Q3 FY26: Shemaroo’s digital rise is real, but losses keep mounting

MUMBAI: Shemaroo Entertainment’s long-running pivot to digital is showing traction—but not nearly enough to stem the bleeding from its traditional media business.

The Mumbai-based media company reported consolidated revenue of Rs 1,607 million for the December quarter, down 2.25 per cent year-on-year, as a 13.8 per cent jump in digital media revenue failed to offset a 14.4 per cent slide in traditional segments. For the nine months ended December 2025, revenue slipped 7.75 per cent to Rs 4,436 million.

Losses, however, widened sharply. The company posted a consolidated net loss of Rs 554 million for the quarter, compared with a loss of Rs 364 million a year earlier. EBITDA plunged to a loss of Rs 674 million, pushing margins deeper into negative territory, with EBITDA margin deteriorating to minus 41.93 per cent.

For the nine-month period, net loss ballooned to Rs 1,465 million, while EBITDA losses swelled to Rs 1,776 million. Earnings per share for the period stood at minus Rs 53.60, underscoring the scale of the deterioration.

Costs told much of the story. Operational expenses climbed to Rs 1,501 crore in Q3, while employee benefit expenses rose to Rs 360 crore. Finance costs remained elevated at Rs 75 crore for the quarter and Rs 223 crore for the nine months, reflecting sustained balance-sheet stress. Loss before tax widened to Rs 756 crore in the December quarter.

Management attributed the weak performance to a bruising mix of industry headwinds: the return of major broadcasters to FreeDish, an overcrowded sports calendar and persistent softness in FMCG advertising, which hit traditional entertainment revenues hardest. While a recent GST rate cut is expected to stabilise advertising spends, margins are likely to remain under pressure in the near term.

Digital, however, continues to be the clear bright spot. Digital media contributed Rs 807 million in Q3 revenue, lifting its share of the business to 37 per cent, up from 20 per cent in the pre-2018 era. The company’s YouTube network clocked more than 9.5 billion views during the quarter, with Shemaroo FilmiGaane crossing 74 million subscribers and the flagship Shemaroo Entertainment channel topping 61 million.

On the content front, ShemarooMe released six new Gujarati titles across films, web series and plays, including world digital premieres such as Jai Mata Ji Let’s Rock, Auntypreneur, Shubhchintak and Vicki Ki Baraat, as it doubled down on regional and language-led storytelling.

Despite the red ink, the company maintained that much of the pain is accounting-driven. Inventory charge-offs linked to initiatives launched eight quarters ago, it said, have no bearing on content monetisation or free cash generation. The focus now is on shoring up the balance sheet, tightening operations and extracting long-term value from its digital assets.

Standalone numbers mirrored the pressure. Shemaroo Entertainment’s standalone net loss widened to Rs 557 crore in Q3, with nine-month losses touching Rs 1,489 crore, even as standalone revenue for the period reached Rs 4,166 crore.

Beyond the income statement, legal risks continued to loom. GST authorities have raised demands of over Rs 7,025 lakh, alongside penalties exceeding Rs 6,334 lakh, with additional penalties of Rs 133.61 crore each imposed on senior executives. While interim stays were granted by the Bombay high court, an appeal was disposed of in the department’s favour during the quarter. The company has since moved the Goods and Services Tax Appellate Tribunal and filed an updated writ petition, with hearings pending.

The unaudited results were reviewed by the audit committee and approved by the board at a meeting held on January 29, with statutory auditors Mukund M. Chitale & Co issuing a limited review and flagging no material misstatements.

Investors remain unconvinced. The stock closed December at Rs 108.70, well below its 52-week high of Rs 184, and has lagged the Sensex over the past year.

For Shemaroo, the verdict is stark: digital momentum is undeniable, but until legacy media, costs and legal overhangs are brought to heel, the recovery story remains unfinished.