Ladies and gentlemen, good evening, and I welcome you all to the PVR INOX Q1 FY2026 Earnings Call. As a reminder, all participant lines will be in less than one minute, 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 and zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Abhishek Banerjee from ICICI Securities. Thank you and over to you, sir.
Thanks. Good afternoon, everyone. On behalf of ICICI Securities, I would like to welcome you to this Q1 FY2026 Earnings Conference Call for PVR INOX Limited. Representing the company, we have Mr. Ajay Bijli, Managing Director; Mr. Sanjeev Kumar, Executive Director; Mr. Gaurav Sharma, Chief Financial Officer; and other senior management personnel. The call will begin with brief management remarks, followed by a Q&A session. I would now like to hand over the call to Mr. Bijli for his opening remarks. Over to you, sir.
Thank you very much, Abhishek. Good evening, everyone. I'd like to invite you all to discuss the unaudited results for the quarter ending June 30th, 2025. We uploaded the earnings presentation and the results on our company's and stock exchanges' websites earlier today, and I hope you've had a chance to review them. The Indian box office has started on a strong note in FY2026, led by robust performances from both Bollywood and Hollywood movies. Bollywood box office collections surged by 38% year-on-year, driven by a steady flow of successful titles such as Raid 2, Sitaare Zameen Par , Kesari Chapter 2, Housefull 5 , and Jaat. The year so far has relied less on the big-ticket blockbusters and more on a consistently performing, steady flow of films, with five indie films crossing the INR 100 crore billion mark, including three films which crossed the INR 200 crore mark.
This signals a healthier practical environment, where performances are less skewed by mega blockbusters and more anchored in the sustained strength of mid-to-high performing titles. Hollywood movies, too, where PVR INOX enjoys a dominant market share, delivered a sharp 72% year-on-year growth in collections, followed by super hit franchises like Mission Impossible, Final Destination, and Ballerina. The major summer event films like F1, inspired by the world of Formula 1, also stood out with its high-octane racing accent, placing it among India's top-performing Hollywood releases for this period. These titles perform exceptionally well in our premium and experiential formats, which recorded an impressive 20% year-on-year growth in admissions. On the other hand, digital content demonstrated stability. Visual performance was well supported by hitchhikes, Good Bad Ugly in Tamil, Thudarum in Malayalam, and seafood hitchhike Tourist Family in Tamil.
We continue to focus on our manufacturing footfall initiatives to drive demand generation. In April, we launched Blockbuster Tuesdays, offering tickets starting at just INR 99, which has quickly emerged as a very high-impact footfall driver for value-conscious weekday operations. Impressively, it brought nearly 1 million new and lapsed transactors back to cinema, highlighting its effectiveness and revitalizing weekday cinema-going habits. Our live events initiative also progressed well, with screenings of IPL matches, which drew enthusiastic crowds and showcased how cinema halls can be multi-purpose entertainment venues. While these initiatives delivered strong engagement, the quarter also saw some external disruptions and the release of films like Akaal and the indefinite suspense of Sardaar Ji 3 collectively impacted footfalls, resulting in a loss of nearly INR 6 lakh-INR 7 lakh admissions. All key operating metrics registered strong year-on-year growth.
Admissions rose by 12% to 34 million, while average ticket price increased by 8% to INR 254. We also achieved our highest ever spend per head on food and beverage services at INR 148, reflecting a 10% year-on-year growth. Advertising revenue reached INR 110 crore, the highest for any quarter post-pandemic, marking a 17% increase over the previous year. In terms of the financial results for the quarter, the following numbers were calculated after adjusting for the impact of Ind AS 116 on lease accounting. Total revenue for the quarter was INR 1,488 crore, EBITDA was INR 114 crore, and PAT loss was INR 34 crore, compared to revenue of INR 1,209 crore, EBITDA loss of INR 20 crore, and PAT loss of INR 137 crore in the same period last year. On the growth investment front, we're actively implementing the capital light growth strategy.
During the quarter, we opened a total of 20 new screens, of which 14 were under asset light and FOCO models. In addition, we have signed 55 new screens under the FOCO model and 72 new screens under the asset-light model, reinforcing our focus on capital efficiency and scalable expansion. During the quarter, we have not closed any screens. Our net debt stands at INR 892 crore at the end of June 2025, marking a reduction of INR 61 crore since March 2025 and an impressive INR 539 crore or 38% reduction since the merger, underscoring our commitment towards financial discipline and deleveraging. The upcoming quarters look promising, with a robust lineup of releases across languages. Key titles include War 2, Coolie, Jolly LLB 3, [Ikkya], Thama, Tere Ishq Mein , Dhurandhar, Avatar: Fire and Ash , Rajasaab, Alpha, Border 2, Love & War, and Toxic.
