Ladies and gentlemen, good day and welcome to the PVR INOX Limited Q2 FY27 earnings conference call hosted by ICICI Securities Limited. As a reminder, all participant lines will be in the 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 your touchtone phone. I now hand the conference over to Mr. Nirant Dhumal from ICICI Securities. Thank you, and over to you, Mr. Nirant.
Good afternoon, everyone, and welcome to PVR INOX Limited Q2 FY27 post-results earnings call. The call will start with brief management remarks on the earnings performance followed by a Q&A session. PVR INOX management will be represented by Mr. Ajay Bijli, Managing Director, Mr. Sanjeev Kumar, Executive Director, Mr. Gaurav Sharma, Chief Financial Officer, and other senior management personnel. Over to you, sir.
Good evening, everyone. Can you guys hear me?
Yes, sir. Please go ahead.
Good evening, everyone. This is Ajay Bijli. I would like to welcome you to our call to discuss PVR INOX's unaudited results for the quarter and half year ended September 30, 2026. The earnings presentation and results were uploaded to our website and the stock exchanges earlier today. Box office growth momentum continued in Q2 FY27, which was a landmark quarter for Indian cinema. Industry gross box office collections reached INR 4,433 crores, the highest quarterly collection on record and the first time the industry crossed INR 4,000 crores in a single quarter. Industry box office grew 23% year-on-year, following 20% growth on Q1. Building on a record FY26, industry collections grew 22% to INR 7,618 crores in the H1 of this fiscal year, underscoring sustained momentum in theatrical moviegoing. What is especially encouraging is the range of content behind the growth.
English language cinema had a standout quarter, with collections growing 87% to INR 1,024 crores, crossing INR 1,000 crores in a quarter for the first time. Spider-Man: Brand New Day became India's highest grossing English movie ever at INR 608 crores of box office. Christopher Nolan's The Odyssey grossed INR 233 crores, with exceptional demand in premium immersive formats like IMAX. Together, they show the strong appeal of both franchise and non-franchise Hollywood content in India. Even a re-release, Avengers: Endgame Encore, grossed INR 45 crores over a four-week theatrical run, indicating strong consumer demand for premium cinematic experiences. In Hindi, the quarter was led by the exceptional performance of Hanuman Ansh, which grossed INR 351 crores. Mirzapur: The Movie deserves a special mention.
A hit streaming series was taken to the big screen as a feature film for the first time, and it went on to collect INR 267 crores at the box office. We see this as a beginning of a new trend. It reinforces what we have said on earlier calls. A theatrical release is where the biggest stories become events, and streaming can widen the audience that comes to the cinema. Sequels such as Awarapan 2 and Dhamaal 4 were the other successful hits. Regional cinema also witnessed a strong box office growth, with star-led spectacles like Jana Nayagan in Tamil and Toxic in Kannada grossing INR 200 crores and INR 296 crores respectively. Irumudi in Telugu and Bethlehem Kudumba Unit in Malayalam were other authentic regional blockbusters during the quarter.
Growth is now coming from a wide range of films across languages, genres, and budgets, from rooted word-of-mouth successes to star-led spectacles. We welcomed 46.3 million guests during the quarter of 4% year-on-year, and occupancy rose to 30.4%. Average ticket price and food and beverage spend per head each grew 14% year-on-year, reaching INR 298 and INR 153 respectively. This was also our best ever quarter for revenue, EBITDA, and PAT. On an Ind AS 116 adjusted basis, total income grew 17% to INR 2,133 crores. EBITDA rose 44% to INR 475 crores, and EBITDA margin expanded around 420 basis points to 22.3%, driven by strong operating leverage. PAT more than doubled to INR 273 crores. This marked our sixth consecutive quarter of year-on-year revenue growth.
For the H1, we reported total income of INR 3,775 crores, up 13% year-on-year, EBITDA of INR 705 crores, up 56% year-on-year, and PAT of INR 344 crores, up 233% year-on-year. These numbers show how the business has changed since the merger. Our EBITDA margin was 22.3% this quarter and 18.7% for the H1, against 17%-18% before COVID at higher occupancy levels. Merger synergies, cost discipline, and capital efficiencies have made PVR INOX a structurally stronger business. It is also showing in our returns. Our return on capital employed has improved from 10.2% in FY 2026 to 16.5% on a trailing 12-month basis, above the pre-COVID benchmark of around 13%. During H1, we generated INR 604 crore of free cash flow and repaid INR 259 crore of debt.
