, we can start the question-and-answer session. Thank you, and over to you, sir.

Thank you. Greetings, everyone, and thank you all for joining our Q1 FY '27 earnings call. FY '27 witnessed encouraging theatrical momentum. The quarter commenced with a continued strong theatrical run of Dhurandar: The Revenge, while films such as Bhooth Bangla contributed to the healthy audience engagement across key markets. May maintained good theatrical momentum led by the success of Malayalam film Drishyam 3 along with strong performance of Marathi film Raja Shivaji. While a few Hindi films delivered moderate box office performance, regional cinema continued to attract audience and highlighted the growing appeal of films across languages. June concluded the quarter on a positive note, supported by strong performance of Welcome to the Jungle, Main Vaapas Aaunga and Cocktail 2. The diverse content slate helped sustain audience interest and advertiser engagement during the quarter. Overall, Q1 FY '27 reflected encouraging theatrical trends to the industry despite Southern regional cinema remaining subdued. The continuing blockbuster performance of Dhurandar: The Revenge along with the performance of select Hindi and regional titles supported improved advertiser participation, contributing to a 33% year-on-year growth in our advertisement revenue. Looking ahead, a healthy pipeline of releases across languages, coupled with improving advertiser sentiment gives us confidence in the growth prospects of advertising over the coming quarters. The last quarter saw a lesser number of movie releases. In total, 399 movies were released, including versions and languages during the quarter compared to 456 in Q1 FY '26 and 459 in Q4 FY '26. On the screen network front, our advertisement footprint now stands at 3,891 screens comprising 2,565 multiplex screens and 1,326 single screens. Turning to the key figures for the quarter ended June 2026. Consolidated revenue for Q1 FY '27 stood at INR 1,118 million against INR 1,090 million in Q1 FY '26 and INR 1,342 million in Q4 FY '26. EBITDA for the quarter was INR 189 million as against INR 193 million in Q1 FY '26 and INR 182 million in Q4 FY '26. PAT stood at INR 56 million compared with INR 65 million in Q1 FY '26 and INR 45 million in Q4 FY '26. The consolidated cash at the end of the quarter was INR 1,462 million and the net cash was INR 624 million after considering outstanding debt. Looking ahead, Q1 FY '27 has commenced on an encouraging note with the release of films such as Alpha, Damaal 4 and Jana Nayagan. The outlook for the remainder of the quarter remains positive, supported by an exciting slate of upcoming releases, including Batwara 1947, Toxic, Haiwaan, Awarapan 2 and others. With a healthy content pipeline and improving industry sentiment, we remain confident about the theatrical business and our ability to capitalize on the opportunities ahead. I would like to take this opportunity to thank all our shareholders, exhibitors, advertisers, business partners and employees for their continued trust and support. With that, I would now like to open the floor for questions. My colleagues, Mr. Ashish Malushte, Chief Financial Officer; and Mr. Siddharth Bhardwaj, CEO, and I will be happy to take your questions. Thank you.

[Operator Instructions] The first question comes from the line of Mr. Shailesh Naik from SCODE.

Good performance in advertising this year. So we have grown by 33% [indiscernible]. How much of that would be...

Can you speak a little louder, sir? We are not able to hear you.

Can you hear me now? Can you hear me now? Hello?

Yes, yes. Please go ahead.

Okay. Fine. Yes. So it has been a good performance on the advertising part. So just wanted to see how much of it is because of the Dhurandar and what is the rest -- of the rest? That was one question. Second question is, can you just update me on what is our trade receivables because it was very heavily as on March 31. So how it has progressed? And what has been the cash generation in this quarter? These are the 2 questions, which I had.

Yes, answering the first question in terms of what is the quantum of revenue that can be credited to Dhurandar. So we'd like to concede here that the spillover of Dhurandar, which actually released in the back end of quarter 4 of last financial year, did actually spill over into the first quarter. And it definitely helped us build the foundation for this quarter and this financial year. So we can definitely credit the performance on advertising front to the momentum that was built by Dhurandar. But what it essentially did was created a positive sentiment towards the cinema at the most critical juncture in the marketing fraternity because at the end of the financial year, most marketers are planning for the subsequent year. So a film like Dhurandar 2 positively disposed most of these decision-makers and which not only probably helped us, but will help the industry at large in terms of advertising revenue. So it -- you can credit the good performance in terms of advertising revenue to the positive momentum created by Dhurandar. So I hope that answers your question, the first part. And Ashish, can you...

