Ladies and gentlemen, good day, and welcome to the PVR INOX Limited Q4 FY 2026 earnings conference call hosted by ICICI Securities Limited. As a reminder, all participant lines will be in the listen-only mode, and there'll be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Jayram Shetty from ICICI Securities. Thank you, and over to you, sir. Good afternoon, everyone. I welcome you all to PVR INOX quarter four FY 2026 earnings call. The call will start with brief management remarks on the earning performance, followed by interactive Q&A session. PVR INOX management will be represented by Mr. Ajay Bijli, Managing Director, Mr. Sanjeev Kumar, Executive Director, Mr. Gaurav Sharma, CFO, and other Senior Management personnel. Over to you, sir. Good evening, everyone. This is Ajay Bijli. I'd like to welcome you to discuss the audited results for the quarter and the year ending March 31, 2026. The earnings presentation and results were uploaded to our website and the stock exchanges earlier today, and I hope you had a chance to review them. FY 2026 was a defining year for PVR INOX. We delivered our best ever financial performance, brought net debt to a negligible level, and pivoted decisively to a capital-light growth model, even as the Indian box office reached an all-time high. Today, PVR INOX is structurally stronger than at any point in our history. Within India's exhibition industry, PVR INOX stands apart as a well-loved consumer brand with unmatched market leadership and scale. Today, we operate nearly 40% of the country's multiplex screens and capture 31% of India's box office with prime locations, premium formats, and the trust audiences place in our brand. We are a preferred partner for India's leading mall developers and top film producers and the industry we lead is itself on a strong long-term trajectory. India's box office has grown at a 7%-8% compounded growth rate over the last decade, reflecting the sustained structural demand for movie watching in cinemas. Theatrical first is now firmly the dominant release model as producers and OTT platforms alike recognize that theatrical performance sets the quantitative and the qualitative benchmark for a film. Against this backdrop, FY 2026 was the strongest year in the industry's history, with collections rising 11% to INR 13,519 crores. The standout was a resurgence of original Hindi cinema, with Bollywood collections growing 55% year-on-year, delivering its best year ever. English cinema also delivered a strong year, growing 54% on a robust slate of Hollywood releases. Another big positive trend in FY 2026 was a solid comeback of mid-scale films grossing between INR 100 crore-INR 200 crore, which saw its share rising from 12%-20%. Growth is now broader, more resilient, and less dependent on a handful of mega blockbusters. Coming to our performance, Q4 FY 2026 recorded our highest ever fourth quarter collection, supported by titles like Dhurandhar: The Revenge, Border 2, Project Hail Mary, amongst others. We welcomed 31 million guests in the quarter and 150 million across the year, which is a 10% growth over FY 2025. ATP for the year stood at INR 280, which is up by 8% compared to previous year, and SPH at INR 147 up by 10%, both record highs. In Q4, ATP touched INR 315 and SPH INR 165. On an Ind AS 116 adjusted basis, FY 2026 revenues was a record of INR 6,742 crores, up 16% year-on-year. EBITDA before exceptional items doubled to INR 968 crores, with margin expanding from 8.4% to 14.4%, reflecting both strong revenue growth and the cost discipline we have sustained for several years. FY 2026 also recorded the highest ever PAT at INR 386 crores against a loss of INR 152 crores in FY 2025. For quarter four, revenue grew 25% to INR 1,577 crores. EBITDA rose nearly six fold to INR 169 crores, and PAT was INR 178 crores versus a loss of about INR 10 crores, INR 106 crores. PAT for Q4 2026 and fiscal 2026 also included gains on the divestment of 4700BC to Marico. On growth, our model has pivoted decisively to capital light. Of the 93 new screens added in FY 2026, 55% came under capital light formats, with around 44% of additions in under-penetrated South India. Screen exits dropped sharply to 18 from 72 last year as a post-merger portfolio rationalization is largely behind us. Our signed capital light pipeline now stands at 138 screens, 50% light. Capital intensity is down 20% year-on-year basis. Proper capital light formats, screen cost discipline, and reduced capital intensity have driven consistent free cash flow generation over the past three years, with FY 2026 free cash flow reaching an all-time high of INR 790 crores. This cash flow has been deployed towards debt reduction, thereby strengthening the balance sheet. Our net debt now is nearly down 90% since the merger to a negligible level of INR 161 crores as of 31 March 2026. Return on capital employed has improved to 10.2% in FY 2026, a clear breakout, and we will continue to work towards improving it further. Looking ahead, FY 2027 content pipeline is broad and diverse across Hindi, English, and regional cinema, giving us strong confidence in the trajectory. On the Hindi front, anticipated titles include Cocktail 2, Dhamaal 4, Welcome to the Jungle, Awarapan 2, Ramayana: Part One, King, Love & War, and with several other films also lined up. Regional cinema continues to offer exciting content lineup like Peddi, Toxic: A Fairy Tale