Shemaroo Entertainment Limited — Q1 FY27 earnings call

Thank you. Good afternoon everyone and a warm welcome to you all. My name is Priyanki Jain from Valorim Advisors. We represent the investor relations of Shemaroo Entertainment Limited. On behalf of the company I'd like to thank you all for participating in the company's earnings call for the first quarter of the financial year 2027.

Before we begin a quick cautionary statement. Some of the statements made in today's con call may be forward looking in nature. Such forward looking statements are subject to risk and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management's belief as well as assumptions made by and information currently available to the management.

Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decisions. The purpose of today's earnings conference call is purely to educate and bring awareness about the company's fundamental business and financial quarter under review.

Now, I'd like to introduce you to the management participating with us in today's earnings call and hand it over to them for their opening remarks.

We have with us Mr. Hiren Karda, CEO, Mr. Arya Chakraborty, COO, and Mr. Ashish Gupta, CFO. Without any delay, I request Mr. Ashish Gupta to start with his opening remarks on the financial highlights. Thank you and over to you, sir.

Thank you Pravangi and good afternoon everyone. And welcome to our earnings call for the first quarter of the financial year 2027. Let me first start by giving you some of the key financial highlights after which our CEO Mr. Jayant Gada will give you some operational highlights for the quarter under review.

Now for the first quarter of the financial year 2027, revenue from operations stood at approximately 1.132 crores, reflecting a 6% year-on-year decline. The company significantly narrowed its EBIDA loss to around INR 2 crores compared to INR 56 crore in the corresponding quarter last year.

Net loss also materially reduced to approximately INR 8 crores.

With regards to the new initiatives, expenses in the first quarter of the financial year 2027 amounted to around INR 20 crores. Adjusting for these investments, the EBIDA for executing operations for the quarter would have been around INR 18 crores.

The digital media revenues for the first quarter stood at approximately INR 56 crores, registering a year-on-year decline of approximately 17%. Traditional media revenues for the quarter were around 76 crores and up 5% year-on-year.

Now I would request our CEO Mr. Jain Gada to give you the operation highlights for the period under review.

Thank you Ashish and good afternoon everyone. This quarter marks an important milestone in our transformation journey, representing the quarter following the successful completion of the inventory charge off initiative that we embarked on nearly 10 quarters ago.

For the quarter under review, while revenue declined marginally, the EBITDA and PAT loss reduced significantly.

Digital revenue for the quarter declined by 17% year on year. select B2B syndication deals were deferred on account of geopolitical uncertainty coupled with the inherently lumpy nature of this B2B side of the business.

This was partially offset by healthy growth in our consumer business driven by fresh content, stronger audience engagement, and improved advertising monetization.

The traditional business registered a 5% year-on-year growth with the closure of select B2B licensing deals, which more than offset the impact of a subdued advertising environment.

Given the ongoing BARC blackout, continuing macroeconomic pressures and geopolitical tensions, the overall advertising outlook for our traditional business is expected to remain subdued in the near term.

On Shemarumi Gujarati, the platform acquired the Oho Gujarati catalog in April 2026, adding over 22 Gujarati original web series. We also released 10 new titles including during the quarter across movies, web series and plays, including the original web series Kajodu and the world digital premiere of the movie Jalebi Rocks. Other prominent web series released during the quarter include Vithal Tidi season one, Kadak Mithi season one and two and Cutting season one.

On YouTube, the flagship channel Shemaroo Filmy Gaane has passed 74.7 million subscribers, while Shemaroo Entertainment crossed 61.9 million subscriber milestone this quarter.

Across this across its entire portfolio of channels, the company garnered approximately 9 billion views during the quarter reflecting sustained digital engagement. On this indication front, the company became the worldwide digital and satellite distribution partner for Malayalam action thriller Katlan.

We are also very proud that our first AI powered brand campaign Kindness Badai Goodness received industry wide recognition winning the Baby Blue Elephant at the Curious Creative Awards 2026 and a bronze at the Good Ads Matter Awards. These accolades reflect our commitment to combining creativity with technology to build meaningful consumer engagement.

In conclusion, as you all know, it has been a tough couple of years not only for Shimaru but for the overall industry. Over the last few years, Shimaru has withstood the toughest times the industry has ever witnessed. In fact, the company has invested heavily during this period in its people, processes, and offering, thereby building a much agile and sustainable company for the future.