As our balance sheet strengthened, we returned part of surplus capital to shareholders in September through our maiden share buyback of INR 300 crore while retaining sufficient capital for growth. Even after this payout, we ended September with net cash of INR 141 crore, up from INR 81 crore in June. With the company turning net cash positive in Q1, the board has also approved a capital allocation and dividend distribution policy. While our earlier policy was limited to dividends, the new policy provides a broader framework for capital allocation. The framework sets out three priorities. First, we will continue to invest for growth in new screens, premium formats and technology while maintaining the quality of our circuits. Second, we will keep the balance sheet strong with net debt to EBITDA remaining within 0.5 times after any distribution.
Third, from the surplus that remains, we expect to return around 30% of our annual surplus cash flow to shareholders through dividends, buybacks or a combination of the two. With the timing and quantum at the board's discretion. The policy is available on our website now. On expansion, we opened 24 new screens across six new cinemas in the H1, predominantly under the asset-light models. Our network now spans 1,797 screens across 114 cities in India and Sri Lanka. During the half, we also exited 25 screens, the majority of which were loss-making. We remain on track to open around 90 to 100 new screens in FY 2027, with the bulk of the openings in the H2, mainly under capital-light formats. Our first SMART Cinema opened in Muzaffarpur, Bihar in September, introducing an affordable capital-light format designed for Tier 3 and Tier 4 markets.
We expect to open two or three more SMART Cinemas this fiscal. Looking ahead, the film slate is promising across languages. In Hindi, we have Ramayana, Part 1 in November, Shah Rukh Khan's King in December, Love & War and Golmaal 5 in Q4. Pan-Indian regional titles include Chiranjeevi's Kaaka and Prabhas's Spirit. Hollywood has an especially exciting lineup with The Hunger Games: Sunrise on the Reaping, Avengers: Doomsday, Dune: Part Three, and Jumanji: Open World. Beyond the films, we are giving audiences more reason to visit and more ways to engage with our brand. Value offers such as weekday morning shows at INR 99, Friday first shows at INR 149, and front row seats from INR 79 are bringing in more price-sensitive moviegoers. In food, we are taking our brand beyond the cinema through home delivery, grab and go counters, outdoor catering and our in-house food brands.
Through live events and sporting telecasts, we are making better use of our screens outside peak movie hours. We enter the H2 of FY 2027 with record earnings, a structurally stronger margin profile, a net cash balance sheet, and an exciting content calendar ahead. We are confident we can build on this momentum while further improving the quality of our earnings, cash generation and returns. With that, I open the floor for questions. Thank you.
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 the 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. Our first question comes from the line of Abneesh Roy from Nuvama. Please go ahead.
Yeah. Congrats and great set of numbers. My first question is on the SMART Cinema, which you have opened in Muzaffarpur. If you could tell us, how is the pricing, how is the CapEx, why are you calling it SMART Cinema, and what will be the plan in terms of this CapEx-light model in terms of the lower tier cities? Next 2 years, what is the broad plan you have? How many openings?
Well, Abneesh, first project. Sorry, you want to ask another question, or should I answer this?
Definitely. Go ahead.
Yeah. This was a pilot that we did, but we were quite confident about the way we approached it. The CapEx is about 25%-30% lower than our normal screen that we put up because we want to read the market and according to the demographics and the propensity for people to pay and make X number of visitation to the cinema, we wanted to make sure that we get the right offering. So whether it is a seat quality, legroom, seat width, big screen experience, AV, audio-visual, the food offerings, even the square footage per seat that we have taken in SMART Cinemas and the OpEx cost is about 25% lower than our normal cinemas in bigger cities like Delhi, Mumbai, Bengaluru and all.
That was one thing, but it was always a pilot and with the grace of God, fortunately, the first 2 months have been phenomenal. We are above what we were expecting. The ticket prices, like our average ticket price that you've seen just now we've reported is INR 298, but over there it's about INR 190. Even our F&B pricing is much lower there. Our offerings are limited, but basically limited to hero items, as we call them, which basically people want to consume quickly, and which go along with the moviegoing experience. Now that this pilot is out of the way, yet we haven't stopped from signing because we were fairly confident that this should do the trick for us in T3 and T4 markets.