for Grown-Ups, Jailer 2, Spirit, amongst others. Hollywood is lined up with Masters of the Universe, Toy Story 5, The Odyssey, Spider-Man: Brand New Day, Avengers: Doomsday, and many others. We enter FY 2027 with the strongest balance sheet in our history, an exciting and diverse content slate, a strong pipeline of new screen signings, and an industry tailwind that is structurally stronger. We are confident the next chapter will compound on what we delivered this year. With that, I open the floor for questions. Thank you. Thank you very much. We will now begin the question 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. We have first question from the line of Abneesh Roy from Nuvama. Please go ahead. Thank you, and congrats on fantastic debt reduction. That will be my first question. In terms of debt, obviously now it is negligible. What will be your expectation given a light asset strategy going ahead in FY 2027 also? What kind of screen addition you expect? What kind of own screen versus the low asset model? What will be the plan once you have net cash? Would you like to start dividend also? Well, firstly, the pipeline, about 120 odd screens visibility we have to open, we have that we'll be opening next year. The percentage of screens opening in FOCO and asset light model will was 55% this year. It'll continue to be between 55%-60%. So that is your first question. Secondly, you know, with the kind of lineup that we are looking at, I think, we will continue to have healthy cash flows. Definitely we want to get into a situation where we are cash positive and of course then the Board will meet and decide what should be done with the accruals. We haven't given it much thought at the moment. Gaurav, would you like to add something to it? No, I think you've covered all the key points and nothing incrementally. Okay. Sure. My second question is slightly on the macro side. Two parts to that. One of course, Prime Minister has said yesterday, not to buy too much gold jewelry next one year and not to travel outside also. Obviously diesel and petrol price hike is just an event which will happen very quickly now. Would you expect some kind of a consumption impact on multiplex viewing also, given urban disposable income can get impacted? Slightly related question, one of the key South Indian state now has a Chief Minister who is obviously one of the biggest hero. Any possible positive news either in that state or any of the other state, any positive regulatory you expect in the medium long term? Not asking immediate because these things can't be predicted. I mean, firstly, I must tell you that obviously it's not very, you know, if the macroeconomic scenario is something that the PM has spoken about and asked to take such austere measures, that's all due to the West Asia crisis and obviously that doesn't sound that good overall. Having said that, you know, we've history has shown that cinema, being still a very small ticket size, if you look at, ATP is INR 280. Overall if you look at India is maybe the average ticket price is somewhere between INR 100 and INR 150 maybe, if you look at all the single screens, multiplexes which are there. It's still a very average transaction size is two to 2.5 when people go and watch a movie. Typically, history has shown that I don't wanna use the word recession, but I'm just saying in challenging times, cinema going actually benefits. People do go out and then they eliminate all other discretionary spends of traveling and, you know, other things that they do, leisure activities. Cinema bounces back and people do like to entertain themselves in the cinemas. I'm not saying that it's good what is happening as an impact of West Asia crisis, but we do not directly see that there will be any impact to our own business due to this. On Tamil Nadu or any of the other state, anything positive you expect given. It's too early. regulatory changes, government changes? It is too early. It's, it just, I think only today he's become the CM. There is no, I don't think that is probably on, number one on his agenda as just now. We, we don't know of any regulatory, you know, positive or, what kind of news is gonna come out of Tamil Nadu. Last quick question. If I see your revenue streams, advertising seems to have been the slowest growth. Obviously now there'll be margin pressure for all corporate advertisers and even non-corporate advertisers in Q1 and possibly Q2. What is the outlook on that? When I analyze IPL, in cities where IPL has been held and cities where there's no IPL actual match, have you seen box office performance different? Because, say, in Bombay, there is a IPL match, obviously a customer has a choice. But in cities like Patna where there's no IPL match or, say, any other city like that, are you seeing box office growth in Q4 where IPL has been there a bit faster in such cities? No, I don't think IPL is completely, has no impact on cinema-going at all. We have seen no correlation. Many movies have got released in the last few weeks ever since IPL has started. Whether in the city where it is being played or in any case the city in which it is being played, you know, there's only so much capacity that that city can take in its stadium, all these cities are pretty populated. I think both of these things are very different forms of entertainment. Those who want to watch cricket, they watch cricket. Those who want to go