PVR INOX Ltd Q3 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Abneesh Roy - Nuvama Institutional Equities - Analyst : My first question is on overall consumption impact on your business. So we have seen this quarter and maybe previous quarter also, lot of the FMCG and even discretionary categories call out slowdown in urban. Of course, yours is an essentially urban consumption. So how do you see in the near term this impact? I do understand Q4 because exam season anyway, pipeline every year is a bit less. But would you be worried in the near term because of the urban slowdown? And on the flip side, because of the budget, the taxes have been reduced and substantially also. So in the past have you seen any such measure -- similar measure lead to more consumption? Or is it still fully dependent on the quality of the content?

Question: Abneesh Roy - Nuvama Institutional Equities - Analyst : My second question is a bit related to the content only. And it's specific on the Hindi content. So we have seen a few Hindi movie producers facing very tough times because one after the other, the movies have not done well. And we have also seen, for example, marquee producer like Karan Johar sell out a major stake to another company. And we have also heard that in terms of mid-budget movies, there is a calendar which has become erratic and bit inconsistent. So how do you see that funding of Hindi movies, because most of the hits are coming essentially from South India or dubbed South India. So from a funding perspective, how FY26 you see for Hindi movie? And if you could talk about mid-budget movies, how the calendar is? And FY25, why did the large tentpole kind of Hindi movies not released? What was the specific reason? Because normally, these can be easily planned. What was the reason for lack of tentpole Hindi movies? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 06, 2025 / 10:30AM, PVRL.NS - Q3 2025 PVR INOX Ltd Earnings Call

Question: Abneesh Roy - Nuvama Institutional Equities - Analyst : Sure. My second and last question is on the two new developments. One is, if you could talk about initial learnings and initial feedback on the first property, which you have opened in terms of food court with Devyani in Rajasthan. If you could talk about that. And second is, in terms of the asset-light model, again, how has been the initial discussions? Is it a game-changer? I do understand 100 screens over three years may not change your overall numbers significantly, but if you could talk about longer term in terms of your debt levels or your return ratio, how this impacts, not on FY26 because that's the first year, but how does the longer-term picture change because of this?

Question: Kavish Parekh - Batlivala & Karani Securities India Pvt. Ltd. - Analyst : Firstly, I want to get a sense on synergies. The numbers that we had laid out in the time of our merger, where are we now? From here on, what levers do we have to improve the cost structure or margin trajectory, especially if occupancy stays where it is? And secondly, what is the update on our deleveraging plans? So we had set out plans to generate proceeds of about INR3 billion, INR3.5 billion from sale of some of our properties. Where do things stand as we speak? So of course, debt reduction this quarter was commendable, but what from here on, considering the weak trends as we go into 4Q?

Question: Kavish Parekh - Batlivala & Karani Securities India Pvt. Ltd. - Analyst : Understood sir. So just a follow-up on our asset-light model. Can we have some more color on how would the economics work in case of both the asset-light models? And if I can squeeze in one more question, any thoughts on price hikes in our F&B segment? So I think the last hikes we took were in April '24.So -- and this quarter, sequentially, F&B revenues remained largely flat. So what levers do we plan to exercise to ensure sustained growth in the F&B business? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 06, 2025 / 10:30AM, PVRL.NS - Q3 2025 PVR INOX Ltd Earnings Call

Question: Kavish Parekh - Batlivala & Karani Securities India Pvt. Ltd. - Analyst : So I'm clear about the management contract model that we will receive a 6% to 10% management fee. My understanding is, this will be across all revenues, ticketing, F&B as well as ad revenues. Is that right?

Question: Kavish Parekh - Batlivala & Karani Securities India Pvt. Ltd. - Analyst : And under asset-light model, could you just elaborate some more on how the model will work? So I understand the CapEx, I mean 40% to 80% will be borne by developers. But how does this play out in terms of revenue sharing?