Two are already under fit-out in Rampur and Barrackpore. Then we have a pipeline of about another 100 odd that we have signed, which should come up in the next 12-18 months. But this will be a big growth engine, in addition to the 100 screens that we're opening anyway in the normal format.
One or 2 follow-ups. The reason for calling it SMART is limited SKUs, say, in terms of the F&B and tighter pricing. Is that the reason? Second, India, the T3 T4 market is obviously extremely large, and now that box office is firing on all cylinders. Would we see very sharp expansion at some stage or would you like to continue last 2 years of very moderate but very well-thought-out and more calibrated expansion? My question is now net debt free, 30% cash will give back to investors. But are you going to miss out on the growth because of this strategy at some stage?
No. We are, in fact, now that all that volatile period is behind us and all the stakeholders are aligned to come on the big screen, which is the film fraternity as well as the consumer, the developers are still allocating spaces for multiplexes. The growth is only going to accelerate from here. 300 cities have been identified for SMART Cinemas. There is no question of compromising on growth because the country is still very under-screened, and it has a huge potential. Still, 50% of the screens in the country are single screens. You can imagine that so many cities are there where a good experience can be introduced. In fact, this is only encouraging us to grow faster. You are absolutely right. Post-COVID, we wanted to be careful, cautious. That will continue to be.
Unit level economics, even if you open 200 screens a year, will not be compromised. We still want to work on margins and payback of a maximum 3-4 years in any unit that we open. There are plenty of opportunities out there now. A lot of demand and inquiries have come after we have opened this one screen, one cinema in Muzaffarpur. Last year also, we closed down a lot of cinemas which were in dilapidated malls which had finished their life cycle. Therefore, the net screen addition you found muted. Now, the net screen addition will be much faster than what you have seen in the previous years.
Thanks for that. My second question is, "Hanuman" is a sleeper hit, but mega eventual revenues are INR 2 crore budget. How does it change slightly struggling Hindi movies? When I say slightly struggling, that is coming from the data.
Right.
If I see INR 1,400 crore revenue incremental, which has come in H1 this year versus last year, only INR 110 crore has come from Hindi incremental out of the INR 1,400 crores and INR 150 crore has come from dubbed Hindi. Which means around INR 1,300 crore-INR 1,400 crore has come from the regional and English. That does mean that Hindi, which is the main language, the number one language, is hardly adding much. How does it change "Hanuman" and why is Hindi struggling?
First of all, it depends on how you look at the data. I think Kamal is best suited to answer this because it is on a very large base. 100 crores is incremental box office collections on a very large base, which got built last year. Kamal, over to you are better equipped to answer this question.
I think Mr. Bijli has touched on the core point, which is because you are looking at the incremental number, there is a high base. Last Q2 last year was extremely strong for Hindi films. Hollywood films and regional films had their own struggles. Hollywood was still coming out of a lot of experimentation, strikes, and all sorts of issues. There was a lot of uncertainty. This year in the Q2, all of that has been put to rest and Hollywood is now firing with all cylinders. Hindi was already firing in Q2 of last year. Therefore, because of the high base effect in Hindi, you are seeing less of incremental, but wait till you have Q3 and Q4.
You will see, without making any forward-looking statements for PVR INOX, but at the industry level, we are confident that in Q3 and Q4, you will see a big jump in incremental numbers even for Hindi box office. Just to emphasize the point that we are trying to make. Hindi is not struggling. Hindi has been doing well since last year.
Abneesh, this is Gaurav here. I just want to add one point to what Kamal and Mr. Bijli said, and also on the data that you pointed out on Hindi. The way the reporting happens is that the dubbed version of English films are quoted as part of English collections. That has been the industry norm. This quarter, Spider-Man, which did nearly INR 600 crores, 35% of that, about close to INR 200 crores, was from dubbed version of Spider-Man in Hindi. If you add that also as part of the Hindi collections, then you know the growth in Hindi is not less. It is very strong, over and above the 11%-12% that you see. There is dubbed version of Spider-Man that is part of the Hindi box office as well.
