INOX Leisure : Analysts/Institutional Investor Meet/Con. Call Updates

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INOX Leisure Limited January 21, 2022

Moderator:Ladies and gentlemen, good day and welcome to the INOX Leisure Limited Q3 FY2022 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 "*" and then "0" on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sanjesh Jain. Thank you and over to you Sir!

Sanjesh Jain:Thank you. Good afternoon everyone. Thank you for joining on INOX Leisure Limited Q3 and nine months FY2022 results conference call. We have INOX management, Mr. Alok Tandon - CEO and Mr. Kailash Gupta - CFO with us for this call. I would like to invite Mr. Alok to initiate the proceeding with his opening remarks post which we will have a Q&A session. Over to you Sir!

Alok Tandon:Good evening everyone. I am Alok Tandon and with me is my colleague, Mr. Kailash Gupta, and on behalf of the management of INOX Leisure Limited, I welcome you all to this call. Our board has approved the quarterly results for Q3 FY2022 and the same has been uploaded on the website of the stock exchanges and the company's website. Q3 was an extremely important quarter for us with major business mixes showing a significant reduction in the gap with pre-COVID levels, the Q3 signaled a sharp recovery largely due to great content, reduced apprehensions due to widespread vaccination, and above all the humongous amount of passion for cinemas prevailing in our country. The passion translated into numerous houseful shows and five movies clocking more than Rs.1 billion in collection.

We have put to use all our learning from the downtime in the last two years. My experience on the tough time and the understanding of the business to make sure that we keep a grip on the expectations and aspirations of the guests. We have been resilient and we have maintained an optimistic outlook during the adverse phase over the past eight quarters. Thanks to our strong fundamentals, the spectacular content flow, and above all the infinite passion for cinema prevailing in our country, we have proudly witnessed the recovery happening. We would express our deep gratitude for the significant support that we have received from all our stakeholders; be it the real estate partners, content creators, our investors and not to forget our team. They have played a massive role in this journey which continues to remain progressive and promising. With the addition of 41 new screens, the highest in the industry in the calendar year 2021, we have shown that adversities could not dent our passion. Our path ahead promises to be underlined by innovativeness and rigor, and being enlightened with our lessons from the past.

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INOX

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	January 21, 2022

After our initiatives on the F&B and consumer communications front, we showed significant impact in our journey forward. However, currently, we are in the midst of the third wave of COVID-19, and this time we believe the severity of this wave on our business would be comparatively lower than the previous two waves and we expect that our business would recover faster than expected. I will begin the presentation now and talk about the key highlights of Q3 FY2022 and also for the nine months of FY2022.

In Q3 FY2022, we have the highest ever quarterly ATP of Rs.226. We have the highest ever quarterly SPH of Rs.97. INOX added 41 screens in the calendar year 2021 which is the highest in the industry. We are also the only national chain that is net debt-free. We have a strong liquidity position and as of 16th of January 2022 we had close to Rs.180 Crores in cash and cash equivalent. In Q3 FY2022, the revenue is Rs.301 Crores as compared to Rs.21 Crores for the same period of FY2021. EBITDA is at positive Rs.54 Crores as compared to a negative Rs.79 Crores in Q3 FY2021. In Q3 FY2022, PAT is at a positive Rs.17 Crores as compared to negative Rs.83 Crores in Q3 FY2021. For nine months, FY2022 revenue is at Rs.380 Crores as compared to Rs.29 Crores for the same period last year. EBITDA is at minus Rs.108 Crores as compared to minus Rs.144 Crores in nine months FY2021. PAT is at negative Rs.152 Crores in nine months FY2022 as compared to minus Rs.183 Crores in nine months FY2021.