With such a diverse and high-potential content slate lined up, we expect strong audience traction and healthy footfalls in the quarters ahead. We will continue our efforts towards manufacturing footfalls through innovative promotions and programming, while prudently managing cash flows and reducing leverage. Our current screen portfolio stands at 1,745 screens across 353 cinemas in 111 cities in India and Sri Lanka. Thank you for joining us today. I now open the floor for any questions you may have.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Abneesh Roy from Nuvama. Please go ahead.
Yeah, thanks. The first question is on the FOCO and asset -light models. You have opened around 14 screens in these two models this quarter. If you could comment, what was the response? If you could also comment on the FY2025 screen openings, if any, in this model, any tweaks are needed in terms of expansion? Are you happy with the initial response in these two, asset -light and the FOCO model?
Yeah, it is Ajay Bijli. Yes, I mean, out of the 20 screens that we've opened, Rajpur is on FOCO model, Jabalpur is on FOCO model, and also Director's Cut in Mall of India, DLS project in Noida is an asset-light model. We are completely happy because we are not compromising on any of the things that we look at when we do a normal lease model, even when we're doing these models, because in fact, our responsibility increases to make sure that these projects are successful and the quality of the operations, quality of the fit-outs are equally good. The response even from the developers and those who invested money in the FOCO model is also very good. I think, as mentioned in my opening speech or whatever talks, 127 screens have already been signed.
We are going to be opening these screens in this financial year and the next financial year, 18 - 24 months. Just an overview, the EBITDA margins are going to be the same as what we normally look at. The ROC, because the contribution is less from our side and more from developers, the ROC numbers are much healthier. It's part of our strategy to correctly spread the brand now, which is recognized by all stakeholders, especially the developers and the consumers, much as the way it has been done in hospitality for a long time. I think it's the first time a cinema company has basically gone on this path. We are very happy with the results.
Sure. My second question is on your footfall initiatives. Tuesday, INR 99 pricing seems to have done well. Now, weekend customer and weekday customer generally is a bit different because of the nature of the job profile, etc. Does it make sense to extend Tuesday to a bit more weekdays? My second question is, on the food and beverage side also, you have done affordable pricing. Any numbers you can share on a percentage basis conversion of the occupancy? How can we judge that this is also working? In India, anything affordable always works. Just wanted to understand if any data points you can share how it's working.
Is it okay if Abneesh gives the answer to request Gautam to answer this? Yes, Gautam, can you answer this, please?
Yeah, sure. Your question on whether this affordable pricing is working, the first answer is that if you look at our 10% growth, the majority of the growth has come through value and not through volume, which is very healthy in the sense that we are able to take the strike rates up by converting some of our non-eating consumers on the weekday through the 99 plan and through the unlimited refill promotion that we run over the weekend. We try to cover a larger audience through that. By and large, there's been a very focused approach on trying to get more conversions to the candy as well as keep the pricing up there. The split between on the growth is 50/50 or 50/40 in favor of volume to value. That shows clearly that this is working. What was your fourth question?
On whether we can extend the pricing to weekend. No, we don't want to do that.
No, that was not the question. My question was, currently, I think the INR 99 is more on Tuesday. Now weekend and weekday crowd is different. Instead of Tuesday, can you have it, say, one more weekday? Does it make sense?
No, this is an industry, you know, a specific program where not only PVR INOX, but the entire industry has been galvanized to actually have this specific one-day off. We don't want to start shifting our value customers from other days into INR 99 day because that would begin to erode our profit. The idea was to get new customers on a specific day, and it's working brilliantly well. We don't see the need for extending it beyond one specific day because, as you would understand, that cinema does cater to various audiences with different pocket sizes. This day has been marked out for people which are time-rich, task-poor, and still have the ability to walk into a PVR INOX cinema or any cinema for that matter. Because all the cinemas are at INR 99, we get that advantage because clearly of our positioning. That's a big one for us.
We don't feel the need for extending it beyond one day of the week.
Hello, yeah, I was told on the industry of weekend.
Can I have a follow-up?
Go ahead.
Sorry. One follow-up I wanted to understand more in terms of the understanding. You mentioned the industry-wide Tuesday. That is something which I get. What I did not get was the time-rich, task-poor. Now, if you think weekend audience, generally, my understanding is it will be the office-goer and the student who has classes on the weekday. Isn't the customer base largely disparate? If he's free on Tuesday, there can be customers who are also free, say, on the Thursday or Wednesday. I just wanted to understand why only one day you are restricting by opening up more weekdays, which are anyway underoccupied. What is the issue? Because see, someone who is coming on the weekend, he's an office-goer or a student who has classes, right? To that extent, he can't come on the other weekday.