With that, I now open the floor for question and answer section.

Excuse me, Mr. Rehan. Can you just repeat the question if your line is not very clear?

Yeah.

No, as we, uh, as Ashish shared in the opening comments, if we exclude the EBITDA, if we exclude the investment, the EBITDA would have been about 18 crores. Yeah.

And uh

Hello.

Yeah.

Yeah, so, uh, no, like, can I repeat?

And then that other question, I'm actually, your line is a little unclear, so I'm not able to fully understand the question. No, no, I have, I have.

beta gain. Our EBIDA gain would have been 18 crores. So currently with this initiative, our EBIDA loss is 2 crores. Excluding this one this investment, our EBIDA gain would have been 18 crores.

No, so, ultimately, it's it's not about that. I think it's essentially it is a content monetization. So as our content monetization is growing and we have been working on the parallelly in the last few quarters on a lot of operational efficiency. So it's a combination of that. So margin growth or margin improvement is combination of revenue increasing and cost reduction. So it's not only

on revenue side.

Two uh

There are two parts to this. I think it's not about under monetization of the of the library. I mean, today with the kind of digital distribution that is available at everyone's back end call, you know, we have fully utilized our library and not only fully utilized, we have a large, I mean, today if we are generating as we have shared earlier in the call, 9 billion views for the quarter.

that shows that there is a very strong attraction of the content on the digital media side. So it is not about so rest assured that there is no under utilization of the content. Yes, there are two factors over here which are impacting. One is the fact that traditional media monetization has been steadily and gradually reducing over the last about two to three years. And of course that

has kept the overall monetization of the library at a, in fact, that part of the revenue stream has been on a degrowth side. But on the other hand, the digital monetization on various platforms like YouTube, Meta, or many other subscription-based platforms or international platforms, it has been on a growth trajectory. So it is actually even net of that.

Uh, the good thing I would say is that, uh, the content library continues to, uh,

I would say you know, connect and track well with audiences. So because of that, it has ported extremely well on the digital media side, on the digital front and some of our market content titles you know, like Welcome Jab We Met, Phir Era Pheri, etcetera, etcetera are top performers on the YouTube or in fact on most platforms that they are present on. So particularly

on the digital side in fact. So that is actually giving us a very good edge and a very good futuristic predictability of the revenue.

Next how many? Next three years.

So, I think definitely we are aiming at a double digit plus kind of growth. One has to see the industry context where traditional media has been degrowing and digital media has been growing. Recent growth of digital media has been roughly in, you know, low double digit kind of number. We are intending to, you know, outdo that by at least a couple of percentage.

points overall. So blended growth I think should, you know, we should be at, uh, the aim is to be at a more than, I mean, at a healthy double digit kind of a growth rate.

Hi, I just wanted to ask about three things in terms of the numbers. One, is there any debt reduction plan and if you could describe what that is going to look like? A guidance on when we can see a P&L profit and the revenue breakup for FI27 in terms of digital revenue traditional business, etcetera.

So, on the debt side, one second, I'll just go one by one. So, on the debt side, I think by the end of the year, so we may have you know, quarterly ups and downs and particularly given the whole geopolitical and other situation, there could be a little here and there around. But we definitely have a debt reduction plan for this year. Now how much it will be right now, it's very difficult.

difficult to say because you know, we started the year with this whole geopolitical uncertainty and that has kind of got compounded last one month with this mark blackout. So ratings blackout. So because of which definitely there is an impact on the traditional media revenue on the syndication side on many it has a secondary impact on the on on the traditional media or television linked businesses. But notwithstanding,

I think we are looking forward to a very healthy second half of the year because there is a festive season. There are a lot and lot of operational gains and the digital engine is firing quite nicely on the consumption side. So I think all of that put together I think I'm unable to give you an I mean it's no point that I give you a target or a number right now and then you know it doesn't

Hold by the end of the year, but we have a reduction plan. Uh, your second question was on profitability.

Yeah, profitability. So, let's put it that way that given combination of the fact that digital media continues to grow along nicely and our content has ported extremely well on the digital media. I think that's a revenue stream and a cash flow that is steadily on an upward trajectory. And that combined with the fact that our overall investment plan for the last about almost three quarters.

has been significantly focused or pivoted towards the digital media and reduced from the traditional media. I think and the third point is the operational efficiencies that again we've been working on over the last particularly last three quarters or so. I think the results of all of that will be visible every quarter. I think, you know, we should be seeing an improvement on a quarter-on-quarter basis. Now, when it will tip into a profit, you know,

You know, it's difficult for me to pinpoint. Uh, let me, if I have to give a conservative view, the aim will be for the year to be EBITDA positive at least. And, uh, yeah, hopefully next year, hopefully, you know, I think we are very confident that next year we will be bottom line positive also.