and watch a movie, they watch a movie. I don't think one eats into the other at all. We haven't seen any evidence of that. As far as advertising is concerned, I will let Gautam Dutta, our CEO, answer you address that question for you about the impact of any challenging times on advertising revenues. Gautam, would like to answer that? Yeah. Yeah. Thank you so much. First and foremost, I would want to also add on IPL, we are also screening quarterfinal, semifinals, and the finals in our cinemas. Completely validated what Mr. Bijli said that there is absolutely zero impact. In fact, it plays pretty well for us, and there's been absolutely zero impact. On advertising, just to While these numbers are a bit subdued, most of our growth this year also came in from a lot of sleeper hits which became really, really big at the box office, which was great news. There were about two or three big blockbuster films like Jana Nayagan and Toxic, which technically moved. If those two films would have got released because they were a Pongal release and then, early January release, that would have actually helped us to register at least 7%- 8% growth on advertising. Largely we are on track. It's just that some of the big blockbusters moving has kind of impacted and whenever a movie moves, there is a bit of a vacuum that gets created and because of which this happened. Having said that, this year seems to be a very balanced year, both in terms of Bollywood, Hollywood, as well as regional. While the primary growth in advertising the way we are seeing will come in H2, simply because of the mega titles getting released in October, November, December period. We are well-poised this year to be on our projected growth path as we've shown over the last so many years, and there would be no deviation there. Sure. Thank you. That's all from my side. Thank you. We have next question from the line of Umang Mehta from Kotak Securities. Please go ahead. Hi. Thanks for the opportunity and congrats on a strong year. Thank you. My first question is on the pipeline. Currently based on whatever in the pipeline, what's the conviction in terms of footfall growth or occupancy for FY 2027? Any, any guess you can hazard for us? You're talking about the pipeline of this full year? Yes, FY 2027. Yeah. I mean, I can start from this quarter itself. You've got, you know, you've got this Pati Patni Aur Woh coming, and then you've got, you know, later on, so many films. The Odyssey is there. Ramayana is a big one. Drishyam 3 is coming. You've got Dhamaal. You've got Welcome to the Jungle. You've got Cocktail 2. There's a, you know, a movie called Chand Mera Dil which is coming. Then later on, big movies like The Odyssey. In Hollywood films you've got this time Star Wars, Toy Story. You got Evil Dead. The Odyssey is a very big one. Spider-Man is coming. Dune 3 is coming. Avengers, which is always very big in India. Jumanji. A lot of regional movies. I mean, Toxic is bound to come this year. There was a gentleman who was asking the question about the Chief Minister of newly appointed Chief Minister of, you know, Tamil Nadu. His movie is Jana Nayagan is coming, and that's got a very good traction. Peddi is coming. Gabru of, what do you call, Sunny Deol is coming. Plenty of movies. I can rattle off the entire lineup, but I think this should be enough. Sure. If you're okay with it. In this, on this, like, given this backdrop, are you confident that occupancy levels will keep inching up? Can we, you know, maybe pencil in more 27 + for FY 2027? How are you thinking internally? As the trend is only that it goes up. I've been talking to a lot of people about the macro picture of India. 1,500 films get released every year. You know, movie by movie, if one movie does well, one doesn't do well, it doesn't matter to us that much. On overall basis, I think there's a CAGR growth of 8% in the Indian box office. Our occupancies are increasing. The number of films which are the bracket of INR 100 crore to INR 200 crore movies is only increasing every year. The bracket of INR 500 plus movies has only been increasing post-COVID. Obviously, all these factors, more and more investment is being made by the film fraternity into movies for the big screen. If you look at OTT versus Exhibition, you know, there was a EY report which basically was just got released, wherein calendar year 2022, 217 movies first came to the theaters, and 105 came to OTT. This year, 470 have come to Theatrical, and only 30 have gone to OTT. A theater-first model is a very clear model for all the you know producers. I think there is no reason for us to not be optimistic that occupancies from now on are only going to improve. Sure, sir. Thanks for that. The second question was on one of your growth vectors, which you mentioned about Tier -2 and below cities. Any update you can share on the Smart Screens pilot which all were kind of running? Yeah. I think by July 15th, a couple of pilots will open. I think we're calling them pilots, but we're very confident because these are in good cities. Good deals have been signed with the developers. Demographic studies have been done. By July 15th, or mid-July, at least two of them will open, and we're hoping to open close to 28-30 screens under this model. In FY 2027? Yeah. Over the next year? Okay. Sure. No, this financial year. Got it. Just two bookkeeping questions for Gaurav. One is the CapEx