UFO Moviez India Limited Q3 FY26 Earnings Call Summary

Summary

UFO Moviez India Limited - Q3 FY26 Earnings Call Summary Friday, January 30, 2026, 11:00 AM

Event Participants

Executives 3 Ashish Malushte (CFO), Rajesh Mishra (Executive Director and Group CEO), Siddharth Bhardwaj (CEO, Digital Cinema Network Business)

Analysts 3 Ashish Bhuj (Individual Investor), Sagar (Individual Investor), Shilpa Saboo (Ananta Capital), Vedant Bangar (Individual Investor)

Financials & KPIs

Geographic & Segment Commentary

• Content Performance: Q3 performance was driven by December blockbusters like “Dhurandhar,” while October saw support from “Kantara: Chapter 1.” However, the Diwali phase in November was muted as major releases failed to gain significant traction, leading to uneven footfalls across the quarter.
• Advertising Network: The network is split between the Southern market (1,590 screens) and the Hindi-speaking market (2,193 screens). Management noted that while Southern screens provide consistent value, blockbuster Hindi “event” films like “Dhurandhar” are currently driving peak advertiser interest in the North.
• International & Products: Minor contributions from international business and product sales (projectors/servers) helped stabilize margins, with product sales typically yielding 21-22% average margins.

Company-Specific & Strategic Commentary

• Capital Allocation & Buyback: Management acknowledged that the stock is trading below book value and suggested a buyback is a better proposition than dividends once accumulated losses are fully cleared (Ashish Malushte).
• Hyper-Local Advertising: The company is reviving its “Frames” platform to target local mom-and-pop retailers who now possess audio-visual content capabilities due to social media trends, aiming for more consistent, non-tentpole revenue (Siddharth Bhardwaj).
• Asset-Light Transition: While UFO traditionally invests in theatre CAPEX (projectors/servers), they are selectively moving toward asset-light models for new screen additions where the exhibitor bears the investment (Ashish Malushte).

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Ad Revenue & Margin Fluctuations

• Question: Why did margins shrink this quarter despite the success of “Dhurandhar”? (Ashish Bhuj)
• Answer: Ad revenue was slightly lower than last year’s Q3 (which had “Pushpa 2”). Because sharing costs are largely fixed, any drop in top-line ad revenue results in an 80% hit to the bottom line (Ashish Malushte).

Shareholder Rewards

• Question: Can the company initiate a small-scale buyback given the high cash and low valuation? (Shilpa Saboo)
• Answer: Technically, we are clearing accumulated losses from the COVID period. Once the P&L supports it (likely by year-end), the board will consider a buyback over dividends due to current low valuations (Ashish Malushte).

Content Comparison

• Question: Why did this quarter underperform compared to last year’s Q3 given both had major December hits? (Vedant Bangar)
• Answer: “Pushpa 2” was a multilingual release with massive national hype, whereas “Dhurandhar” was primarily a Hindi-market success. Additionally, Diwali releases this year underperformed compared to the previous year (Rajesh Mishra).

Local Advertising Strategy

• Question: What is the five-year vision for local vs. corporate advertising? (Sagar)
• Answer: We are targeting local catchment retailers via our DSA network. Previously, they lacked video content, but digital maturity now allows them to run AV ads, which provides a more stable revenue stream than volatile corporate “tentpole” spending (Siddharth Bhardwaj).

Key Takeaway

UFO Moviez delivered a stable Q3 FY26 with revenues of ₹131.90 crores, though profitability faced headwinds from a muted Diwali and a sharp decline in government ad spending. While December’s “Dhurandhar” provided a significant boost, it lacked the multilingual scale and advertiser “hype” associated with the previous year’s “Pushpa 2,” leading to a 49% YoY decline in EBITDA due to the company’s high operating leverage. Strategically, UFO is focusing on a hyper-local advertising push and maintaining a disciplined CAPEX of ₹40-45 crores to refresh its 3,783-screen network. With a robust Q4 release slate and over ₹127 crores in gross cash, management is pivoting toward potential share buybacks once historical losses are fully offset. The company remains cautiously optimistic that the upcoming “Dhurandhar 2” and other marquee titles will restore margin momentum in the near term.