Got it.

So as I said to the previous caller also, digital we are anticipating or we are looking forward to a double digit growth rate and traditional should probably be flat to yeah I I would imagine it would be flattish.

Not a degrowth, so hence leading to an overall double digit kind of a

Top line growth chhe.

Okay, got it. Thank you. I'll get back to you and answer the other questions.

No, I think as I was talking to the previous question also, the context here is

Uh, we are finally in an industry environment, right? So I may want to grow in a certain way and all of that. The question is that what is the underlying growth that the industry is offering me? And we are, our attempt is always to grow faster than the industry. Now, in the last 2 years actually, if you see the underlying growth rate has itself been low. So yes, we have not grown at that pace in the last

two years on the on that side. But there is also an underlying context because of various various reasons. Now we can, you know, go into some of those reasons, but the idea has been to be growing at faster than faster than industry growth rate. There's another angle to the whole thing is that growth at what cost is another question. So the idea for us also is to maintain a profitable growth rate and

Uh, not burnout. I mean, it's very easy for me to, if I take say example of Shemarumi. Okay, we can scale up by burning significantly more amount of money. Uh, we can scale up that number. But then, you know, that will burn a big hole on our cash flow and balance sheet. And, you know, few months or few quarters later or maybe a year later, we would ourselves scratch our heads and say that, you know,

is business worthwhile? Why are we investing in this business? Rather what we are doing is we have a strong belief in this business. We have a whole position with you know, very strong leadership and share of mind of consumer as far as the Gujarati entertainment is concerned. And keep building and bringing in more efficiencies. So balancing growth and profitability.

I think is an extremely important part of that, managing everything within the you know, available cash flow and balance sheet kind of a thing. I think that is the second consideration that will always be linked to growth.

So, it depends on what which part of the business value chain you are residing in or you're working on. So if you are in you know, in the consumer facing side at this point, no one is making money, right? So which is where Shemaroo is. Then there is a there there is a mid segment where you are owning content and aggregating and licensing.

content across across the you know industry wide kind of platforms. Whether it's Amazon, whether it's Shimaru, sorry, YouTube or Meta or many other even internationally etcetera. Now over there it depends on what is my mix of content. So if I have legacy content, my margin could be as high as 80-90% because the

The underlying cost is all written off, charged off, paid off, everything. But for what I acquire new, the margins could be, you know, zero, it could be minus, it could be marginally positive depending on whether I overpaid, overbid, or at what rates I have acquired. So the blended margin over there is again, you know, a function of what is my mix of existing or legacy.

content versus new kind of content kind of a thing. And then third part of this value chain is on the creation side. Where I you know there it's more you can say like what it was TV side of the things where you know it was a

Production work for higher kind of a thing. So there there could be some fixed margin kind of business which could be in the range of between 10 to 15% or even 20% depending on who it is. So I think it's very varied. I wouldn't, you know, say it all depends on which side of the value chain you are playing.

I would, I would put it actually again based on as I shared earlier that the

Uh, what is the, what is the, uh, what is my starting point of the library ownership? What I have already, uh, paid for and charged off is highly profitable irrespective of whether it's on YouTube or on syndication.

And what I have freshly acquired, there is a cost I am bearing for that and whatever IRR etcetera I have worked on, I will, you know, kind of deliver based on that. So the again, whether it's YouTube or syndication, it doesn't matter. So even for us, for example, say I was talking of say welcome or something, where the the licensing, if I have licensed welcome to some, you know,

of some platform within India or internationally, etcetera, then the margin is significantly higher because it's already paid for. Same way, welcome on YouTube is also a higher margin, but not necessarily a new acquisition on either of these cases.

And to their second part of the question, yeah, I mean, as of now, we are on track to, uh, for, for what we have. We are well on track. Yeah, in fact, we are well on track for that.

as okay so you joined a little late. we were talking about the margin profile discussion on. So basically without giving much more color essentially you know the it's not at this point it is I would say it is not exactly one to one linear correlation of top line to margin. I think there are three four factors at play here.