outlook. I mean, if you can share a ballpark range for next year. What was the management fee income in FY 2026 from the FOCO screens? Next year, I mean financial year 2027, we expect around INR 375 crores-INR 400 crores of overall CapEx, which will be spent across new projects as well as renovation of some of our high, you know, high-value cinemas. Our management income has seen a sharp increase, even though at an absolute level, it is about close to INR 10 crores for financial year 2026. On a run rate level, it is at about INR 13 crores-INR 14 crores per annum, and it's growing. Got it. Thanks so much. All the best. Thank you. Thank you. We have next question from the line of Harit Kapoor from Investec. Please go ahead. Good evening. The first question was just to get your sense on the capital light, you know, model. If you could just help us understand that, you know, what is the number that we currently have already in this model? And incrementally, you know, what's the kind of within the 120 screen pipeline, what that number looks like going forward? That's the first question. The second one was on the rental side. I've seen that there is some reduction as a rent, as a percentage of sales starting to kind of come down as maybe capital light model kicking in as well as some operating leverage that you're getting on revenue. Just wanted to understand that over a two, three-year period, you know, once this capital light piece picks up as well, you know, what kind of, you know, basis point savings one can think of in this line item, which is your largest OpEx line item? Thanks. Gaurav, would you like to answer this? Sure. Sure. Harit, I think, we've given that data as part of our investor presentation as well in current, you know, in financial year 2026. Overall, we have added about 51 screens under capital light model, of which 29 were asset light, and 22 screens were under FOCO model, where, you know, it was completely franchisee-owned and company-operated. Overall, I think going forward, we have about 138 screens which are signed under capital light, of which 52 are under a FOCO model and about 86 are under asset light. That's one. Second, in terms of going forward, our rental cost, of course, in capital light model and franchisee model is going to be lower as compared to cinemas where we invest, you know, our entire CapEx and, you know, that appears in our P&L. At this stage, you know, it's hard for us to give a guidance on what exact percentage drop that will happen in terms of percentage of revenue. Overall, the trend will be on asset light will be on the lower side. Gaurav, just to follow up, is that this 138 number that you mentioned that gets executed over what period of time? This will get executed over next 18 months. Okay. Okay. Next stage. All right. Great. I'll come back soon. Thank you. Thank you. We have next question from the line of Arun Prasath from Avendus Spark. Please go ahead. Good evening, everyone. Thank you for the opportunity. My first question is on this asset-light model. I understand, the asset-light model helps us in diversifying the risk of content. What I'm trying to understand is now that we have a very neat balance sheet, our constraint on balance sheet is not there. Unless and until we go for a very large number of screens, how is the asset-light model helping us? Because the way I'm seeing is that your screens count is increasing, but your CapEx deployed is decreasing, which will be at this point of time because we have enough resources. Can you just throw a light of what is our objective of doing a asset-light model going forward if we have enough resources, if we are generating enough operating cash flows and we don't have any restrictions because of the balance sheet, debt constraints? asset-light model, and the FOCO model is straight away, your ROC is improved dramatically. I think, beyond a point, you know, if you look at our entire circuit, I mean, this we just started about three years ago. I mean, of course, we had some properties under management earlier on. But I think because the brand is now recognized and everywhere, I think sweating the brand is something that, you know, is something that is a very natural progression and for any brand to do. In the hospitality sector, retail sector, and even in the, you know, some of the restaurant, F&B sector, this is something which is very common. You have a healthy balance of growing with your own CapEx as well. At the same time, you know, wherever the opportunity lies to improve your ROCs, you should be, you know, looking at this model as well. I think, even if we have cash flows, it doesn't matter, they have to be deployed on our own expenditure, number one. Number two, screening expansion of 120 to 150 screens in a year is quite healthy because we still want to have unit level economics working both for us and the developers who are spending the money. We always, PVR INOX has been very careful about our screen expansion strategy. Not for the heck of it, we should just put screens everywhere. Wherever the demographics are correct, market dynamics are correct, where we get a good deal is where we want to grow. Unit level economics have to make sense. Given the pace of shopping centers and malls and opportunities in the smaller towns, I think growing by 100 odd screens every year is still pretty healthy. Gaurav, would you like to add something more? No, nothing