That is a good point. I would just make one last point on what you said. *Hanuman* made on 2.5 crore budget, doing the kind of box office it did. Enormous amount of profitability for every stakeholder in value chain. This is fantastic for Hindi film business and for Indian film industry, because this encourages a lot of producers who have been sitting on the fence thinking whether they should green light or wait for an actor to allot them dates. This gives them a lot of encouragement to go out with their project, especially if they have conviction in the subject. If they have good content, if they have put rigor on that content. With *Hanuman* success, a lot of people would feel encouraged to go ahead and make those films, which is fantastic for exhibition business.
We will have more consistent supply of all types of films, the bigger films as well as smaller films. Back to you.
No, thanks. Thanks for the detailed answer and congrats again on great performance. Thank you.
Thank you.
Thank you. Our next question comes from the line of Arjun Khanna from Kotak Mahindra Asset Management. Please go ahead.
Thank you for taking my question and congratulations on a great set of numbers. I think the change that's been planned has seemed to have come through well. The first question is, and I think you all talked about it in the previous question also, that if we look at it from merger where we declared screens of almost 1,890 in Q4 FY 2023, we are currently close to 1,800 in Q2 FY 2027. So in about 3 1/2 years, we've added 100 odd screens on a net basis. Just thinking for the next three and a 1/2 years, how do you all envisage this number moving? Because I would assume most of these underperforming screens would have been dealt with. Would that be a right understanding?
Yes. I think because the multiplex business and our company has been around since 1997. So a lot of the first generation malls that had come up, all those became obsolete and they got overshadowed by bigger malls coming in the same vicinity. These older malls also lost tenants, and escalators, elevators, so many things were not working. So these screens were underperforming, and they were not in a state to be continued. Leases had come to an end. Therefore, we want to clean up the circuit by not having any underperforming. All that is behind us now. Now you will see the net screen addition growth much faster and much more. As I mentioned in my previous question, that this new identification of 300 new cities, Tier 3, Tier 4, and with this format which was not in our portfolio earlier.
We've got a solution for giving a clean, high-quality cinema experience at every price point. But that one cinema solution for Tier 3, Tier 4, we were not still comfortable with it, happy with it. That we've cracked it now with the first opening at Muzaffarpur. With that, suddenly it paves the way for us to increase. So, 150, 175 is a number that we could achieve from next fiscal every year. Could be even more.
So say for the next 3 years, roughly 500 screens. Would that be a fair expectation?
Yes.
Sure. Sir, the second question is, we have broken up our new screens to, say, an asset-light, FOCO, and lease model. Just wanted to understand how would the revenues be accounted in this model. How would the expenses be accounted?
Arjun, as you are aware. On the asset-light, we account the entire P&L in our books, the revenue as well as the cost of the cinema, operating cost of the cinema. On the franchise, we just account the management fees, which is a share of the property's revenue only as part of our management fees income in the revenues. The operating cost of that sits with the franchise owner. It is not accounted in our P&L.
To understand this, in terms of the top line, you would record this under movie exhibition. I mean, sorry, your net sales and the expenses, say, for food, et cetera, would all be at the operator level.
Correct. At the franchisee level.
Right. And on the lease would be similar to the asset-light model?
Sorry, can you repeat your question?
We had said we would be taking some on lease also, so that would be similar to our asset-light model.
Yes. Lease cinemas are the normal traditional leases.
Oh, fair. Perfect. That's our normal. Fair. Perfect. Sure. Just the last question on the advertising bit. Are there any innovations we are planning out here? Because this is one line item where we haven't seen too much positivity or incremental changes that potentially could come through from the larger network. If you could just help us with some possibilities on this front.
This is largely because of the fact that H1, we were fully aware, had not such big blockbuster tentpole films.
Slated tentpole films, which technically gets marketed a lot more easier. in Q3 and Q4, we have four big films now coming in, starting from Ramayana, King, Avengers, and Love & War. We believe that there would be a substantial good revenue incomes recorded on these four films, and we will end the year at a fairly healthy growth number. On your question on saying what is the big initiatives being planned, we are planning to do a digital version of pay per eyeball plan, which will help us to monetize the sleeper hits. Films like Hanuman Ansh and films like Mahavatar Narsimha, Saiyaara, which got in a lot of footfalls but not enough advertising. We are trying to build on a digital platform. However, this is about 8-10 months away when that will happen.