Question: Arun Prasath - Spark Capital Advisors (India) Private Limited - Analyst : Arun Prasath from Avendus Spark here. So continuing the discussion on the asset-light model, can you just throw some light on how does this framework work from our perspective? I mean, if you are opening, say, 100 screens, what you will give for the -- what you allot for FOCO model and what will you allot for the asset-light model and which one you will be completely putting 100% of your CapEx? Or is it left to the -- option is left to the developer or do we have some say in this? So can you just help us understanding this framework, how do we distribute the new screen buckets among these three buckets?

Question: Arun Prasath - Spark Capital Advisors (India) Private Limited - Analyst : Sir, I was asking slightly a different question. Say, you have -- you want to go for a management fee model versus the -- where the developer has to pitch in, say, 50%, 60% CapEx. So between these two, say, given a location, do you have any say on this or the developer comes out and says that, okay, I want to put 100% CapEx. No, I will only put 50%. What is --

Question: Arun Prasath - Spark Capital Advisors (India) Private Limited - Analyst : Okay. Let me frame it in a different manner. What kind of developers are interested in say a FOCO model and what kind of developers are interested in, say, the asset-light model? Is it like -- more like a premium old model -- REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 06, 2025 / 10:30AM, PVRL.NS - Q3 2025 PVR INOX Ltd Earnings Call

Question: Arun Prasath - Spark Capital Advisors (India) Private Limited - Analyst : Okay. Got it. And secondly, when you said that this will ramp up your deployment of the screens, obviously, the CapEx is not a constraint here, but more mall supply, especially in South was our constraint. That is capital is a secondary constraint. So does this solve your primary constraint of mall supply in some of the regions where you are looking to grow faster?

Question: Arun Prasath - Spark Capital Advisors (India) Private Limited - Analyst : Okay. Understood. And that means that most of these 100 screens that we have tied up should be coming from Tier 2, Tier 3 cities? Is it the right understanding?

Question: Arun Prasath - Spark Capital Advisors (India) Private Limited - Analyst : Understood. Understood. If I can just add one more on the bookkeeping questions. On the like-to-like basis, we are showing CAM growing at an alarming pace throughout this nine months period, much higher than the rest of the fixed line items. What is the reason for this kind of a growth in CAM? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 06, 2025 / 10:30AM, PVRL.NS - Q3 2025 PVR INOX Ltd Earnings Call

Question: Arun Prasath - Spark Capital Advisors (India) Private Limited - Analyst : Do we have any control on this or it's whatever the developer builds, we need to take it?

Question: Jensen Jacob - Centra Insights LLP - Analyst : I just needed a small clarification on our screen additions. At the end of FY24, we had reported that our screen count stood at 1,748 screens. And currently, we're at 1,728 screens, which is a net reduction of 20 screens. But we've also reported that our net screen addition has been 10 screens year to date. So could you please clarify this for us?

Question: Jensen Jacob - Centra Insights LLP - Analyst : Sure, sure. We can take this offline, Saurabh. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 06, 2025 / 10:30AM, PVRL.NS - Q3 2025 PVR INOX Ltd Earnings Call

Question: Tanay Gandhi - Investec - Analyst : So first question is regarding the ScreenIt initiative that you have launched regarding those re-releases and people being able to book their own shows. So I just wanted to understand like how has it been -- how is it since the past -- I think it's been one or two months since then, and how is the shows count per month? And what do you all expect it to go ahead with this?

Question: Tanay Gandhi - Investec - Analyst : Got it. And I just wanted to understand like just a bit of macro where like the past month, we saw a lot of cricket matches, lot of events which were taking place like concerts and stuff like that. So is that eating away from -- like going ahead, do you feel that's eating away from the share of going to cinemas or both are growing side to side in like the entertainment industry?