incrementally, sir. One just clarification. The unit economics of the screen is not dictated by who funds the CapEx. Obviously, ROIC at the property level is not going to change because of we putting an asset light or obviously at our balance sheet, it makes a difference. As long as that unit economics works in a particular catchment area and ROIC is not going to be different because of who funds the CapEx. Ideally, if we have enough balance unless and until, as I said, the mall supply is so high and we can't be catering to all those screens by ourselves, then asset light makes sense to me. Just a bit more nuances of, you know, why we are doing this if we have enough balance sheet is what my original question is. Gaurav, I leave it to you to answer that, please. I think, as Mr. Bijli explained earlier, the strategy is not to use our own CapEx, use our own capital to open every screen. I think the idea of the merger that we did three years back was to create market leadership, a strong brand that we can leverage vis-à-vis the new screen additions. What we are saying is that our new screens will be a healthy mix of lease model, where we will put in our own CapEx, especially in markets where there's high competitive intensity, particularly in South India. In other markets in the country where there is, you know, we have good market share and a very strong brand and the competitive intensity is less, we would like to partner with the developers with capital contribution and also, you know, do only franchise deals. The whole idea is that we fund our growth through our own internal accruals rather than using CapEx, and, you know, borrow through debt and grow, you know, and use the strength of our balance sheet to fund the growth for future. It also, you know, helps to improve the return matrices, and that's quite visible, when we look at the numbers that we've reported in financial year 2026. Okay. Which means simply, what it implies is if we are going to steady state generate an operating cash flow of north of INR 700crores-INR 800 crores, ideally, we should put all this into the deployment and develop more screens. That is, this is what we can expect in a steady state basis. Because India is so underpenetrated market in terms of screens, multiplex screens. From the point of supply. You know, you, there has to be enough opportunities and unit economics should stack up, for that location, for that mall, for a multiplex to be operating. It's a combination of multiple factors. You know, the screen expansion is not getting compromised because of asset-light and FOCO model. Screen expansion is completely robust, and wherever there is a good opportunity, we're just utilizing our capital in such a manner where there is, we are being prudent about how to utilize our capital. That's all we're doing. We're not compromised just because we're doing FOCO and asset-light, it is not compromising on the screen growth strategy. That continues to remain, you know, whatever opportunities which are coming our way, and if we evaluate it and the unit level economics work, we basically are grabbing onto it. What model we work it in is not gonna compromise on the screen growth, the percentage growth we want to increase. Understood. Thanks for that clarification. All the best. Thank you. We have next question from the line of Mr. Jinesh Joshi from PL Capital. Please go ahead. Yeah. Thanks for the opportunity and congrats on the balance sheet improvement. Just one observation on the balance sheet side. I see that our ROU asset has come down from about INR 4,900 crores in FY 2025, to about INR 4,600 crores in FY 2026. Correspondingly, we have added about 42 odd screens on a lease basis and about 29 on asset-light basis, which effectively means that there has to be some capitalization on the balance sheet with respect to these screens. Just wanted to know why the ROU figure has come down when we have had screen additions in 2026. ROU, as you know, ROU assets depreciate over time. Simply because the depreciation over the last one year has been more than the gross additions on the ROU on lease model screens. That's why there is a drop in ROU assets. Because if we add FOCO screens and asset-light screens, the contribution of these screens on ROU assets is much smaller than a fully leased sort of screen additions. Do we also capitalize FOCO screens? My understanding was that under that model, the P&L belongs to the developer and not us. We don't capitalize FOCO screen. Sorry, Gaurav, you go ahead please. I'll we don't capitalize FOCO screens on our books. Okay. The P&L in the asset-light model belongs to us, I mean, belongs to the company. In the asset-light model where there is a developer contribution, the P&L is ours. Right. Right. Secondly, I just wanted some clarification on the CapEx figure that you mentioned for FY 2027. If I heard you right, you have given a figure of about INR 375 crore-INR 400 crore, and we plan to open about 120 screens in 2027, whereby 55%-60% will be on the FOCO and the asset-light model, where typically our CapEx commitment has to be very negligible. Just wanted to understand why this figure is high. I understand we have renovations as well, which you highlighted in the opening remarks, but if you can break this number into new organic CapEx and renovations, it will be really helpful. Yes. I think, roughly around, you know, about INR 225 