That work on the digital platform is currently happening, and that is the big step forward into the digital world, where advertising will be sold pay per eyeball, along with the traditional media of selling. And that would help us capitalize on the footfalls we get through a lot of films that do brilliantly well on box office but are not touted as blockbusters to begin with.
Sure. Thank you for the response and wishing you all the best.
Thank you.
Thank you. Our next question comes from the line of Umang Mehta from Kotak Securities. Please go ahead.
Hi, sir. Thanks for the opportunity and congrats on a strong quarter. My first question was just a clarification on the SMART screens. This year you mentioned 2 more properties, and next year, I think you have raised the screen opening guidance from 100 to 160, 175. Fair to assume that almost 60 of the screens next year would be SMART screens. Second question is, are bulk of these screens in the FOCO model, or is it a mix between developer partnership and FOCO?
I think it will be a mix because we do not want to basically compromise on our screen growth by sticking to any one type of agreement that we have with the developers. The response so far in the smaller towns is that the developers are ready to contribute, and if they are ready to contribute, we do not have any problem providing the commercials are workable for us as well as the developer. There is no restriction that it has to be an asset-type of FOCO model. If we have to invest, we can invest as well.
Got it, sir. Just that 60, 70 could be SMART screens next is the right conclusion, right? From the numbers that you shared.
Yeah. Difficult to put a number, but as I said, the bulk of the SMART screens will open next year. Could be this number.
I understand.
Yeah.
Sure. The second question was for Gaurav. Just in terms of this current pipeline of screens and change in depreciation, any guidance on this year's CapEx and depreciation and similarly for next year? Any numbers that you can share?
Umang, in terms of the depreciation, what we have basically done is to look at the useful life for a few assets, especially the projectors and the IT equipment. There is enough evidence in history, and we have engaged with our auditors to show that the useful life is more than what we were accounting for when we were doing depreciation. Accordingly, the useful life has been increased and the depreciation therefore is now lower between INR 35 crores to INR 40 crores a year. That is the kind of depreciation impact on the current block of assets that we have. In terms of the CapEx, this year, we will do around INR 300 crores to INR 320 crores, INR 330 crores in that range. Overall CapEx.
So far in the H1, we have spent about INR 132 crores of capital expenditure, but the new screen additions will accelerate in second year and the payouts will increase and by the time we will finish this fiscal will be about INR 300 crores to INR 320 crores of CapEx. Next year will be higher as we mentioned that the screen additions will be more than current year and therefore the CapEx are likely to be more than INR 350 crores, plus minus, depending on how the pipeline and fit outs and the execution gets going on the ground. Those are the numbers that I can share with you.
Sure. That is very helpful. Just one last one, sir. I heard on the TV you all mentioned that Q2 could be as strong or better than Q2, based on whatever your current assessment is. That is the right understanding, that footfalls in Q3 could be even higher than Q2, right? Based on the pipeline and performance in October so far.
I think what essentially we were trying to say is that based on the current slate and the industry momentum and the consumer demand, we are very hopeful and optimistic about H2, and we expect that the H1 performance will continue. Very hard to say that how consumer and audience response will be there, but at least in terms of release schedules and the scale and the quality of upcoming films, they look very encouraging.
I understand. Thank you so much and all the best.
Thank you. The next question comes from the line of Jinesh Joshi from PL Capital. Please go ahead.
Hi, and congratulations on a good set of numbers. Sir, I have one bookkeeping question on our balance sheets. Now, despite opening about 24 odd screens in 1H, our ROU and lease liability figure is down as compared to March 2026. Ideally, there has to be some capitalization from new screen openings, right? If you can just maybe clarify why that figure is down.
We've also closed about 23 or 24 loss-making, underperforming screens during the H1 of the year. Net-net, if you see those numbers have even kind of canceled themselves out, but that's one reason. Secondly, ROU asset and liability is a number which ROU asset will continue to depreciate, and ROU liabilities will continue to reduce as we move forward in terms of Ind AS 116, the way the accounting happens.
