UFO Moviez India Limited (UFO) Q4 2026 Earnings Call Transcript

Good afternoon, ladies and gentlemen. I'm Akash, moderator for the conference call. Welcome to UFO Movies Q4 FY26 conference call. As a reminder, all participants will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on a touch-tone telephone. Please note, this conference is being recorded. The company is represented by Mr. Rajesh Mishra, Executive Director and Group CEO, Mr. Ashish Malushate, Chief Financial Officer, and Mr. Siddharth Bharadwaj, CEO, Digital Cinemas Network, business of the company. I would now like to hand over the call to Mr. 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 Q4 and FY26 earnings call. Q4 and FY26 witnessed a meaningful improvement in theoretical momentum, supported by a stronger content pipeline and better audience engagement across markets. January started on a healthy note with films such as Iktis, Daraja Shah, Border 2, and Mardani driving theoretical traction across key circuits. The month benefited from a balanced mix of commercial and regional religions, which helped sustain footfalls and advertiser interests. February witnessed comparatively lower theoretical momentum as religions such as O.Romeo and Doe Diwane Sheherma generated moderate audience traction. The month remained softer in terms of box office performance and advertisement engagement. March was clearly the strongest month of the quarter, led by the exceptional Thank you. This emerged as one of the biggest box office successes of the year. The film delivered strong and sustained footfalls across markets and significantly improved advertiser traction during the quarter. Overall, Q4 performance reflected improving theatrical trends for the industry, supported by stronger content-led audience engagement and better advertiser sentiment. During the year, improvement in theatrical revenues, advertising revenues, and product sales Contributed positively to the company's overall performance. Looking ahead to a healthy content pipeline and continued focus on strengthening our advertising network and premium cinema initiatives, we remain optimistic about sustaining growth momentum going forward. In FY26, a total of 1834 movies were released, including versions and languages. Against 1,808 movies in FY25. In total, 459 movies were released including versions and languages during the quarter, compared to 458 in Q4-FY25 and 457 in Q3-FY26. On the screen network, our advertisement footprint now stands at 4,049 screens. Comprising 2597 multiplex screens and 1452 single screens. With this, UFO continues to maintain the largest multiplex screen advertising network in the country, with the highest number of multiplex screens under the network. Turning to the key figures for the quarter and year ended March 26. Consolidated revenues for Q4FI 26. Grew by 43% to 1,342 million, compared to 940 million in Q4 FY25, and increased by 2% on a quarter-on-quarter basis from 1,319 million in Q3 FY26. Habitat for Q4 FY26 grew by 55% to 182 million, compared to 118 million in Q4. Thank you. For the full year FY26, consolidated revenue grew by 15% to $4,864 million, compared to $4,240 million in FY25. Ebitda increased by 36% to $803 million in FY26, from $591 million in FY25. Net profit for FY26 grew by 161% to 249 million, compared to 96 million in FY25. The consolidated cash as of 31st March was 1,362 million and the net cash was 590 million, after considering outstanding debt. Looking ahead, the Q1 FY27 began on a mixed note with the release of films such as Booth Bangla, Rajashiva Ji, Satip Asmi Har Vodo, etc. The outlook for the upcoming quarter remains positive with several high-profile releases including Feddy, Khai Jawani Toh Iskho Na Hai, Welcome to the Jungle, Darpanch, Cocktail 2, etc. With this robot lineup, we remain confident about continuing with the momentum of last year. I would like to take this opportunity to thank our stakeholders for their continued trust in the company. With that, I open the floor to take your questions. My colleagues, Mr. Ashish Malustad, Chief Financial Officer, and Mr. Siddharth Bharadwaj, CEO, and I will be happy to take your questions. Thank you.

Thank you, sir. Ladies and gentlemen, we will now begin the question and answer session. If you have a question, please press star and one on the telephone keypad and wait for your turn to ask the question. If you would like to withdraw your request, you may do so by pressing star and one again.

Ladies and gentlemen, if you have any questions, please press star and one on your telephone keypad. Ladies and gentlemen, if you have any questions, please press star and one on your telephone keypad.

The first question comes from the line of Anshul Zanand, an indigenous minister. Please go ahead.