Performance in our key operational metrics is as follows: For Q3 FY2022, we welcomed 94 lakh guests as compared to 5 lakhs in Q3 FY2021. In Q3 FY2022, occupancy was at 19% as compared to 3% for the same period last year. ATP is at Rs.226 compared to Rs.153 for the same period last year. SPH at Rs.97 compared to Rs.73 in Q3 FY2021. In nine months FY2022, the footfalls are at 120 lakhs as compared to 5 lakhs in nine months FY2021. In nine months FY2022, occupancy is at 16% as compared to 3% for the same period last year. ATP is Rs.215 compared to Rs.153 for the last year and for these nine months the SPH is at Rs.95 compared to Rs.73 for the same period last year.

We are glad to announce that in Q3 FY2022, we have progressively narrowed the gap in net box office collections and F&B revenues and we are close to the pre-COVID levels. In December 2021, we have achieved close to 90% of NBOC and net F&B of December 2019, and this is despite various restrictions put up by the state governments. We have tried our best to keep our fixed costs under control. However, in Q3 FY2022 we had footfalls of 94 lakhs. This has increased the expenses as compared to previous quarters. We can see that from the numbers on a Q-o-Q basis our employee benefits expense including agency manpower has increased from Rs.28.4 Crores to Rs.41.9 Crores in this quarter. This is because we were operational in more screens and more guests came to our cinemas.

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INOX

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	January 21, 2022

Power and fuel, and repair and maintenance expenses have increased from Rs.14.3 Crores in Q2 FY2022 to Rs.29.2 Crores in this quarter. This again relates to the fact that we were operational in more screens. Our expense towards rent and camp during Q2 FY2022 was Rs.40.4 Crores as compared to Rs.51.3 Crores in Q3 FY2022. We have concluded rent and CAM negotiations for almost all the properties till 31st December 2021 and the impact has been incorporated in Q3 and nine months FY2022. Our other overheads have increased from Rs.11.8 Crores in Q2 FY2022 to Rs.21.7 Crores currently.

In terms of shareholding structure, as on 14th January 2022, FIIs owned about 16.14% of the company. The DIIs owned 23.83%. Promoter and promoter group owned 43.63% and public and others owned 16.40% of the company. The share price as on 14th January 2022 was Rs.378.80 which gives the company a market capitalization of about Rs.4600 Crores. Currently, 572 screens out of our 667 screens are permitted to operate at 50% or less capacity. 47 screens are allowed to operate at 100% capacity, and in two states where there is total shutdown we have 48 screens. Hence, 48 screens are shut as per the respective State Government guidelines.

In Q3 FY2022, we opened cinemas in Guwahati with 4 screens and 183 seats. We opened the cinema in Prabhatam Grand Mall, Dhanbad with 4 screens and 888 seats, and in World Mark, Gurugram with 5 screens and 904 seats. Beyond FY2022, we have signed up to the extent of nearly 135 properties, 935 screens with 1,73,000 seats and once this entire pipeline is fully implemented we will have 297 properties, 1619 screens, and nearly 3,27,000 seats. At present, we are operational in 18 states and 1 union territory, present in 70 cities with 158 properties, 657 screens, and approximately 1.5 lakh seats. In Q3 FY2022, we had five blockbusters namely Pushpa The Rise, Spider Man - No Way Home, Suryavanshi, Annaatthe and 83. We are delighted to inform you that we have a healthy lineup of movies already waiting for release. We have an extremely rich pipeline with movies like RRR, Jersey, Prithviraj, Attack, Badhaai Ho, Gangubai Kathiawadi, Jayeshbhai Jordaar, Bachchan Pandey, Radhe Shyam, Batman, Death on the Nile, Doctor Strange, and many, many more. So, we have movies in all genres and all languages.

Currently, our cinema operations are affected due to the third wave of COVID-19. We have already concluded negotiations for rent and camp up to 31st December 2021. With the advent of the third wave of COVID-19, producers and distributors have deferred their movie releases. The majority of the producers and distributors are waiting for the situation to normalize. The third wave of COVID-19 seems to be less severe and as a result, we anticipate reaching normalcy comparatively sooner.

As far as CapEx is concerned, of the 41 screens to be opened in FY2022 we have already opened 24 screens. In the remaining 17 screens, 80% of the work is completed and we

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