Understood. Sir, secondly, if I look at our rental cost, it was up by about 11% in Q2, and I think in the notes to account, you have mentioned that there was some element of variable rental as well in this quarter. Can you maybe just tell us how many screens do we have currently on the variable rental model and what are the current revenue sharing terms on that side?
Majority of our legacy screens are on a model which is minimum guarantee fixed rental and revenue share, whichever is higher. Depending on how the revenues pan out for a period, either the minimum guarantee gets paid out or revenue share gets paid out. That's number one. Number two, the sharing on revenue is on the scale of tickets and F&B. There is a property by property, those numbers are different. There is no fixed percentage sharing of revenue on rental. That's how it works. In quarters or periods when the revenue numbers are high, occupancy levels are stronger, there is an element of revenue share which kicks in. But I think the way we look at it is rent as a percentage of revenue, and that number as a percentage of revenue has dropped in quarter two.
Okay. Sir, one last question from my side. I think the other income was high in this quarter because there was some reversal in certain old provisions. Can you maybe just quantify that bit and also explain what these provisions were pertaining to? Given how the balance sheet strength has shaped up, at least in the last maybe 6 to 12 months, I think we also had some asset recycling plans which we had kind of highlighted some time ago. Will that now be put on hold? If you can also clarify on that side.
The other income that you see in our quarter P&L includes about INR 7 crores of one-off reversals of certain old provisions on some collections from the filmmakers on the distribution side of the business, which we had provided for as per our provisioning policy. Fortunately, favorably, those collections were recovered during the quarter, and we had to account it as other income. There is a small element of some interest income on certain tax refunds that were received during the quarter for the past assessment year. Overall, INR 7 crores was recorded as one-off in that other income line in Q2 . I am not sure about the recycling of assets that you're referring to if you-
Sir, certain real estate that we were owning, we had plans to sell and repay the debt if I'm not mistaken. Now given how the balance sheet is, that plan is on hold, is what I just wanted to check up with.
Yes. We have a few cinema properties which has operating cinemas and those properties are owned cinemas, owned properties. There is no rental that we pay there. Given, as you rightly pointed out, there is no requirement because the balance sheet is now cash positive. There is no rationale for us to sell those assets because these are operating cinemas and they contribute to the revenue and earnings of the company.
Got it. Congratulations once again and all the best for 3Q.
Thank you. Our next question comes from the line of Kavish Parekh from 360 ONE Capital. Please go ahead.
Hey, team. Thanks for the opportunity and congratulations on another solid quarter. Sir, if I look at your gross margins in the F&B segment, we have seen a consistent improvement from around 74% to 77%-78% now. Also important to note that margins have expanded despite offering F&B at discounted rates. Just wanted to understand what has driven this expansion and how much further headroom do you see for improvement here?
There is a fairly good headroom to grow because if you look at our F&B, I don't think we've shared that information, but 40% of this growth has happened actually through the volume increase and about
60% of the SPH growth has happened through the value increase. Given the fact that we deal with captive audience and we deal with really high-end discerning audience who are coming into cinemas for a good complete experience, we believe that there is huge headroom to grow because if you look at some of the Western countries, food sales or SPH is equal to the ATP in these mature markets. While we are at about 60% of the ATP, we believe there is enough and more headroom to grow. Indians love to eat. The kind of food we sort of play out is far more extensive than any other cinema chain in the world. Also the fact that we are now looking at avenues beyond cinemas.
While it is very small, but the fact is we are catering outside, we are trying food delivery, we are subleasing spaces where a counter could sort of cater to audiences inside the cinema as well as the mall audiences. All of those little things are actually adding to the growth factor. We believe that this trajectory is going to keep going up.
Sir, understood on the SPH bit, but my question was on the margin front, gross margin front for the segment.
Yeah, I think on the margin side, as Gautam mentioned, that the value and volume both are growing and some of the hero products like the Pepsi are high gross margin products.
We feel like out of our total sales, 60% are popcorn and Pepsi. Technically, that operates at a very good margin. As long as that growth just shows that we are able to innovate and bring in new packages to be able to keep that 60% contribution of these low costs item and keep the pristine image of these being the hero food products at the cinema.
Yeah. In addition to that, we continue to renegotiate our supply terms with vendors. Logistics is migrating to 4PL, where the cinema supply chain is going to be more streamlined. With usage of automation, we are able to utilize products which are near to expiry before they expire. As a result, the wastage and spillage is reducing, and that's contributing to savings in cost and improvement in gross margins.