crore-INR 250 crore we will spend on new projects, which will be, you know, across payments which are due for projects which are under fit-out, as well as new handovers that will take place through the year. About INR 80 crore-INR 100 crore will be spent on renovation, and the balance we will spend on maintenance and IT CapEx. Got that. One last question from my side. In FY 2026, we closed about 18 screens, and I believe we have had some closures in FY 2025 as well. Just wanted to get some sense, have any of these properties that we have vacated, have they been occupied by any of the peers? Can you give some color on that? Some of, you know, some of the malls themselves are very specific, and they did not have any potential at all to be revived. You know, because, you know, PVR itself started in 1997. INOX started in 2000. Some of these malls and leases are all, you know, 20 years, I mean, say 15 years- 16 years in existence, 20 years in existence. They've been replaced by newer malls and newer multiplexes in the same demographic by us only. We've only moved to a better mall, better destination. In certain cases, the malls have been converted into other uses and some malls have closed down, and certain some operators have taken it. From our scheme of things, it did not make sense for us to grow, continue on those properties. Okay, sir. Thank you. Thank you so much, and all the best. Yeah. Thank you. A reminder to all the participants, please restrict yourself to two per questions. We have next question from the line of Sameer Gupta from IIFL Capital. Please go ahead. Hi, sir, and thanks for taking my question. Sir, I had a broader industry question now, just regarding industry footfalls and occupancy. What I understand is that FY 2026 has been quite a normal year in terms of, say, Hollywood coming back, OTT heat normalizing, and we have seen that evidence in terms of direct OTT releases and so on. Also overall consumption across the board has been picking up. When I look at our occupancy level of 25.8%, this is very similar to 2023, 20 24 levels. What gives us the confidence that this is still not the new normal post-COVID and there can still be improvement? I understand content line up, but, quite frankly, if there are like 1,500- 2,000 releases in a year, I mean, 1,500 will be of good quality is the general consensus. 26.2 is what we've closed the year on. Oh, okay, sir. Still the question still remains. Yeah, yeah. It's, it's, you know, every year there are explainable reasons. This particular year, I think February was not very good. Diwali, which is an aberration, wasn't. Normally you have big Diwali releases, so that didn't happen. I think we're moving in the right direction of, you know, more and more movies coming on the big screen, more and more people preferring to watch it on the big screen than any other format. I see no pessimism or skepticism to think that this occupancy level will not come up. Secondly, we're looking at occupancy levels at one level, but we are also looking at our costs so that even at, say, 27%-28% occupancy, we are able to get the same EBITDA margins that we were getting pre-COVID. Of course, if it does go to 31%-32% occupancy, then you're bound to get much better margins than even what we were getting pre-COVID because of our cost efficiency that we are achieving post the merger. You know, optimism is also coming from the lineup. Optimism is coming from the fact that more and more filmmakers are making film for the big screen, not just in India, but India when I say Hindi, regional and also Hollywood. Got it, sir. Is there evidence now that the OTT heat is now behind and this is the new normal, or there is still some bit of story left there, as in, there is still a fatigue associated with OTT that might come in future or that has largely played out? No, it's played out. It was never a substitute. It only became a substitute during the COVID periods, obviously, when cinemas are shut. It was always something complementary. Home entertainment has always been complementary. TV shows people watch at home. When it comes to movies, the first platform where movies are monetized and seen has always been big screen. I think this debate is quite hackneyed and outdated now. There is enough evidence also about the regrowth of OTT and the growth in people going out and watching movies on the big screen. Got it, sir. Assessment here is that pickup from here on is more driven by macro factors and not specifically to PVR INOX or the cinema industry as a whole, but more to do with macro factors. Is that a correct interpretation? No. No, cinema is very much in the cultural fabric of our country, you know, cinema going. Macro factors can be anything. I'm specifically talking about the film industry. In the film industry, all the stakeholders, which are the filmmakers, the OTT platforms, the consumers, the mall developers, everybody is now making way for theatrical. I think the fundamentals of business have always been strong. That's the reason why, you know, the growth in box office numbers are there. This year, the INR 13,395, whatever calendar year has been the highest ever. Also PVR is, it's not just a passive brand, it's a very active brand. We have got the best locations in the country. We are proactively doing so many marketing activities to make sure people come to our cinemas. PVR does get a delta over any other operator, any