First is the fact that all business that we do or every content is not necessarily similar or same EBITDA margin. So our focus is to, you know, juice out and mine more and more of the content which is already paid for and charged up because that adds the highest amount to the EBITDA overall margin.

Second driver is on the cost side which is where over last two three quarters there has been a significant you know operational efficiency drive and and you know we we should see the impact of that over the next few quarters as we go along. The quarter by quarter improvement on that should be visible. So it's not a straight line answer but

Uh, yeah, I mean, ultimately at some point we have, we hope to far exceed the kind of numbers you're talking of.

Hello Lady

Hello.

Yeah, sorry Chirag, you were asking and I, I don't know what happened. Somehow it got discussed.

My answer is

Okay, uh, so two kind of, uh,

Correct, you're understanding a little bit. Uh, a lot of the spends are actually, I would say, variable in nature and they are ongoing. So tech, for example, yes, there is an initial build out, but then there is an ongoing, ongoing improvement. Every day, every, literally every day, every week there is some new, uh, you know, integration, some payment gateway, something, some new feature, something or the other is kept. So there is a constant, uh,

and that's just one example. The team that works on it, the customer service, etcetera, etcetera. All of that is a continuous op-ex kind of nature. Content investment also once, so thankfully we had a very good starting point. In fact, that was our right to win. You know, at the starting point on Gujarati. So it was not any significant CAPEX to begin with, but on an ongoing basis, there is a content investment as we shared even.

Last quarter we have, you know, released on this movie web series and we acquired the Oho library etcetera etcetera.

So firstly, to correct the understanding, the that is one part. Coming back, the larger two spends on this business are around customer acquisition and content.

Uh, so you know, the customer acquisition cost or CAC, as you may call it, which is a combination of ATL above the line marketing as well as performance marketing, um, you know, for on from a sales point of view, that's one large part of the

revenue, sorry, one part large part of the cost and content is the other large part of the cost. Now, how does this business take shape in the way forward? I think what is important is that how are we shaping up in terms of capturing the lifetime value of a consumer. So if we are able to, for example, build the lifetime value. Now for that what we need to do is essentially

keep, you know, pumping good quality content.

and make the consumer come and consume more and create it make it a part of his daily habit, daily regular routine platform that the consumer keeps visiting because then the loyalty and the lifetime value kind of gets captured. I would say as far as Shemarumi is concerned, we are actually at a in a very, very good position with the Gujarati audience. In fact, we are probably one of the very unique

Lee

placed platform which runs a two year plan. I don't I haven't seen a two year plan virtually anywhere I don't think any other platform in India offers a two year plan. We offer a two year plan and we have a decent uptake on that which shows that the the consumer trusts the brand.

A and is willing to put in money for 2 years and B trusts the fact that today while there is no visibility, right? I cannot tell the consumer that in December I'm going to give you this content and next March I will give you that content, but he trusts also the fact that we will curate and offer formidable and useful content for which the consumer is willing to pay today for 2 years. I think that is a very big, you know.

Thumbs up for us in this journey which gives a lot of consumer, which gives us a lot of confidence and the consumer believes in us. So, you know, finally,

The profitability will be based on are we able to bring in more renewing customers because the cost of acquisition kind of is not applied for the renewing customer than our cost of acquiring fresh customers. And you know, while we haven't reached that point yet and it is still some time away. I would imagine we are at least about two years away from that point but so would most other OTT platforms be.

is what my sense is, but you know, the kind of love that we are getting from the consumer on our platform, the kind of renewal rates or the kind of traction on and the kind of common

I would say reference to Shemarumi for Gujarati amongst Gujarati consumers that it has become a default consume you know Gujarati entertainment platform for the consumer. I think that gives us a lot of confidence that we are doing we are on the right track, we are doing the right thing. And yeah, I mean,

That's that's how I would put it.

No, no, no, no. We have not been and I I we at this point at least we don't intend to. In fact, most of the platforms have globally also they have stopped giving a lot of this data on a regular basis because everyone's realized that you know, it's a wrong metric to singularly look at. There are many, many more factors that drive the health of a platform.

Sorry, as I said, unfortunately at this point we are not.

Sorry, your voice cracked.

Chirag, it's too early to speculate, I think, right? You know, take it as it goes.