Yeah, I understand. The way we look at it is that the weekend is more family. The way we classify them is task-rich, time-poor is the weekend customer because he has the ability to pay. We would really want to cash in on that audience in a different manner. The fact is Monday to Thursday, any which way, we operate on lower pricing than the weekend. Plus, on the Tuesday, we even lower it further to INR 99 flat pricing. We believe that we are giving audience such as students, housewives, and senior citizens, which are largely the case between Monday to Thursday, opportunity to come and watch the film. Even on Tuesdays, it is further dropped down to INR 99. On a weekend, we believe that we, any which way, work on higher occupancy.
If you see the weekend occupancies are much higher than the weekday occupancy, that is largely because of the fact that it's a family audience and this audience is willing to pay additionally for a great experience of coming to a cinema. This is how we have allocated time zones for just about every category within the space, and it's kind of worked for us. We don't feel that there would be a need to change that equation because we need to maximize on a few days. Fridays, Saturdays, Sundays also, the first three days of when a movie is absolutely fresh and caters to an audience which is willing to pay the maximum price. As days and weeks go by, the pricing keeps coming down and keeps opening a different subset of the market for us. That's the way we've planned it.
Sure, thanks. Last question. Highest ever SPH, if you could discuss what was the reason. Second is the post-pandemic highest Q1 ad revenue. What were the key drivers here? Was it the Hollywood box office finally seeking a good number, INR 200 crore after two years? Now the Hollywood pipeline is looking good. Overall advertising, when I see for FMCG and for, say, media companies like Zee and others, it is not that good. You have obviously done better. Your overall ad revenue is a bit more unpredictable and a bit more movie-like. What is the key driver for ad revenues being a multi-year high from a Q1 perspective?
Sorry to interrupt. The line for Mr. Ajay Bijli has been disconnected. Please stay connected while we reconnect him.
Let me answer the question.
Thank you for your patience. The line for management has been reconnected. Thank you and over to you.
On advertising, for advertising revenue, we tend to lean a lot on big-star films. That is something that has always worked for us. Unfortunately, sleeper hits don't work for the advertising business. From that point of view, we had some big-star films that came in, which was Kesari with Akshay Kumar, who also endorses a lot of brands. We had Ajay Devgn in Raid 2. We had Good Bad Ugly with Ajith again, who endorses a few brands in the South. All of these bigger films and Sitaare Zameen Par , of course. The fact of the matter is we garnered fairly decent advertising revenue on the back of these films, which not only opened well and had huge expectations with the advertiser, and because of which we were able to get better numbers.
And SPH?
On the SPH end, as I said, the INR 99 menu on the weekday and the unlimited popcorn and Pepsi refill packs, along with that offer where anybody could buy a glass of Pepsi by paying INR 50 extra, all these offers really helped us to increase strike rates and get the SPH up. Also, the fact that some of the big films that came in this quarter were Hollywood films, which actually garnered a very different audience, which is a high ATP audience, and they like to come and spend at the candy. There were hardly any films where the youngsters came in alone. This was all family content that came in, a high-spending audience that came in, and because of which we were able to sort of galvanize a better SPH.
One clarification here. Does the INR 99 pricing help you in augmenting SPH? I thought INR 99 affordable pricing, it may help you in conversion. It may help you in getting new customers. We are talking about spend per head. INR 99 is affordable pricing. Does it help SPH in going up?
It does because if you look at the way which operates is Monday to Thursday till 6:00 P.M. Till 6:00 P.M., our price rates are normally slightly vented because of the kind of consumer we get. These are very value-conscious consumers who would typically wait for a Monday to a Thursday and come and watch a film. They at times found our S&P pricing a bit high. With INR 99, they were easily able to convert. You got to see that while the SPH was low, the conversion was better thanks to the INR 99 offer.
Okay. I did call offline. I still don't get it. Thank you. That's all from my side. Thank you.
Thank you. Before we take the next question, we would like to remind participants to press star and one to ask a question. The next question is from the line of Vaibhav Muley YES Securities. Please go ahead.
Hi, thank you. Congratulations on a good set of numbers. My first question was on your asset light and capital light growth strategy. Going forward, what kind of margin expansion do you foresee because of the addition of capital light screens? The reason I'm asking is there has been a significant cost reduction across the cost headers in Q1 results. Is there any particular reason for that, or are we already starting to see the benefit of shifting towards capital light models?