other cinema chain because of the way we position ourselves. I think it is not just macro, it is lot of proactive effort that PVR Cinemas, PVR INOX makes, and also because of the way the film industry is currently poised. You know, the fact that movies are doing so well at the box office, that fact is not lost out on any of the filmmakers, because there is no cap to how much a movie can earn when it gets released on the big screen. Smaller movies like Saiyaara, Mahavatar, Narasimha, Laajo, all these movies were small to medium budget movies, and look at the box office collections they have got. Got it, sir. That's all from me. Thanks again and all the best. Thank you. We have next question from the line of Parag Thakkar from Fort Capital. Please go ahead. Parag. Yeah. Hi there. Thanks a lot for giving me opportunity and thanks a lot for the very good performance. I would like to ask that, fundamentally speaking, our stock is completely undervalued. Now, of course, as you rightly said, the trend is changing. From last six months, we are seeing good footfalls. You are generating so much of operating cash flow and your CapEx is limited. Why would you not consider a buyback? Because if you remember, during COVID also, you did a QIP at around INR 1,300, and still the stock price is below that, even after such successful movies. You are saying that pipeline is also looking very robust. Why a buyback where promoter will not participate is not an option as a capital allocation decision now that your net debt is just INR 160 crores? Gaurav? Sure. Mr. Thakkar, I think, you know, we have been on the journey of deleveraging over the course of last two years-three years, as you've seen. Our net debt levels have come down by almost 90% since the Merger time, and we are now negligible net debt. I think the first goal objective for the company is to become a positive net cash, which is looking very likely in the near future. I think once that is achieved at the, you know, under the guidance and discussions with the board members and, you know, we will also discuss the capital allocation priorities and objectives of the company post that. At this stage, yes, it is definitely one of the things which is there in the list. You know, at this stage, we don't have any incremental guidance to offer. Okay, sir. It is my actual genuine request that, once you are net cash, I think because the stock is completely undervalued, based on the fundamentals, and of course, the stock has not rewarded, shareholders because of other reasons which were not in your hand. Now that the tide is turning, I would seriously recommend that, we should go for a buyback. Point noted. Sure. Thank you so much. I said nothing is off the table. Thanks. Thanks. Thanks. Thank you. We have next question from the line of Kavish Parekh from 360 ONE Capital. Please go ahead. Hi, team. Thanks for the opportunity, and congratulations on a good set of numbers. Your initial capitalized screens are now almost eight, 10 months old. How would you assess the progress on this initiative so far? Across both the FOCO and asset-light models, what have been the key learnings, positives, challenges, or areas where further improvement is required? Could you also quantify the margins you are generating on such screens today? Yeah. Gaurav, can you answer that if you have the numbers? Sure. I think, you know, very strong response on both franchisee as well as asset-light models. On the franchisee screens, there has been a very strong response, especially in tier two and tier three towns. A lot of cinemas that we have opened in the recent past, for example, in Siliguri, Gangtok, Agra, Leh, they have been all franchisee deals. The performance has been pretty strong. The response from the local partner that we have given the franchisee to has been satisfied. The, you know, overall growth in the management fee on a run- rate basis has been upwards of 40%-50%. Even though on an absolute basis, it is still a small portion of our total top line because we have almost 1,750 to 1,800 screens on the lease basis. Asset-light, which is where we partner with the developer, where developer contributes anywhere between 40%-80% of the CapEx. Again, there are a few cinemas we have opened in the last one year under that model, and we are yet to see one full year of operations. So far, I think the earliest one that we opened was last year, sometime in the month of April and May, and which has completed one full year of operations. You know, the performance has been pretty healthy. ROCs are in line with what we had estimated at the time of feasibility of those cinemas. As we open more cinemas in the asset-light approach, we will also learn about how they are, you know, performing and overall, you know, response from the developer partners there. Got it. On the expansion plan, 75 net screens added this year. What is the plan for FY 2027 in terms of gross additions? Will it be around 100- 120? Apologies if I missed this number earlier. Yeah. That's right. Expansion will be continuing to be over 100 screens. Some will be through this model of FOCO and asset-light. We will be spending our own money. A lot of focus on Tier -2, Tier -3 sort of cities as well with our Smart Screens initiative, which is I think the first one will open by mid-July. But we are expanding in those smaller towns as well. Of course, big cities continue to surprise