Understood. Just to get a clear picture on the popcorn and Pepsi bit, today you said it contributes about 60% of the revenue pool. Has this seen a sharp improvement post the introduction of discounted F&B offerings? Was this number, say, significantly lower, somewhere around 40%, 45%, 50-odd%, or has this been in this range for a while?
Discounted F&B is basically on weekends when we do free refills of large category of Pepsi and popcorn, and that's been a very successful initiative. We have been continuing it for the last 2 years now. I think that helps in consumers upgrading from small or mid to larger packs. Then there are Tuesdays and other F&B targeted promotional initiatives on F&B that is driving off take across the weekdays as well.
To Gaurav's point, if you remember, I just told you that we have also increased on volume going up, and the volume really comes in from people who weren't eating earlier. How do you get them in to eat? We have now very targeted promotions for people because we have the database for just about all footfalls which are coming into the cinema. We track their consumption completely. When are they coming, what are they consuming in terms of both movies, the type of seat, the type of experience, and what are they eating. Hence, we are able to do very personalized offers around that to be able to increase. My starting point on F&B was that we've managed to keep the balance between volume and value fairly well-defined.
Today we have a scenario where close to about 85% of the people who walk in eat something or the other at the cinema, and that's a fairly healthy number.
Interesting. This 85% is, I think, a pretty high and healthy strike rate. Understood. Thanks a lot for that explanation. Gaurav, just wanted to reconfirm something that you mentioned earlier. If I heard you right, I think you mentioned depreciation going ahead will be about INR 35 crore-INR 40 crore lower given the change in our useful life policy. Is that correct?
That's right.
Understood. Thank you so much. All the very best.
Thank you. Our next question comes from the line of Saurabh Beria with Sameeksha Capital. Please go ahead.
Thank you for the opportunity.
Saurabh, your line has been unmuted.
Hello. Am I audible?
Mr. Saurabh? Sir, we are not able to hear you, sir. If you could use your handset, please.
Am I audible?
Hello, sir.
Am I audible?
Yes, sir. Yes, slightly audible, sir. I would request you to use your handset while asking the question.
Yeah. I think now I'm loud and clear, right?
Yes, sir. Please go ahead.
Yeah. My first question is around the industry grew around 23%, but our growth stands at 18%. What can be the reason for our slow growth in such good quarters?
As you saw in the mix of box office collection, there has been a lot of films like Hanuman, Mirzapur, and even regional films which did very well in mass markets in Tier 2, Tier 3, Tier 4 towns where single screen penetration is more than multiplex theaters. As a result, the overall box office got distributed across more number of screens, single screens as well as multiplex screens. The primary reason of the growth in box office of PVR and the difference or the gap in box office of PVR versus and it's a function of the mix of content rather than anything else.
Okay. My next question is around the footfall growth. That footfall growth for this year is around 4%, and at the same time, ATP rose around 14%. Was this primarily due to higher share of Hollywood movies, or this trend is going to continue? Are we confident enough that we expect the ATP to remain constant from current levels?
Yes, ATP will, because as we had just mentioned, there are four big blockbusters lined up, which is Ramayana, King, Avengers, and Love & War. Plus, there will be a few others which will be coming in, IMAX films. All this, we are more than confident that our ATP will be at the expected lines. So no change in that at all.
Okay, so if I can squeeze in one last question. Is there any update on ticket price caps that have been discussed in southern states of India?
No such conversations at all.
No. Nothing at all. Okay. Thank you. From this message.
Thank you. Our next question comes from the line of Aejas Lakhani with Unifi Mutual Fund. Please go ahead.
Yeah. Hi. Team, am I audible?
Yes. Please go ahead.
Yeah. Perfect. Team, congratulations. My query is that over the past 2, 3 years, the controllable variables that have been there in your hand in terms of rents and whatever costs, the team has done a phenomenal job of curtailing them and also making the pivot towards different model styles. I want to understand a little bit, if Mr. Bijli can expand, what are some of the maturity or changes that have happened on the manufacturer's end over the last 2, 3 years? We spoke about the sleeper hit at the start of the call, but is there any broad call-out in terms of change that you have been able to see on the producer and manufacturer ends over the last 2, 3 years and how that would shape into trends for the next two? Thanks.