As you're aware, today, if you look at our circuit, the number of screens which are on asset-light are very minuscule. To answer your question, the control on cost that you are seeing is not because of asset-light. It's largely because of the cost discipline and various efficiency initiatives we have implemented across our circuit. Electricity, water, utilization of resources, optimizing and controlling on a variable basis linked to footfall, all of that is driving the control on fixed cost, not because of FOCO or asset-light. Going forward, yes, the majority of our new screen additions will be under the asset-light model. In asset-light model, as I said, two differences are there. One is a FOCO where we don't consolidate the P&L. We only get the management fees.
The other is where we have a developer invest or co-invest in the CapEx, where we share a certain percentage of rentals, incremental rentals with the developer in view of his investment, where there is a margin impact. That margin impact is, to a large extent, taken care of by the improvement in ROCs. As a result, the free cash flow that the property will generate in the break-even period improves dramatically. That's our response. Any further questions or any points you want to clarify?
We can expect the current level of cost as a % of sales to continue going forward or even reduce from the current levels.
Yeah, I think in the near term, the existing cost structure will continue. As the share of asset light improves, increases over the medium to long term, the cost structure will shift a little bit.
Understood. My second question was on the performance in July. You have mentioned in your press release regarding highest admissions in the past 18 months. In terms of financial performance, what kind of color can you provide for the one month and one week gone by? What kind of admissions have we seen and also the trend in terms of ATP and SPH, if you can provide a broad color?
Yeah, I think July has been a very, very strong month. Hindi films like Saiyaara, Mahavatar, and English films like Jurassic World, Superman, even regional films have done very well. All across the board, across all languages, the turnout of admissions and occupancies has been pretty strong. I think we would not like to comment specifically on financials for the month of July. We will report that as part of our quarter two earnings, and give you more insight on how the quarter, including July month, has panned out.
Perfect. Just lastly, on the net debt, we have reduced the net debt by around INR 61 crore in Q1. Can we expect more net debt reduction? Free cash flow generation can be pretty strong going forward, given the kind of outlook that we have. Now we are shifting towards the asset-light and the capital light growth strategy as well. Given the strong free cash flow generation, net debt could accelerate going forward?
Yeah, that's our priority to reduce net debt. I think you should expect the net debt level to further come down. As the operating cash flow increases, we will use the surplus cash to pay down debt. You should expect further reduction in debt level.
Perfect. Thank you so much. That's it for myself.
Thank you.
A reminder to the participants, you may press star and one to ask a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The next question is from the line of Jayram Shetty from ICICI Securities Limited. Please go ahead.
Hello, sir.
Sir, what could be the impact of the Karnataka tax on PVR profitability and operation, overall operation?
Yes, the Karnataka government order is yet not notified. There was a draft notification released in mid-July where the government sought feedback and objections from the public at large. A lot of feedback and objections have been sent out. More than 700 objections on the price cap have been sent out to the government. We have not yet heard anything after that. There is no clarity by when this notification, if at all, will become applicable. Also, whether this will be applicable across the board or there will be exclusions in terms of weekdays or weekends and special formats, and whether [SAT] will be part of the INR 200 cap or not. There are a lot of moving parts. Depending on the final structure of the government order, including applicability across premium formats and weekends, the financial impact can be determined.
I think at the moment, it's a little bit premature for us to comment on this aspect.
Okay. My second question would be your consolidated loss has narrowed down significantly to INR 54 crore in quarter FY2026. What are your seed levels to sustain this momentum through FY2026 and beyond?
Yeah, I think, you know, business, the biggest driver of revenues and profitability are footfalls. The lineup of films across languages in the upcoming months and quarters is something which we are pretty optimistic. We feel that the momentum is very strong currently, and the lineup will only support this momentum. That's one lever. The other is pricing on our tickets and food and beverage services. You know, we are very careful. We are doing a lot of initiatives. We are also trying to address the price-sensitive audience by bringing out more promotions on both tickets and food and beverage services through various initiatives. Third is our control on operating costs. That is something which is a top priority for the entire organization. We are trying to make sure that the cost discipline continues. These are the three big drivers for the profitability in the remainder of the financial year.
Okay, thank you for your answers, sir.
Thank you.
Participants, to ask a question, you may press star and one. The next question is from the line of Vaibhav Muley YES Securities. Please go ahead.