I agree with you and net of I mean so you know all the points that you made are very valid that you know one is the fact that there has been a significant shift over the years in the in the revenue mix itself in terms of you know traditional to digital. And at the same time the investment has continued. We

If you ask me personally and I think at at a company level, you know, coming out of a couple of black swan events like you know, the BARC blackout or the geopolitical kind of situation and all of that. You know.

Then, then.

Uh, you know, considering all of that, I think, uh,

We have been able to manage margins at a still at a decent level. Are we satisfied with this? Definitely not. I think our intent is to move significantly higher on the margin. And which is what I was referring to earlier that you know, we will there's a lot of operational changes, there's a significant you know, dialing down doubling down on the digital investment and all of that. So which will ultimately yield to

to a higher better margin improvement. I think if I see a 2-3 year perspective, I think definitely upwards of 20% EBIT dash is something that we should aim for. I don't know whether we will be able to achieve that or not, but definitely something that we would aspire for for that. One small clarification is that the negative margin that you're talking of is primarily on account of the accelerated

Uh, charge off of the content. But otherwise, as far as the core business is concerned, it has, you know, always been on a positive margin trend.

investment all those things.

So,

I'm saying.

Thanks a lot.

I started my agreement with . No, no, I am no, no.

I think let's currently not split hair for that right now but I'm thinking supposed to say that aspiration should be of a significantly higher margin. We have already been there always, you know. So it's not that we can't go there. It's just, you know, we have there are tectonic shifts that we are all, you know, adjusting to and I think we should come back because again to repeat back what I said earlier our content has is tracking extremely well on the digital front. So the library that we have in the

is, you know, totally digital ready or digital, uh, you know, kind of, uh, tracking.

Okay, while so I mean, we are fully committed to you know, higher standards of disclosure. We have in fact if you see, we have added a lot of color over the last few years to the overall disclosure. But happy to understand more offline and see what we can provide out of that. You know, if it is easily doable, we have no problem in sharing that.

Sure.

Yes, yes.

No, now we are in a normal charge of cycle. So whatever as per consumption, as per our policy, that is being charged off accordingly.

So we are at 300 crores. No, we closed the quarter at 311 crores.

Inventory, we closed the quarter at ₹348 crores.

I can't hear you, Akshay. Can you please be more clear or come on a better, more clearer line?

Hello

So as we just shared in the pre to the previous question that we are currently not sharing any data on Shimaruni. So we can unfortunately we cannot give any details further on that.

I mean it's possible but at this point in time from what we understand the focus for YouTube actually is on actually on the other end of the spectrum which is on connected TV which is on the long form content and actually I think you had asked earlier about the views this thing on YouTube. I think the while the views are what they are I think we our focus has actually been on driving

significant consumption on the connected TV kind of platform which is a which has significantly better monetization. So finally, you know, it's more than views I think finally, you know, your revenue per view or monetization metrics are far more important and that's what really our focus has been around. So, so shorts is on one end of the spectrum but long form content

On connected TV consumption, I think that's really where YouTube itself seems to be focusing significantly as far as the monetization part is concerned.

Thank you.

So basically, uh,

As I just shared towards the end of the last question was about connected TV. So there are multiple ways in which you know, the connected TV the audiences kind of consuming content in multiple ways, either through an on-demand kind of a thing or through a linear channel or through OTT you know, on the connected TV or many such.

manner. Fast is one such way. and fast while it has it has a certain amount of monetization happening. in terms of the fast ecosystem globally it has actually been degrowing in the last I would say about almost 18 to about about 12 to 18 months it has been degrowing. so you know there was a point when there was a

Huge number of fast channels up there and that number has shrunk significantly now globally. In fact,

We also to begin with had more channels. We also have shrunk it down to two channels. so yeah I mean we continue to participate in it. It's still not scaled to what promise it held at the beginning of the at the early stages. in fact you know, so we are kind of tracking and monitoring it. We you know, are participating to understand and keep our keep track if it scales we will.

scale up and we have all the wherewithal to scale up but you know if it doesn't scale we'll scale back. So currently I would say it is still at very early stages more experimental stage of monetization.

Thank you yeah. So thank you everyone for participating in today's earnings call. I hope we have been able to answer your questions satisfactorily. If you have any further questions or would like to know more about the company, please reach out to our IR manager, Valorem advisor. Thank you and looking forward to seeing you all next quarter. Thank you.