Thank you for taking my question. So, my question is for Sanjay Gaikwar, sir. I have two questions. Firstly, overall, let me see our employee costs and operating costs are increasing faster than revenue and profit. We feel like we are invested in a cooperative society, not a corporate company. Sir, in trading distribution business, our employee costs should be 5 to 7%. So, how are you planning for cost optimization? And if there is some disagreement internally, why don't you hire a third-party external consultancy to improve this profitability? And secondly, our caravan business is lock-making, and 50-odd drivers are used there. So why are we not closing it, as it is further driving costs and eroding shareholder wealth? What is the future forecast here?

Hi. So, on the cost front, we have been conscious about this part, and over the last two years, we have already optimized and are continuously going to be optimizing on the manpower cost. The slight increase in the manpower cost that we are seeing also pertains to incentives and variable. Part of the salary of the people are variable. And this year, with us meeting the numbers, a part of the variable was paid out, which was not there last year. So last year, there was no variable payout or incentive. And this year, there is a variable payout and incentive because of the better numbers. And that is what is showing the year-on-year increase. But to answer your question, yes, it is an area of continuous monitoring and optimization on our part. And we will continue to be doing that, rest assured. Secondly, on the caravan front, we have discontinued the operations of the caravan business, because there was a lot of inconsistency in the pipeline of the business that used to come from caravan. And considering that, we have significantly curtailed the business and completely over the last year and perfectly... Shut it down and close the entire expenses on that account from this year. So that point is well taken, but already acted upon. And as and when caravan business comes to us, because we continue to be impaneled on the caravan business front because of our experience. Whenever the business comes, then only we will operationalize any third-party bank and enter into their business. Otherwise, there will be no cost on that front.

So, sir, for the camera band business, when are we planning to sell the assets and how much can... Sorry?

Yeah, on the previous question, there was one data point which I wanted to bring it to your notice. If you go on the investors' presentation, slide 18, we have highlighted that in the current year, on a full year basis, There's a 9 crore worth of variable payout that has happened, and that's the reason why you will see that when you in isolation see the employee cost incur gone up from 87.3 crores to 94.7 crores, but of which 9 crores is a variable cost incremental payout, and the reason why it has been paid out. Obviously, you can see it in the numbers itself, where there is a significant improvement in the profitability on all the parameters, and that's the reason why the employees have been paid out the variable. So, that is one point which I wanted to bring to your audience. You are asking for the question, if I am correct.

Yes, sir. Okay. And, yeah, I just wanted to understand for the caravan business that when are we planning to sell the assets and how much money can we realize from that?

We have already disposed of the assets, and these vans were quite old, more than 10 years old. So, the amount of realization on that front totally would have been around 2 to 3 crores.

Okay, so thank you.

Thank you.

Ladies and gentlemen, if you have any questions, please press star and one on the telephone keypad. The next question comes from the line of Mr. Silish Naik from Escort. Please go ahead.

Good afternoon. It's an excellent performance this time on both revenue and profitability. I had a couple of questions on operative metrics. These three receivables are going up at a very fast pace. This year, we are ending at 162 crores versus 115 last year. So why this is going up, I just wanted to understand. I mean, it seems to be going at a faster pace than as compared to revenue. Second area is revenue per screen. That is dropping both in CDC and VF. What is the reason for this? Is there a way to work it out and improve on this? The third area which I wanted to understand is revenue sharing with exhibitors on ad revenue. Now, I understand that we have entered into different contracts with your exhibitors, but earlier it was 33 percent. Now, it was coming to around 59.5. I mean, is there a way to improve on it, or is there any efficiencies, or are we losing rising power in this? This is the three first operating related questions. If you can answer, I will continue the next one.

Thank you. Thank you, sir. Can you repeat your second question, please?

Second question was revenue per screen that is dropping both in CDC and VPF. Like CDC does drop from $64,000 to $69,000 to $64,000, and VPF, it has dropped from $25,000 to $23,000. So that's what was the second question.

Thank you. And your first question was around? There were three questions.

First was trade receivables, second was revenue for trade, and third was related to exhibitor ad revenue percentage.