Hi. I just had a follow-up regarding, you know, 10 movies have done more than INR 100 crore of collections for the quarter. What has qualitatively changed according to you compared to previous quarters? Of course, one of the reasons is, you know, a slightly improved content pipeline. Apart from that, we have had good movies in the past as well. Revenue distribution has been very skewed towards a particular movie while many of the movies have performed poorly at the box office. What exactly has been changing fundamentally amongst the consumers that has led to, you know, more distributed collections across movies?
There could be many reasons for this, and we keep debating internally as well as keep checking with consumers and do deep insight sessions with them. What we clearly are getting is that there is an OTT fatigue. Clearly, that's one. The content overall has become a lot sharper and better. The fact that people do want to come out and understand and enjoy this movie experience is the pivot point. The more and more that we are talking to consumers, they are saying the best and the only way perhaps to enjoy an unadulterated movie experience is at the cinema. I think the swing is completely back. You can see this across. We've been sort of doing deep research at each of our cinema locations. The sheer footfall has increased, and consumers are very actively now seeking fresh content.
I think what we've been lucky is the fact that the directors and producers of new content have clearly got the vibe of the consumer and are creating stories which are kind of connecting with today's audience and their requirements. Also, one big move that we are seeing is this whole shift from stars to stories. I think if you look at the success of some of the films, you will clearly see that the move from just a multi-star or a big star film to great stories has come into play. That really augments better footfalls to the cinema. The last point that we have kind of again captured through the creative fraternity is now across the board, whether it's Bollywood, Hollywood, or Tollywood regional film, they're all eyeing the pan-India market. There is no longer a regional divide for a film.
If you talk to any film creator today, he's not creating a film for a certain boundary. His stories, the way they are shooting, the way the production values are, they are trying to cater to a much, much larger audience, which really augments really well for us. Regional content is on a high, and along with the fact that regional stars, and when I say stars, I mean great actors, are coming into form. This is something which we will continue to see even in the two big startup films, which are due to come on 14th, which is Coolie and War, where we have the leading Bollywood and the South stars coming together. Same is the case with Coolie, same Rajinikanth and Aamir Khan coming together. I think this is a few trend lines that we are seeing, which is resulting in higher footfalls at the cinema.
Wonderful, sir. Just a follow-up on that. You said OTT fatigue is there. What do you mean by that? Are the investments behind OTT platforms starting to slow down, or is the amount of new content slowing down? Is it just that the consumer preference is now again shifting towards the movie exhibition, towards the movie on the big screen?
While I will react more from an outside-in perspective, we don't have an inside view of what's happening really at the OTT side. What you see is it's not as if there is a complete lack of content. Content is coming in there as well. There's clearly a fatigue where people are saying, "I've seen it all." In fact, they seem to be now getting into a rut where a similar kind of content is finding way. They have now got into a bit of a constraint where stories, cast, everything is plain to a certain plot, whereas cinemas have started to now break the mold, come up with far more fresh stories and coupled with a great experience that the family gets when they come and visit a cinema because this unadulterated cinema experience is something which only cinema can deliver.
Sitting at home, there are just far too many distractions, which consumers are now coming to terms with. What happens is we've often seen that through 20 years, 25 years, that once a consumer is out to watch a film at the cinema, he gets hooked on and would come back to a cinema quite often. If he comes out once, you will see the same customer coming out again and again and again because that's when he begins to enjoy the sheer experience of a cinema.
Got it, sir. Is there any chance of increasing the OTT window from the current, I think it's about four weeks, and also to make it consistent across, you know, regional languages?
No, the current window is not four weeks. For TV films, the theatrical window is eight weeks before it's available on theaters. You know the global windows are also six weeks for a pay-per-view or transaction and minimum eight weeks for subscription-based OTT. Windows in South India are slightly shorter. There is no change, and these are the windows because they are in pre-COVID period also, and the same windows are currently applicable.
Got it. Just lastly, I had heard Mr. Bijli saying that PVR w ill eventually become, along with the movie exhibition, an overall platform for out-of-home entertainment and entertainment consumption entities. Are there any trends that we are taking in that direction from a long-term perspective?
I think our mainstay, the way the infrastructure is designed, is for movies. Our long-term view is that we can utilize the existing infrastructure for alternative content other than movies. That is the strategy that we want to focus on, which is to say that if we can do more of live events, screenings, IPL matches, comedy shows, constantly in our cinemas, which are not dependent on film only. The other piece is re-releases of the huge library of films that we have access to, depending on the audience buzz around what sort of genres and films that they would like to see, we decide on a re-release platform. We want to use our existing cinema infrastructure for multi-purpose entertainment out of home, including movies and other live events and alternative content.
Perfect. Understood. Thank you so much for answering my questions, sir, and all the best for the time.