Yes. About -- so your question on the debtors. So you're right in the first quarter, the balance sheet numbers are not required to be disclosed. But on the debtors front, the situation is a lot under comfort and control. 31st March -- just to give you specific numbers, 31st March '26 net debtors were INR 93.5 crores for Indian operations, that have come down to INR 89.4 crores as on 30th June. Now one important point to note is despite a very heavy and good performance on the advertisement front, which happened, as Siddharth explained, towards the fag end of Q4, which obviously would lead to debtors getting generated in the last week of March, and we have at least 120 to 150 days realization period. But in spite of that, the overall debtors have reduced from INR 93.5 crores to INR 89.4 crores. And even on a consol basis, the situation is good. Internationally, the debtors reduced by INR 10 crores. So on a consol level, the net debtors, which were at INR 152.4 crores have come down to INR 148.1 crores.

Okay. So basically, you are saying that we would be -- by next quarter, we should be in line with the historical number of days of debtors. That is one. Second is on -- the reason why I asked the earlier question of Dhurandar is basically to see is there the thing that 33% growth is entirely attributed to one such mega hit and then next quarter onwards, we might again fall back. That is the reason why I asked is the percentage -- just wanted to understand the percentage is 10%, 20% or 30%. So that understanding the next quarter, what kind of a repeat in terms of advertising we can look at? That was the only reason. The third question is sales of products has dropped dramatically. Is there any concern there? Or is it something like we have a sequencing differently across the year? Is there a seasonality pattern in that?

So let me take the first and third question -- or first point and the third question. First point, where you said that it would come back to the historical trend by Q2. In fact, even now, we are very much in control on debtors. And that is something which we make sure that anything which is more than 1 year old is 100% provided for. And that's the reason why we always have this comfort. So even as we speak, in spite of a much stronger performance on advertisement front, we are very much under control on historical trend on the debtors aging. Third part, your observation on sale of product is correct. There is a dip when we compare on Y-o-Y basis. Over here, one important aspect that happened was the sale of product at a consol level has 2 pockets. One is Indian sales and second is that the sale of product that happens internationally. Till last year, international sale of product used to constitute a significant portion, almost 80% plus of the overall sales. Last year, strategically, we decided to focus on -- in fact, last 1.5 years ago, we decided to focus on this revenue line in India. And that's the reason why last year, you have seen a significant growth in this revenue line in India. The drop that you see this year in this quarter is predominantly the drop in the international sales. Indian sales have reduced, but not reduced significantly. They have gone down by -- it has gone up. Indian sales have gone up marginally. But internationally, there has been a significant reduction of about INR 7 crores, and that reduction is only and only on account of the war situation, which was ongoing there. And as a result of which the deliveries could not be completed. I mean the imports could not be completed in Dubai. And -- as a result of which the sales could not be completed. So the comforting factor is the sales have not evaporated. The orders are very much there, and they were waiting to be executed. So maybe in Q2 and latest by Q3, all those pending orders will get executed and booked as sales. So this is one part which I want to tell you. I think about the second part of your question where you're talking about the advertisement whether a blockbuster to what extent it gives an impetus and push, Siddharth would explain a little bit in detail.

So just to give you a background of how your company actually -- how the revenue bucket within advertising revenue bucket, how the different revenues trickle in. One is business that is consistent across the year, the annual spenders on the platform. And second is tactical money which comes on -- the spike that comes in revenue because of major releases actually -- major titles getting released, right? So Dhurandar, what it essentially did, yes, there was a lot of tactical advertisement that happened on Dhurandar, which was for 1-week, 2-week, 3-week, 4-week period. But at the same time, across cinema, most of the platforms were able to lock in annual clients on the platform, so which will help not only us but across the industry revenues to consistently flow in. But given the nature of our business, the tactical business actually comes on the major blockbusters and which will definitely be dependent on when what time of the year and quarter, these films come in. But generally, we all know by now that these are major -- the tentpole films come around major holidays and major festivals. And we don't see any aberration this year. There's a consistent flow of content that we can see going forward, and there aren't any gaps there. So we feel that the tactical thing would also flow in and the annual spenders, which got locked in on Dhurandar will give us consistent revenue right through the year.

And last question, a follow-up to this. So what is the percentage of tactical versus annual in advertising?

It all depends. Bigger the film, more tactical is contributed. So it -- the tactical component generally is dependent upon the excitement around the film. Generally, most -- through the years, we have seen that at least 30% to 40% revenue comes in from annual deals and annual spenders and balance is contributed by tactical spenders or the short-term seasonal spend that happen on specific films or specific seasons, right? So that's been the trend and which is expected to continue, but we can definitely see a spike in terms of tactical spender depending on what's the excitement around the film, right? So like Dhurandar was a -- Dhurandar 2 was a complete outlier, and we have never seen that kind of tactical spends coming in. And so very difficult to put a number to it. But historically, I've already spelled out that is how things look, 30 and 60. Going forward, things may change. I don't think beyond that, it will be possible to give any clarity.