So, your observation with respect to increase in absolute terms is correct, and one of the key reasons why the receivable seems to have gone up… It's primarily because the sales are, I mean, the advertisement sales typically have a realization cycle historically of anywhere between 110 to 150 or 160 days, depending upon whether it is corporate or a government segment, and that you can see historically. In this particular year, one of the reasons why, in fact, two reasons why you would see the number going up is one on absolute terms, the revenues have moved up in agro type and sales, and more importantly, the key revenues that, I mean, one of the significant revenue stream, I mean, the significant chunk of revenue got booked on Durandar, and Durandar was actually, if you know, if you remember, it got It was released towards the end of financial year, towards the end of March. So everything that has been booked on that movie is entirely sitting into receivables. And that has been one of the best movies for the entire film industry, including... Digital Cinema Service Providers, and there was a sizable amount of revenue that was booked on this movie. And that's the reason why it appears that it has gone up. But let me quickly tell you in terms of the DSOs, the day sales outstanding, on a current year consolidated number is 147, which is higher than FY25 numbers of 121. And this is one of the key reasons, but in... The industry used to be having a good time in terms of profitability and pure turnaround. In FY19, the consolidated days used to be 134, which are now moved to 147. Nothing to worry about as such. The books are properly provided for in terms of wherever there is provision required to be taken. Thank you. So I will, my team is gathering information. But in the meantime, let me take your third question. What was your third question about?

A third question was, if I will be sharing with exhibitors, I know there have been certain agreements, like with Mirage and all, which you add higher absolute amount, or rather given to them. But still, Bizzab is 33%, now it is at 59.5. Right? Is there a scope for improvement, or are we losing pricing power in our negotiation? That was the only thing. Yeah.

Firstly, we are not losing pricing power, for sure. In fact, the fact that we have been able to increase our advertisement network actually vindicates the point that the theaters really want to get connected and the chains really want to get connected with UFO. So that was more importantly I wanted to clarify. Coming back on the numbers part, yes, it is fact that the number of the sharing has been going up. And the reason for that is purely two reasons primarily. One, if you know the business model of UFO is such that we charge rental to the theater, and we also give a minimum guarantee of revenue share from advertisement to the theater. In other words, there is one billing happening on the theater. And one revenue sharing happening to the theater. And the contract is structured such that the minimum guarantee in non-DCI installation cases is always equal to the minimum guarantee paid for, I mean, the rental charges which are living. Now, over a period of time, the rentals, because of the better equipment being declared, have also started going up. And therefore, correspondingly the sharing has gone up. That is one component, but that is a smaller component. The bigger component is we were very successful in getting into the chains and the theatres and aggregating the ad rights where we have not done the investment from our side. And in the situation where the investment is not from our side, the sharing that we do with the theatre, rightfully so, is on a higher side. Are they sharing? Typically in the range of 35 to 45%. We have not received a minimum guarantee, and therefore, almost 80% of revenue or sharing expense would fit into this category. And that's the reason why... The ratio is going down.

Thank you.

Yeah, so just before you answer the second, revenue per screen, on the trade receivables, yeah, trade receivables, is there a possibility to share with us DSOs which are above 120 days or DSO which is above, let's say, 160 days, if that was the metric which is there, whichever is the right metric, because looking at the absolute trade receivables, And if the film is released closer to the quarter, as you said about Durenda, so this might cloud our view. So can you share in the presentation, what is the DSO about, let's say, 120 days, or what are the right metrics which you would like to show, so that we understand that there is an improvement and there is not a problem in this. Yeah, you can answer the third question.

It's a very valid and useful solution, especially in the quarters where we have positive situations like Duranda. We need to provide this information and it will be included going forward in such quarters. Siddharth wanted to add a data point with respect to sharing.

So, sir, I think that's a very valid observation that you have made on account of ad sharing, increasing from 30-35%, which used to be our legacy percentage, and now it has gone in 50s and 60s. So, this is on account of change in the nature of your network. In those days when sharing was low, a large percentage of our screens were single screens, right, multiplied. Thank you. So, that is also one reason, but... We have the ability to monetize our screen.

I appreciate that point. In that context, in that context, our ad revenue per screen should also go up, because if you have a higher quality of screens, I mean, the kind of output or the return per screen should also go up from what it was earlier. That is not visible. That may be probably, it might be content related, but that was one point in that direction. You had something to say on the Uniford screen?

I think that was your second question, and your observation was the Revenue 4 screen on 3DF.

3DF and BPF?

3DF and BPF is going down, correct? So, that observation is correct for Q4, but if you see fully a basis, the revenue has gone up on 3DF, And Q4, the reason why it has gone down, It's because, and this happens almost always, that whenever there is a bumper, I mean, a big blockbuster expected to be released, none of the movies try to release around that movie. In this case, if you actually check, entire February was blank. In fact, there was no meaningful movie in February. And therefore, our CDC revenue has taken a beating, which obviously gets compensated handsomely because of the advertisement revenue growth, but the lower revenue translates to lower power screen revenue, and that is evident in your Q4 comparison. But full year basis, you will see that increase, which is obviously because of the way the performance of movies are going on.