Thank you.
The next question is from the line of Kavish Parekh from B&K Securities. Please go ahead.
Hi. Thanks for the opportunity. Congratulations on the set of numbers. Firstly, on the margin front, a fairly heavy show, 730 with sequential margin improvement on the back of 150 with optimistic expansion. We've already touched upon that part of it was aided by increase in shares in Hollywood, part from cost control. Any crossovers that can further be exercised to sustain or provide derived these benefits in lull periods which usually see some dips in margins? Any thoughts on that?
Sorry, can you repeat the last sentence? It was not very clear.
Increasing shares from Hollywood, as well as cost control, aided us to deliver these margins. Any cost levers that can further be exercised to sustain or rather derive these benefits in lull periods, which usually see sharp dips in margins?
Yeah, you know, our business is a business which is dependent on flow of footfalls and admissions. Over the course of the last two years, and especially post-merger, we have leveraged technology. We have leveraged scale to control and, you know, variabilize our costs at the ground. When there is less number of footfalls or weekdays, our usage of contractual staff is accordingly monitored and altered. Similarly, for electricity, air conditioning, utilities, it's also controlled based on occupancy levels within the cinema hall. As a result, we are able to control electricity costs. We are also deploying solar panels in cinemas where our dependence on, you know, grid electricity reduces and cost-effective solar electricity is being supplied. These levers are being put into place, and they will, you know, give benefits to us.
I think most of the cost areas we have explored and we have put in place the efficiency measures. Benefit of this will be visible as the operating leverage in the business shows up with increase in footfalls.
If there is no response from the current participant, we would move to the next participant. The next question is from the line of Umang Mehta from Kotak Securities. Please go ahead.
Yeah, hi. Thanks for the opportunity. Am I audible?
Yeah.
Yes, you are.
Yeah, thanks. My question was again linked to one of the previous participants when you mentioned that you can't share details on July kind of profitability. You know, you delivered 6.5% margin with 22% occupancy. As we enter the seasonal period where ATPs will be even better, would it be too far-fetched to think that with the 25%, 26% occupancy you could do mid-teen or even higher EBITDA margins? I mean, given the current cost structure.
See, if you look at our financial year 2024 result, which is a year ago, at a 25% occupancy, we did about 13.5% EBITDA margins. That's a mid-teens EBITDA margin at a 25% occupancy. Now, a lot of the margins are dependent on how the other levers in the business, like pricing, advertisement income, costs, they pan out. I think it's very hard for us to say where exactly the margins will be if the occupancies are 25% in subsequent quarters.
I'd like to add one point to what Gaurav s aid. If you traditionally look at our business, our business quarter three is by far the biggest quarter. As far as the trend goes, quarter one and quarter four are kind of comparable, and then the biggest quarter is quarter three, followed by quarter two. The better quarters are yet to come.
From that point of view, overall, all the metrics going up is quite likely.
Understood. That's helpful. The second one was on the full-year kind of footfalls. Now, we generally rely on your assessment of the pipeline on how it looks for the rest of the year. Would you be confident that this shares that footfall for the year could cross FY2024 levels, roughly around 150 million plus? This is whatever you see in terms of your assessment of the pipeline.
Yes, absolutely. In the sense the way the pipeline is stacked up, there is absolutely no doubt that we would cross. We were very confident when we were starting off the year in April. Now, after the end of quarter one, it's only looking better. As Gaurav has shared, July was a bumper month for us. All indicators are that we would surely cross the last year footfall number.
Sure. Last year, you mean 2024, right? FY2024?
Yeah, yeah, yeah.
Understood. Just the last one was on CapEx. Gaurav, would you still maintain the INR 4 billion -INR 4.25 billion CapEx for this year, or does it go down further given your progress on capital-led models?
No. For the new screen additions of 90 to 100 screens that we plan to open and our increase in renovation CapEx that we decided at the beginning of the year, we have not changed our CapEx guidance. We will spend roughly in total about INR 400 to 425 crores, which will include about INR 250 crore -INR 260 crore on new screens, about INR 70 crore -INR 7 5 crore on renovation, and the remaining INR 75 crores on maintenance, IT, and other related CapEx.
Understood. Very clear. Thank you so much and all the best.
Thank you. The next question is from the line of Jinesh Joshi from PL Capital. Please go ahead.
Thanks for the opportunity. My question is on our management's income, which was about INR 2.4 crore in this quarter. I know the figure is quite low. Given we have plans to expand via the FOCO route, where do you see this number stabilize at maybe in two to three years? I just wanted to get some sense on this because I believe in this model, your flow-through to EBITDA is quite high.
