Connplex Cinemas Q4 FY26 earnings call

Connplex Cinemas expanded its operational footprint to 41 cinemas with 113 screens across 9 states, adding 30 screens in H2FY26 alone. This expansion coincided with a significant recovery in the Indian cinema exhibition sector in FY26, with the box office growing 15-20% YoY and Hindi cinema recovering over 50% YoY. Management highlighted the return of mid-scale and large-scale films, with over 15 films crossing the ₹100 crore mark, reinforcing confidence in the industry's long-term fundamentals.

For FY26, Connplex reported a 54% YoY revenue growth to ₹14,752 lakhs and a 37% YoY PAT growth to ₹2,608 lakhs. However, EBITDA margin for FY26 declined by 377 bps YoY to 23.68%, and PAT margin decreased to 17.7% from 19.8% in the prior year. This margin compression was attributed to higher operational and expansion-related costs, including a significant increase in employee costs from ₹5.24 crore to ₹9.95 crore and advertising/marketing expenses from ₹9.6 crore to ₹17.79 crore, which management views as strategic investments for future growth.

The company benefits from a diversified revenue structure, with movie exhibition contributing ₹6,213 lakhs, cinema making/franchise fees ₹6,481 lakhs, F&B revenue ₹782 lakhs, and advertising revenue ₹291 lakhs in FY26. Connplex continues its asset-light FOFO and FOCO franchise models, focusing on underpenetrated and high-growth markets. The company has a strong pipeline of 230+ upcoming screens planned for FY27 and FY28, with a target to add 80-85 screens in FY26-27 alone.

While maintaining focus on key markets like Gujarat, Maharashtra, Bihar, Telangana, and Andhra Pradesh, Connplex is actively expanding into newer regions such as Jammu & Kashmir, Chhattisgarh, Nagaland, Punjab, Odisha, and Jharkhand. The company is also entering Tier 1 cities like Bangalore, recognizing opportunities despite their covered status, due to favorable real estate terms and potential for higher Average Ticket Price (ATP) and Spend Per Head (SPH).

Management clarified that revenue from cinema development (EPC) is recognized at the completion of the project, not on a percentage-of-completion basis, as it's a turnkey model. There can be a time lag between revenue recognition and a cinema becoming operational due to licensing processes and franchise partners' launch decisions. This explains discrepancies between screen additions and immediate revenue impact, with some screens completed in the prior year becoming operational in the current year due to delays like elections.

Connplex has adopted a leasing model where it leases cinema space from developers and then subleases it to franchise partners, passing on the rental terms. This model provides greater control over cinemas and contributes to 'other revenue.' The company also holds nearly ₹13 crore in customer advances, with receivables increasing from ~₹13 crore to ~₹21-22 crore, primarily due to VPF charges, advertisement charges, BookMyShow revenue sharing, and franchisee collections during a strong blockbuster period in late March.