us because the CBD keeps changing. Newer malls, newer shopping centers continue to come in, cities like Bangalore, Bombay, Hyderabad, Chandigarh, Kolkata, Surat. You know, big developers like Phoenix, Prestige, DLF, Oberoi Realty, you know, Nexus Malls, they continue to expand into various regions and various cities. We are very much their preferred partner with most of the In fact, all of the top developers in the country today. They are continuing to have shopping centers and having spaces allocated for cinemas. Sure. On a CapEx basis, on the CapEx front, what would be the average CapEx per screen on the Smart Screens model, the one that you plan to ramp up in Tier -2, Tier -3? Gaurav, will you give the comparison between normal screen and? Yeah. Yeah. Roughly, you know, for Smart Screens that we want to open up in Tier -2, Tier -3 locations, the offering will be more affordable, both in terms of CapEx and, you know, more cost efficient in terms of operations. We expect that our per-screen CapEx for a Smart Screen will be at least, you know, 30%-40% lower than mainstream cinema in that same location. Depending on where we open, it will be about 30%-40% lower. Got it. Last question on the debt position. A stellar debt reduction over the full year. From here on, what is the thought process on gross debt? You have a cash balance of about INR 6 billion, gross debt of about INR 7.5 billion. Do you plan to pay it gradually while holding on to cash, or will there be accelerated payments on the gross debt front? Of course, as you mentioned, dividends could be considered at some point in the future, but what is the intended use of cash here with respect to debt? I think in the near term, we will use it to further bring down our gross debt. Our gross debt as of 31st March is around INR 760 crore, and we intend to bring it down to about INR 500 crore levels. In the last year, we prepaid a lot of our term loans. We will continue to prepay some of the term loans and some loans will, you know, with the flux of time get reduced. We want to bring it down to about INR 500 crore levels at a gross debt level. Net debt coming down to zero is a possibility by, say, 1H FY 2027? Yes. While I would not like to comment on the exact timeline, in, you know, near term, it's definitely on the horizon. Sure. Thank you so much and all the best. Thank you. Thank you. Thank you. We have a next question from the line of Saurabh Arya from Sameeksha Capital. Please go ahead. Hi. First of all, congratulations on the great set of numbers. I wanted to understand some unit economics on the new model. First of all, for say, the FOCO model, we are not contributing on the CapEx side. On the consol basis, we are not even adding the top line in our revenues in our top line. What exactly do we combine the P&L, the management fee? Is that on a fixed basis or what is the proportion? Secondly, same on the asset-light structure. For say, they are contributing 50%. Do we add the entire into the ROU asset and then what do we book in the P&L? I wanted to understand on this part. Sure. On the FOCO model, we only book the management fee. We don't consolidate the P&L of the property. The P&L is retained by the landlord. The management fee, you know, varies between 10% to 14% of the top line of the cinema. That's how we record the financials in our books. On the asset-light model, where there is a contribution coming from the landlord, anywhere between 40%- 80% of the overall cinema CapEx, depending, you know, on how much the developer contributes, we, you know, work out an arrangement of yield on his investment. The, you know, the balance CapEx which comes to our account, which is, you know, let's say 40%- 50%, is something that we capitalize in our books and gets up, you know, recorded as ROU assets and lease liabilities. The entire P&L is consolidated. The yield that we pay is in the form of rentals and appears as a rental expense in our P&L. Okay, perfect. Another thing, just confirm if I'm right. On the FOCO side, if you're not adding incremental CapEx and getting a fixed top line of their revenue, this is the way we improve our ROI going forward, right? Sorry, I missed your last part of the question. Can you repeat it? If we are not contributing CapEx on the FOCO side and we are getting top line added to our revenue, their share, this is the way our ROI improves going forward, right? Yeah. The management fee gets recorded in our P&L. You know, if, you know, let's say this year, for example, we have added about close to 18 or 19 FOCO screens. We just get management fee in our P&L and incrementally, whatever FOCO we add, the revenues are recorded. There is no cost to it. We do operate, so there is some employee cost incurred by PVR on these screens? No, no. No. As I explained earlier, the P&L is with the landlord. Yeah. We incur no expense on the FOCO screens? No, no. Not CapEx, not OpEx. Okay. Thank you. Ladies and gentlemen, this will be the last question. I would like to hand the conference over to management for closing comments. Thank you all for joining this management earnings call for quarter four and FY 2026. If you have any further questions, you may reach out to me or my colleagues in the investor relations department. Thank you once again for joining this call. Thanks. Thanks. Ladies and gentlemen, on behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect lines. Thank you.