Shemaroo FY26: Digital Growth, Traditional Weakness, and the End of Inventory Charge-Offs

Shemaroo Entertainment Limited closed FY26 with a difficult set of reported financials, shaped by a sharp decline in Traditional Media revenue, continued investments in new initiatives, and the final quarter of its accelerated inventory charge-off cycle.

On a consolidated basis, revenue from operations for Q4 FY26 stood at INR 139.5 crore, down 31.7 percent year on year. EBITDA for the quarter was a loss of INR 87.2 crore, translating into an EBITDA margin of minus 62.5 percent. Net profit after adjustments was a loss of INR 72.1 crore.

For the full year FY26, revenue from operations was INR 583.1 crore, down 14.9 percent year on year. The company reported an EBITDA loss of INR 264.8 crore and a net loss after adjustments of INR 218.6 crore. Management highlighted that reported profitability includes expenses on new initiatives of INR 56.5 crore in Q4 and INR 155.3 crore in FY26, net of revenue.

Segment mix continued to shift toward digital

The quarter again highlighted a widening divergence between the company’s two disclosed segments. Digital Media revenue grew 17.1 percent year on year in Q4 FY26 to INR 66.5 crore, while Traditional Media revenue declined 50.5 percent to INR 73.0 crore. For FY26, Digital Media grew 9.0 percent to INR 274.7 crore and Traditional Media declined 28.8 percent to INR 308.4 crore.

Management attributed the Digital Media growth primarily to momentum in syndication and an expanding ShemarooMe subscriber base, which it said grew more than 30 percent year on year during the quarter. On the Traditional Media side, the company cited a weak advertising environment and a slowdown in syndication. It also reiterated that syndication revenues are inherently lumpy, and Q4 FY25 had a high base.

Management also said the near-term advertising outlook for traditional businesses is expected to remain subdued. It pointed to macroeconomic pressures, geopolitical tensions and large sporting events like the IPL drawing a larger share of ad budgets, especially impacting non-sports categories.

Financial summary

Note: Figures are consolidated and presented in INR crore, converted from INR Mn in the company presentation.

Inventory charge-offs reached the finish line

A major accounting theme for Shemaroo over the last nine quarters has been the accelerated inventory charge-off program. In the investor presentation and on the concall, management stated this quarter marked the final quarter of the charge-off cycle, in line with earlier guidance.

The company indicated that inventory reduced by about INR 400 crore over nine quarters. Management cited inventory falling from about INR 738 crore in H1 FY24 to about INR 339 crore by March 2026. It emphasised that these charge-offs are accounting adjustments and do not affect the monetisation potential of the content library or the ability to generate free cash flows.

For investors, the conclusion of the accelerated charge-off cycle matters because it removes an additional P&L headwind that has compressed margins. Management also linked the inventory reduction to a healthier inventory position and a stronger balance sheet foundation as the business enters its next phase.

New initiatives and where FY27 expectations are set

The company disclosed that its P&L includes expenses on new initiatives, net of revenue, of INR 56.5 crore in Q4 FY26 and INR 155.3 crore in FY26. On the concall, management clarified that the new initiatives bucket is largely driven by Broadcast and the OTT business, ShemarooMe.

Management acknowledged that spending on new initiatives exceeded what some investors expected earlier, attributing it mainly to the broadcasting business. It cited challenges including a slower ad market and the entry of major broadcasters into the free-to-air space, which impacted monetisation.

For FY27, management did not provide numeric guidance on revenue or margins, but it did state that new initiative spending is expected to be significantly lower than FY26 and likely less than half of FY26 levels, based on its budgeting.

Digital-first strategy and content expansion

The company positioned FY27 as a period where it intends to lean further into a digital-first roadmap. Management spoke about expanding Shemaroo’s presence across digital ecosystems in domestic and international markets, improving monetisation and content discoverability, and using technology and AI to drive efficiencies.

Operationally, Shemaroo highlighted several content and platform updates from Q4 FY26:

• ShemarooMe Gujarati released six new titles spanning movies, web series and plays. It also hosted world digital premieres including Chaniya Toli, Naankhatai, Faati Ne, Goti Lo and Subhchintak (Hindi Dubbed).
• ShemarooMe Hindi premiered its first original Hindi web series, Dil Dhokha aur Desire, under the Shemaroo Premiere banner.
• On YouTube, Shemaroo FilmiGaane surpassed 74 million subscribers and Shemaroo Ent crossed 61 million subscribers. The company said it garnered more than 9.0 billion views during the quarter across its portfolio channels.
• The company also co-produced its first Turkish drama series, Aska Mahkum, with Globalsphere Studios.

Notably, management declined to provide revenue splits within Digital Media such as YouTube versus OTT versus syndication, stating that it continues to report only Digital versus Traditional.

Traditional business: managing decline rather than forecasting a rebound

In Q&A, management offered a clear view that it does not anticipate significant growth acceleration from Traditional Media. It highlighted a structural shift of advertising spends toward digital, along with cyclical weakness in the overall ad environment.

While traditional remains a large business, management’s framing was that the company will manage it through a declining phase, while shifting resources toward digital-first initiatives.

Takeaways

Shemaroo’s FY26 performance reflects a business in transition. Digital Media continues to grow, supported by syndication momentum and subscriber growth in ShemarooMe, while Traditional Media has been sharply impacted by ad weakness and the lumpy nature of syndication.

The end of the accelerated inventory charge-off cycle is a key milestone management has reiterated, and the company is positioning FY27 as a period to move forward with a cleaner inventory base and lower incremental charge-off burden. The other watchpoint will be the extent to which new initiative spending reduces in FY27, as indicated by management, and whether digital growth can sustainably offset continued pressure in traditional revenue streams.