Saregama India Ltd: India’s premier music publishing label

A few snippets from the investor presentation

QoQ growth of 13% in Youtube views
image

Carvaan sales at 156000 for Q2, 60% QoQ growth. They continue to stress that tight marketing cost controls will continue

Profitability of the films and web-series vertical (Segment EBIT margin) has dropped steeply in H1 FY23 compared to H1 FY22. It is probably related to timing issues but worth asking Management about in the concall

Overall, judging by the Q results of Netflix, Spotify and now Saregama doesn’t look like OTT consumption of media has taken a hit yet, although YouTube’s ad revenue has fallen a bit QoQ and YoY. Many had feared that recession fears and the end of WFH will cause significant reduction in OTT consumption. This remains a data point to be monitored in the upcoming Qs.

3 Likes

Investment in Property,Plant & Equipment and Intangibles @ 42.3cr
Investment in Saregama Trust @ 7.4cr
Total of above @ 49.7cr (Spent on low ROI assets)
Quarterly PAT @ 46.1cr (a little more than entire quarters PAT gone on unproductive Investments)

Hoping to get clarity in Concall tomorrow.

Disc- Invested

1 Like

How did you deduce the 42 crore as low RoI assets? It says ‘P,P,E & Intangible assets’, where would they show their investment in new music catalogue otherwise?

I actually see it as investment in ‘New music catalogue’.

2 Likes

Any addition in music catalogue would be under Cash flow from operations- under the head changes in inventory.
Investments under “Investing activities” are supposed to be non-Operational investments.

This could be an intangible- The Investor presentation doesnt talk about any acquisition hence assumed theres no deal/takeover that accounts for intangibles.

For the break-up of increase in asset base, it is better to refer to the Balance sheet-

I am looking at non-current assets only, total increase is 35 crores, intangibles (mainly music rights) increased by 18 crores.

Increase in Other non-current assets is 16 crores, significantly higher than March 2022 but total no. of 45 crores is still not very high compared to total non-current assets base of 490 crores. But I guess it doesn’t hurt to ask the reason for this increase.

2 Likes

Great ! Thanks for the explanation. Stand Corrected :+1:

Any update on concall?

Q2FY23: Another 20%+ Quarter

  1. Music Licensing business has again grown at a rate of more than 20%. ASP of Carvaan has fallen thus previous ASP not valid for computation.

  2. Very big Quarter for Bhojpuri Division of Saregama, 2 massive hits this Quarter.

  3. Regional music like Bengali, Gujrati, Punjabi, Bhojpuri- all 3 have done well.

  4. Announced a long term tie up with Arjit Singh this Q.

  5. On QIP Money: only acquired Mango music catalogue. Money kept aside for inorganic purchases, This capital will only be used for the music business.

  6. Many of the films for which they have acquired music will start going live in Q4 this year, and spill over to Q1 & Q2 next year. (Rocky rani Karan Johar etc etc). This is the lag between content acquisition and release.

  7. Carvaan had an upswing this Quarter, latest variant is carvaan mobile. Which replaced Carvaan go. Price point is at 2000-2500rs. 50% increase in units sold. ASP has fallen here, due to smaller variant products. All sale is through customer pull and no advertisement. Revenue increase isn’t as much as 50% as you need to sell 2-2.5 mobiles to get to 1 carvaan realisations. Not spending at all on Carvaan.

  8. YouTube numbers are globally different vs Indian. YouTube views for Saregama has increased QoQ. Over last 4 Quarters, own channel numbers are growing much faster than user generated content. Views are growing faster than any other label.

  9. YouTube shorts deal was a part of this quarter. (Instagram deal wasn’t- what I understand)

  10. Deals are becoming better, due to better quality of content and newer content. Gives them better position to negotiate.

  11. Got approval for demerger from SEBI and filed in NCLT, will take 4-5 months. Will complete by March 23.

  12. Guidance for 22-25% growth remains in music licensing business. Music business hasn’t experienced any type of slowdown.

  13. Bonuses to employees are given in Q2. Improved employee expenses to 11% in Q2 vs 13% last year in the same Quarter.

  14. Events business is currently combined with Films & TV. Is a low margin business. This is an essential business to manage to build relationship for music business. eg: Events for Diljit and then doing music with him.

  15. Sticking to 32-33% OIBCID margin guidance. Even though this quarter they have done 37-38% OIBCID margin. Due to event business, possibility of having a large event business of 30-40 crore business coming in. If it was purely music, would have done 37-38%.

Retains growth guidance of 20-25% in the medium and long term for the music licensing business

Disclaimer: invested.Fears of a slowdown have been misguided it seems… Remains one of the cheapest consumer stories… given the margin profile and being a play on the internet growth story.

31 Likes
Q2
Carvaan Sales 156000
Avg Realisation 2500
Music Total 150
Q-o-Q 19.05%
Y-o-Y 23.97%
Carvaan Sales 39
Carvaan Q-o-Q 39.00%
Carvaan Y-o-Y 32.25%
Licensing 111
Q-o-Q 13.33%
Y-o-Y 21.30%

for every Rs100 change in avg realisation price of carvaan the licensing music revenue growth goes up by 2%.
If the avg realisation for carvaan is Rs2400 then the q-o-q & y-o-y growth for licensing business will be 15% & 23% respectively.

As per my understanding the realisaiton of 2500 is on the higher side. Even at that price the growth rate looks very healthy.

Please note: My assumptions here is that in the last qtr the avg realisation was ~Rs 2850. The whole calculation depends on my assumption.

5 Likes

Hi @Rajat4636

Views remain the same.

Disc: invested since 2020. Holding and no changes.

Never gave any reco to buy or sell. Pls form your independent views :pray:

10 Likes

2 Likes

I wonder why? Its a pretty substantial amount. @saurabhkhandel_ How do I get the interest earned on this, basically the loan rate?

any update on concall?

Heard Saregama’s concall in the afternoon, broad takeaways:-

  1. Reiterated Growth guidance of 23-25% in Music licensing business.

  2. Major Hindi Launches coming up, if you check the main channel. Then views have barely grown due to no launches. Its the regional channels like Bhojpuri and Punjabi which led to growth.

  3. Music Licensing Business grew at more than 20%+ again this Quarter. Carvan realisations have fallen
    .

  4. They have announced Rs3 dividend per share.

  5. Will only invest QIP money when a suitable opportunity comes up and won’t do acquisitions just for the sake of it.

Near term risk:-

Margins might come down a bit due to lower margin business like events, movies etc increasing. I think events here are joined at the hip with licensing business to drive growth over there.

These were the short notes in a nutshell. Might have missed a few points, will keep updating.

Disc: no reco to buy or sell. Added in last 30 days. Not an Advisor.

15 Likes