Sir, I think to help you understand this a little better. This is a function of two things. One is number of movies. The movies went really wide, so hence the VP of CDC took a little bit hit, but I think it all evils out in a year, and we are confident that this will stabilize. We have a very consistent performance.

The second, regarding this future, I mean, earlier we should talk about this initiative that we would have some software for monetizing the ticketing or a football monitoring and possibly some in-store in the theater advertising also in terms of, you know, just like you have an outpost advertising, you have something to use the real estate which the theater has, which is not just use a screen for advertising, maybe possibly other options. I remember discussing this, hearing this discussion in earlier conversation, I don't know which year, but these three things, software, football monitoring, and all those things are not nowadays covered in the presentation. Any development on those?

So, football measurement is basically a tool to catalyze.

Yeah, segmentation. Earlier I always heard that you are trying to segmentize the status and try to get a higher revenue from advertisers. There were certain initiatives that you had done, you had done some surveys and all that stuff. Yeah.

Yeah, yeah, yeah, so these are tools and which are which we use to actually evangelize. Cinema as a platform and our network, right, that what is the value that we deliver to the advertiser and, you know, the revenue impact that these tools make are reflected in the numbers of this year and this quarter.

Yeah, have you done something like that? Earlier, there was some plan that we are going to do this and categorize so that we can get it closer to, let's say, what PVR earns and all, right? That's what the plan.

Which is... Exciting, excitement around... So, your network delivers around 40-45% of good quality. Thank you very much. We're going to have a new chair. Which is a very very positive trend. Remember to market that tool to advertisers and create belief around our ecosystems. Initiate it. Satellite R. All such initiatives. So this is... Initiated work around that. Bits and pieces.

Oh, thanks. Just finally, one last thing. Can you just tell me what is the free cash flow that was interpreted this year? And just as one data point.

Should I answer your pre-cash flow? So that can be better seen in my net debt situation. So my net cash has improved from 48.3 crores to 59 crores in this year, in spite of almost 11 crores getting further held up into working capital. So this is where, in fact, 11 crores in working capital and 4.5 crores in TDA, because that is also sans refundable. So, about 15 crores stuck into working capital. In spite of that, my net cash position has moved from 48 to 59 crores, 11 crores improved.

But when the cash has improved, then why we have gone for higher borrowing, just in both long term and current?

Yeah, so that's a very interesting question. We have always been following this policy to actually closely see our numbers for last 10 years. We have always been having cash as well as debt on the books. And the reason why we initially had it after listing was because... As you all know that some of the initiatives that we were trying to start more on M&A front could not be funded or it's not easily been funded by a bank line. And therefore, we had kept it with us as a kitty. When that was not needed, we have also gone ahead and distributed dividend in fact to the tune of 300 plus crore over a period of five years. However, what we realized during COVID was because we had that net cash with us or gross cash with us, we were able to survive the worst hit industry, which is entertainment industry, for an extended period of three years. And that's the reason why our conviction is that we should continue to hold cash and also have debt. Now, what happens is sometimes you may find debt going up in a year, and the reason for that is the way the debt procurement is structured in this company is that the debts are only and only taken to fund the expensive equipment that go into the theater. And the way it is funded is, we directly open an LC, and LC gets converted into loan. So that is not kept track as such that where it is really going up or down in which a particular quarter. Therefore enough. In a quarter of a year, you may feel that, oh, you have generated cash, but your debt has also gone up. That's because both things are running parallelly, independently. But I wanted to explain you why philosophically we have been holding cash with us, and obviously when the excess cash is not required, and the possibility of rewarding shareholder was there in the past, we have always done that, and hopefully soon with the turnaround in profitability, we should be able to reach that stage.

Thank you, sir.

Ladies and gentlemen, if you have any questions, please press star and one on the telephone keypad.

I repeat, if you have any questions, please press star and one on your telephone keypad. I believe there are no further questions, sir. Now we hand over the floor to Mr. Mishra for closing comments.

Thank you. Thank you all for joining today's call. We value your time and continued engagement with our business. Our teams remain available for any further queries or clarification. We appreciate your support and look forward to updating you again next quarter. Thank you, everyone.

Thank you so much, sir. Ladies and gentlemen, this concludes your conference for today. Thank you for your participation and for using Dur Sabah's conference call service. You may disconnect your lines now. Thank you and have a pleasant day.