Question: Tanay Gandhi - Investec - Analyst : Got it. But what I was trying to understand was basically, would you feel that the December month and probably even the other -- October and before that was affected by -- like the footfalls were great, of course, but do you think it could have been higher if like all these concerts weren't to take place? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 06, 2025 / 10:30AM, PVRL.NS - Q3 2025 PVR INOX Ltd Earnings Call

Question: Tanay Gandhi - Investec - Analyst : Got it. Got it. And I wanted to understand, like I saw the other expenses were lower year-on-year and quarter-on-quarter basis. Was that regarding some cost initiatives that you were doing or what is it specifically regarding?

Question: Tanay Gandhi - Investec - Analyst : Okay. And a final question, I think it was asked before by someone regarding the Devyani joint venture. Did I miss the answer for that? Just wanted some clarity on how --

Question: Tanay Gandhi - Investec - Analyst : Yes, the Devyani joint venture, which you all were looking at the food court. I'm not sure if you all had answered it earlier, how it is and how is it going right now?

Question: Gaurav Gandhi - Glory Tail Capital Management - Analyst : Sir, what is your target percentage you wish to achieve in box office collection of regional movies? I mean, how much share of box office collection of a regional movie you are targeting from its overall business? Currently, as per the presentation for Bollywood movies, it is around 35% roughly that is our share. And for regional, it is around 12%, 13%. So now as we have good penetration in the southern market, so what is your target? I mean, how do you look at this?

Question: Aditya Sen - RoboCapital - Analyst : Sir, I want to understand the occupancy part. Like how -- if I'm correct to frame like this, how many blockbuster movies do we need each quarter to get an occupancy rate of 28% to 30% or rather, what are the factors that would lead us to the 28% to 30% occupancy rate? You can answer it either ways?

Question: Aditya Sen - RoboCapital - Analyst : Okay. So if December was 30%, then let's say, if we get two very good movies per quarter, then that quarter can give us roughly 28% to 30% occupancy rate. Is that correct understanding? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 06, 2025 / 10:30AM, PVRL.NS - Q3 2025 PVR INOX Ltd Earnings Call

Question: Aditya Sen - RoboCapital - Analyst : All right. And do we have anything in the re-release pipeline?

Question: Vaibhav Muley - YES Securities (India) Limited - Analyst : Congratulations on a very good set of numbers for the quarter. My question was actually on the Q4 current performance in January. So how has been the response for the movies, key movies like Emergency, which were launched? And what is the expectation for the current quarter based on the lineup that we have? That's the first question.

Question: Vaibhav Muley - YES Securities (India) Limited - Analyst : Understood sir. My actually next question was on the management contracts. Our asset-light model that we are following. For the management contracts, if I'm not wrong, P&L won't be on our books, right? But the management fees that we will be generating around 10% of the revenues. Can we assume that this should improve our overall EBITDA margins?

Question: Vaibhav Muley - YES Securities (India) Limited - Analyst : Okay. Understood. And regarding our expansion in South, any kind of guidance that you can give on the screen additions given the regional films are doing very well?

Question: Vaibhav Muley - YES Securities (India) Limited - Analyst : And how many screens of these total are expected to be opened in South market?

Question: Vaibhav Muley - YES Securities (India) Limited - Analyst : Okay, sir. And just last one question if I can squeeze in about the screen churn. So we have again closed, I think, 25 screens in the current quarter, making total tally to 67 screens for nine months. Do you expect this screen churn to moderate going forward or can we expect the churn to remain at the similar levels?

Question: Umang Mehta - Kotak Securities (Institutional Equities) - Analyst : Sir, just wanted some guidance on the CapEx for next year, given that you would have a fair visibility right now given several screens would kind of fit out already?

Question: Umang Mehta - Kotak Securities (Institutional Equities) - Analyst : Got it. And the second question was on rental renegotiation. Could you share some insights as to how many properties are currently seeing rentals consistently about 20%. And how are the conversations going? And a related question was, is there any effort to convert some of the existing screens to new contract? Just checking on that.