The continuance of the article, UFO and QUBE Merger stalled!!, after the merger was roadblocked by NCLT. The article goes in-depth from a legal standpoint as well the business standpoint for the merger and what is missing in clarity of the structuring.
UFO has filed a petition against the decision which hopefully gets resolved at the earliest. Might some changes required in structuring of the merger.
Any further news on this counter as it’s moved down quite a lot and is it worth buying at 140 level. I heard jio is interested with content sharing.
Any news or speculation
Nclat has given favourable ruling to UFO.
But the qube merger is off the table.
No impact of ruling on business.
Meanwhile it went ahead with merger of its Caravan Talkies Business from its subsidiary company into itself. Check this out - UFO Movies takes over Caravan Talkies for rural expansion
It would be interesting why the QUBE merger fell off inspite of favorable ruling as it was opportunity for them to become market leaders
UFO at 2x ev/ebitda…priced for shut down ? what am i missing ?
As per the earnings con call, qube -Ufo merger was called off due to the share price decline in ufo.
Also, management has stated that distribution is a new revenue stream, variable vpf will stop the debate as they pay only when the make money.
Post pandemic when movies start to release and with
With vpf issue getting clarified, advt revenue + service fee on distribution (distribution is a new stream, might take time to become full fledged), also service fee on slate sale of movies to OTTs (mgmt said this also can start once they get distribution rights)
I think risk reward is very favorable.
Corp governance is definitely a sword hanging on them and low promoter holding adds to it. However, top mgmt sacrificing their salary during covid was a great gesture.
Disc: invested recently
Also, NEPEAN FOCUED INVESTMENT FUND (Gautam Trivedi) has entered via preferential allotment. They now hold nearly 25% of company.
All their business arms are light weight and just waiting for the movie releases in succession. Once the covid is gone, this share can take a huge leap.
I was of the same view…but investors not having confidence even after movies started releasing…can see the his lack of confidence in the share price action, so only quarterly results will determine who is right.
Also, have all the multiplexes like pvr, Inox, fun etc abandoned ufo equipment and installed their own? Seeking clarification on this…
As far as I know, digital print is provided by UFO to PVR / Inox. But they have their own advertising contracts.
UFO has very good penetration in single screen and the smaller mutiplexes of small players. They handle all advertising, ticketing etc. Distribution was very natural move for them. Good thing is that they are releasing all south movies in hindi in north india. And with the southern movies getting traction this is going to give UFO distribution a big push.
I see adv of atleast one contract (with smaller multiplexes / single screens) on weekly basis.
They are now penetrating into rural areas as well by contracting with Vakrangee kendras – the ones with cinema screens will be called Nova Kendras
Where did you find the data that cinemas have installed their own equipment?
Company is also in strong investor hands lately.
Gautam Trivedi - Nepean Focused Investment Fund is holding nearly 24%
Hitesh Doshi is holding 1%
3 Even Nikhil Kamath of Zerodha is invested in UFO Moviez. Please check this video where he mentioned his investment in UFO. [The Future of Movie Theaters in India - Nikhil Kamath & Kishore Biyani Discuss - YouTube]
Two 50:50 Joint Ventures to Revolutionize Advertising Sales and Content Services, Fueling Efficiency and Growth in the Cinema Industry
Meeting/Vote on for :
ASSIGNMENT OF MARKETING RIGHTS OF THE COMPANY
The Company proposes to assign its marketing rights in respect of sale of advertising inventory (along with transfer of all necessary resources and personnel, as may be required) (“Advertisement Sales Activity / Activity”), exclusively in favour of United Cine Media Private Limited / United Cinema Media Private Limited or such other name as may be approved by the jurisdictional registrar of companies (“JV”), being the joint venture company that is in the process of being incorporated, with its joint venture partner, Qube Cinema Technologies Private Limited (“Qube”) (in the ratio of 50:50). Qube will also assign its marketing rights exclusively in respect of sale of advertising inventory in favour of the JV.
Pursuant to Section 180 of the Companies Act 2013 (“Act”), the Company is required to obtain the consent of the members, by a special resolution, to sell, lease or otherwise dispose off the whole or substantially the whole of the undertaking of the Company.