Management sees entirely flowing through to our EBITDA. This number is only going to increase as the new signings of FOCO will happen. We've shared that we have signed about 55 screens under FOCO modules. As these screens open, management sees income from these screens will accrue in our P&L. It will continue to grow. To what number it will be and what level it will become, it's hard for us to say. Clearly, it's going to uptake to grow revenue.
Sir, technically, I believe our fixed contract that we had with BMS ended sometime back, and we are on the revenue share arrangement, if I'm not mistaken. In this quarter, while our convenience fee has increased on YoY basis, the contribution of convenience income to the overall box office collection is down on YoY basis. Has there been any change in the revenue share arrangement? If you can please clarify on that side.
There is no change in the revenue share arrangement with our ticket aggregators. It remains as per the contract. The growth in convenience fee you've seen is roughly around 10% versus a 22% growth in our box office collection. Actually, there was an impact of a certain provision that we had reversed last year in quarter one of roughly around INR 6 crore. Because of this, the last year quarter one convenience fee was higher by INR 3.5 crore. If you adjust for this reversal entry in last year quarter one, the growth in convenience fee will be largely in line with the growth in the box office. Roughly around 19% - 19.5% growth in convenience fee, which is in line with the box office growth.
But.
Yeah, change in the revenue share or the change in the convenience fee contract with our ticket aggregators.
Understood. Understood. Sir, one last question on Karnataka. This was discussed earlier in the call. Given the situation over there in terms of price cap, have we slowed down our film expansion plans over there relative to one? Secondly, have we also seen any kind of cancellations come through from our FOCO partners, given the fact that their ROI can also get compromised if prices continue to remain capped?
No, there is no change in our expansion strategy in Karnataka. As I said earlier, also Karnataka, there is no government order which has been released on price caps. It's premature for us to make any strategic decisions based on this. We have plans to open screens in Karnataka, including in Bangalore. We will assess how the situation unfolds on this, right?
Understood. Any cancellation or any change of plans from our focal partners which you would want to highlight?
No, nothing that I want to highlight on that. There is no change. There is no cancellation. There is nothing of that sort happening.
Got it, sir. Thank you. Thank you very much.
Thank you. The next question is from the line of Harit K apoor from Investec. Please go ahead.
Hi, good evening. I just have two questions. When you spoke about this Blockbuster Tuesdays, you spoke about three types of categories of people coming in: college students, senior citizens, and the housewives. I think two out of those three categories, as per any industry research done in the past, were the categories which were not really coming in in the past. I mean, housewives and senior citizens. I think that age cohort also was lower down in terms of the growth. Do you see this strategy as being kind of medium to long term temporarily positive for you, as in that can really drive up footfalls from these cohorts which are especially probably challenging post-COVID?
First and foremost, they were coming. It's not as if they weren't coming. This was an available cohort to us from Monday to Thursday, and all our footfalls that we were getting even earlier, Monday to Thursday, they were the kind of people. When we had launched this, as per our plan, we felt that we could galvanize a larger chunk of people within this cohort to come out and watch movies. That's exactly what has happened. More students, more housewives, and more senior citizens who were still on the brink earlier to come and watch movies at the normal weekday pricing. They still felt a little resisted and now felt that as if it was a day when they could just go and watch. It expanded the market, and it's worked brilliantly well for us. We believe it's a long-term initiative for us. We intend to keep this running.
The beauty of this model is also that the prices start at INR 99. If a film which is new or doing well, we do have the program in a manner where films can run at INR 99, INR 149, and INR 199. We technically work within the three bands. This is really helping us because, as I said, it is galvanizing a much larger footprint of people coming in now. Even in the evening shows on Tuesday, we are seeing some of the office goers and families are also coming out because they feel it's a great value day. While we've just had a couple of months in this promotion, after about six odd months, we also want to do a frequency analysis to ascertain if we have managed to not only get them out, but managed to get them out more often and watch more movies.
This is something that we can't do now simply because it's too short a period. After about, I think, six months, we'll have a very good idea on two things. One, have we managed to create a bigger market? The answer clearly seems to be yes. The second is, have we managed to get them to watch more movies because of this promotion? Something we can't answer today. Hopefully, in the next five to six months, that answer will be very clear.
It's great. We look forward to what your research shows up. The second thing was on ATP. This quarter, the 8% growth, should we assume that there is a little bit of a drastic mix change also here, which is affecting this number? I mean, much lower South, stronger Hindi, stronger Hollywood, especially. This 8% growth, hence, is not representative of what the full year could be?