Just to reiterate and summarize your question, you are saying the trends that we are observing at the content creator's end and how does that impact the exhibition business. Is that your question?
Yes, sir. Very correct.
The trend is extremely positive as one would imagine because the box office is clearly on an upswing, and not just in India. This is a pattern or trend which is visible globally. Two things are happening. A, theatrical is doing exceedingly well. People clearly have come back to theaters. They are enjoying experience. They are back to their default habit of watching brand-new films at theaters. So that is one thing which is happening. And on the supply end, the streamers who were extremely aggressive in terms of acquisitions for the last couple of years, I think the better sense has now taken over, and they have figured that the well-established model of releasing a film in theaters and then exploiting it on other platforms is much more viable, not just for theatrical, but it is also more viable for the streaming business. Therefore, they have retreated.
They are not as aggressive as they were in the last 3, 4 years in terms of acquiring films which were releasing directly on streaming platforms. Producers, because now they are thinking about releasing a film in theaters and then taking it to other platforms, they are putting that much more rigor because theatrical is a pay per eyeball model versus streaming, which is more of a subscription model. There is more rigor which is going into films. There is more experimentation. Actors are putting much more effort, producers are putting in much more effort in marketing their films, and therefore you are seeing a big resurgence in theatrical and in the overall film business. The pattern is that producers have gone back to their default model of making a film and then releasing it in theaters first.
More films are being greenlit because all sorts of films are doing well at the box office. That also augurs well for exhibition fees. Overall, it is all looking very positive.
Understood. Sir, in the middle, the mid-budget production side slate had become weaker. Are you seeing more of that come back in your understanding?
All segments have come back. The micro budget, small films, mid-size films with mid-level actors or films which are high on content but don't have such familiar faces, and the big-budget films with a lot of VFX, big actors. All three segments are currently firing and India as a country has always produced big number of films in terms of quantity. Therefore, we are fortunate to have films in every segment which are growing.
Thank you and all the best.
Thank you. The next question comes from the line of Anubhav Mukherjee from Prescient Capital. Please go ahead.
Hello, am I audible?
Yes, sir. Please go ahead, sir.
Okay. Congrats on the very strong results. Sir, in your investor presentation, it was mentioned that 34% of PVR screens are in South India. Would you be able to share, for the total number of screens in India, what share does South India have?
You mean at an industry level, you are asking? Or you are asking for PVR-
Yeah. At an industry level.
I'll step in, Gaurav. Roughly about 45%. India has a total of about 10,500. South of India, which is the five southern states, constitute almost 45%. It could be as high as 50%. Unfortunately, we don't have exact data, but it's somewhere between 45%-50%.
Get that. Given a lower share of South Indian box office collection also, and you mentioned that you are looking at 300 new cities. Is there a focus on more screen additions in South of India? Yeah.
Yes, absolutely. In fact, in the last 2 to 3 years, nearly 35%-40% of our new screens every year we are opening in South region, and that's definitely our priority market. As you rightly pointed out, the penetration of multiplexes and PVR INOX share in the South Indian film collections is low, and that, therefore, is a headroom for growth and a market opportunity for us to expand a more number of screens in that market.
Get that. Typically, would the average ticket prices and SPH in South India, how would that compare to maybe Hindi?
They are lower. The average ticket price in South India is lower if you compare it to the rest of the country. The difference would be almost 25%, but it will vary from state to state. Tamil Nadu tends to be the lowest in terms of average ticket price. But the other states, Kerala, Karnataka, Telangana, Andhra Pradesh, are better than Tamil Nadu, but still lower than the other parts of the country.
Would South Indian screens be, for you, less marginate profitable compared to rest of India?
South India has higher occupancy, which more than makes up for a reduced ticket price.
Okay, great. Thanks. I will get back to you.
Thank you. Ladies and gentlemen, that was the last question for the day. I now hand the conference over to the management for closing comments.
Thank you everyone for joining us in the earnings call for Q 2 FY 2027. In case you have any more questions, feel free to reach out to the investor relations team. We will be happy to address any specific questions or clarifications. Thank you so much.
Thank you. On behalf of ICICI Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.