The assignment of marketing rights in respect of sale of advertising inventory (along with transfer of all necessary resources and personnel, as may be required), exclusively in favour of the JV may not strictly be a sale or disposal of a business undertaking of the Company (as construed under Section 180 of the Act). However, given that the Company will discontinue conducting the foregoing Activity directly and will transfer rights to conduct such Activity to the JV, who will sell advertising inventory, on behalf of the Company on principal-to-principal basis, pursuant to such assignment of marketing rights (along with transfer of all necessary resources and personnel, as may be required); for abundant caution and good corporate governance, the Company wishes to seek approval of its shareholders, by way of a special resolution for the proposed assignment of marketing rights in respect of sale of advertising inventory to the JV exclusively.
Accordingly, the shareholders are requested to consider, and if thought fit, pass, with or without modifications, the following resolution as a Special Resolution:
“RESOLVED THAT pursuant to Section 180 of the Companies Act 2013 read with the Companies (Management and Administration) Rules 2014 and subject to other applicable provisions, if any, of the Companies Act 2013 and rules framed thereunder, Regulation 37A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, and other applicable regulations thereunder (including any statutory amendments thereto or re-enactment thereof for the time being in force), other applicable laws, charter documents of the Company and subject to necessary approvals as may be required, consent of the members of the Company be and is hereby accorded to assign Company’s marketing rights in respect of sale of advertising inventory (along with transfer of all necessary resources and personnel, as may be required), exclusively in favour of United Cine Media Private Limited / United Cinema Media Private Limited or such other name as may be approved by the jurisdictional registrar of companies, being the joint venture company that is in the process of being incorporated, with its joint venture partner, Qube Cinema Technologies Private Limited (in the ratio of 50:50), on such terms as the Board of Directors of the Company consider beneficial, provided that such transaction / arrangement is being carried out at an arm’s length basis.
How can we estimate the kind of profitability UFO Moviez can make owing to the success of movies like Jawan? The pre-movie ads were usual 15 mins but the interval clocked 20+ minutes of ads. Never seen before. Any idea about which multiplexes does UFO have tie ups with? any info will be helpful here. Thanks!
the business will does well when box office collections does well. The business has rerated since earlier this year after a few commercial successes. There is also a direct correlation between the year before the elections and the ad spends. Govt ads increase the year before elections.
From a longer-term perspective if you look over last five-seven years the business has been stuck in that 500 cr range. I am not sure what growth challenges does the business face that it has not been able to scale over such extended period.
Taking a short cut here with this genuine question as I haven’t looked at the company in recent times.
What has changed form UFO of 2016-2023 to UFO of today?
Has the business model changed?
If they weren’t able to grow then, then what has changed for them to be able to grow now?
Thanks.
Concall Notes - Feb 2024
Financial Performance:
Positive momentum in Q3 with successful movie releases
Advertisement Revenue grew by 83% YoY
EBITDA at Rs. 184 million, a 4% QoQ and 83% YoY increase
Consolidated Revenues for the quarter stood at ₹1,184 million
EBITDA Margin improved to 15.58% in Q3FY24
Profitability after tax reached Rs. 46 million
Consolidated gross cash at the end of the quarter was Rs. 882 million
Business Expansion and Partnerships:
Advertisement Screen Network expanded to 3,407 screens
Tie-up with TSR Films to expand advertising screen rights to 3,808 screens nationwide
Upcoming movies pipeline includes various titles
Expected growth in revenue from State Government spending
No significant costs incurred for the concluded JV with Qube
Caravan Talkies saw decent business in Q3 and Q4
Financial Strategy:
Reduction in gross debt
Anticipated Capex for the upcoming year ranging between INR 40 crores to INR 50 crores
Expectation of maintaining modest buffer in cash reserves while reducing gross debt
Advertising Strategy:
Expected growth in advertisement revenue by increasing minutes sold per screen
Capacity to sell ads expected to increase with higher screen occupancy
TSR deal involves acquiring exclusive advertising rights to expand presence in southern markets
Advertising prices have been on an upward trend
Continued focus on increasing advertising minutes sold per screen
Market Outlook:
Expectations to continue positive momentum with upcoming movie lineup
Positive outlook on the future of the business with a focus on growth and expansion.