Yeah, you're right. The fact of the matter is Hollywood, IMAX films, 4DX films, Bollywood, big-startup films do end up driving ATP. Also, if you look at the lineup, with so many blockbusters, regional blockbusters lined up, we believe that all should get blended up really well. This is quite possible to maintain this growth. Yeah.
I would like to just add to what Gaurav s aid. If you see our last financial year, 2025, our ATP was flat compared to previous years. We had zero growth. Also, last financial year, Hollywood saw significant growth because of the Hollywood strike. As a result, the content mix was more skewed in favor of regional and Hindi. Hindi also had hits and misses and volatile years. With Hollywood bouncing back and coming back to its normal contribution the way it used to be earlier, the growth in ATP will be there year on year. To what level and how much is, only time will tell depending on how the films perform at the box office.
All right, Mr. Gaurav. The third one was on rentals. All your cost levers you have exercised are showing great results. Rental per screen, if you just do that math, is up 5%. I just wanted to understand, with FOCO as well as your negotiations, ongoing negotiations always with landlords, is that still a cost lever which can still grow slower than revenue over a two-three-year period? That's something which can incrementally provide you some benefits over a two-three-year period?
Yeah, the rentals, unfortunately, you know, they have registered leases, and they are governed by the escalation clause in those leases. Having said that, even this growth in rentals that you are seeing is after taking into account a lot of renegotiations and waivers on escalations that were triggering in quarter one. Now, without getting into specific numbers, I can tell you our growth in rentals just purely on account of escalation would have been higher compared to what we've reported if these renegotiations would not have been done. The benefit of this will be visible in the quarter two and the full year financials also. It is a big task. We have INR 1,350 crores of rental costs a year, and bulk of this is from registered leases in existing properties which are not asset-light. This is a priority for us, and we are focused.
As a percentage of revenue, it is still a significant cost in our CNS.
Great. Yeah, thank you very much. All the best. Thanks. Bye.
Thank you. The next question is from the line of Kavish Parekh from B&K Securities. Please go ahead.
Hi. Thanks for the follow-up. On the asset-light modules, could you share some details about how the unit economics or margins look like in properties that you have already started operating? What does the revenue share agreement look like both in FOCO and asset-light?
In asset-light, we've opened one property in Mall of India, Noida, where the developer contribution is there. This got opened only early this year. We will look at the performance for some period of time before coming to any conclusion and sharing the performance. As such, the developer contribution unit economics in terms of margins, depending on the level of developer contribution, the margins are accordingly calculated because whatever is a developer investment, in view of that, incremental rentals are given. The return on capital employed profile in the break-even period is far better than traditional 100% lease models. In a focal property where the 100% investment is done by the developer, because we don't have any investment, it's all flowing directly to the EBITDA in the form of management fees. That's how it is.
We will give you more color and more insights on the asset-light developer contribution model once we have some reasonable period of time for the performance to monitor.
Sure. Lastly, Sathi, how is the Passport initiative going? Any updates on that?
Passports have been discontinued simply because the film fraternity did not sort of agree to the fact that their films should be discounted. They wanted it to be labeled under the marketing structure called PVR INOX, which was really not the way passports could have survived. We have given a kind of a break to passport, and we are still working both internally and externally to see if there was a way that we could relaunch it in a couple of months.
Any thoughts on resuming loyalty programs and other ways to?
Sorry. Sorry.
No, please continue.
Sorry.
I was asking any thoughts on relaunching the loyalty program similar to what you had before the merger?
Not really. In the sense, you know, we really went out and spoke to the consumers. Again, loyalty program works when you can influence a consumer to come and watch a film of your choice. When I say your choice, I mean when an exhibitor is able to push a certain film. Because if you will only collect points and watch a film that you want to watch, and I'm not able to propel you to come to the cinema again, it wasn't working. We felt that Blockbuster Tuesdays was doing that job much better. That's number one. Number two, in a market where any which way some of the key markets where we have key dominance and with high-quality cinema experience, we felt that these minuscule points that we were giving out were not able to influence the consumers to come to the cinema.
It was just the expense sheet that was being maintained, but not something that was resulting in any great business for us.
Understood. Thanks a lot. All the very best.
Thank you.
Ladies and gentlemen, this was the last question. I now hand the conference over to the management for the closing comments. Thank you and over to you.
Thank you all for joining us on this earnings call today. In case of any questions, you may reach out to our investor relations team or directly to us. Thank you so much for your time.
Thank you. On behalf of ICICI Securities, we conclude this conference. Thank you for joining us, and you may now disconnect your line.