Saregama Q4FY24 concall notes:
- Strong outlook:
a. Revenue and margin: Overall company level, revenue to grow upwards of 30% (exc. Carvaan) in FY25. Revenue to grow at 25-26% CAGR for next 3-5 years. Music licensing shall grow in 30% range. Music+Artist management revenue to cross 1,000 crores from 540 in next 3.5 years.
Adj. EBITDA at 32-33% to be maintained for next 3-4 years. This guidance does not include paid subscribers growth, that will be upside if it takes up.
b. Music content cost: 1000 crore will be invested in new content for next 3 years (includes marketing money). Will be funded internally (QIP money raised in 2021).
c. Carvaan to turn profitable – single digit mid-level profits
d. Video – Pocket access to grow at 25% cagr. Was loss making when acquired, in FY25 to it will break-even. Cost structure synergies, no synergy on topline.
e. PBT will double in 3 to 3.5 years.
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Revenue break-up FY24: Music licensing and AM: 544 crores, carvaan: 130 crores, video (pocket aces): 116 crore, events: 13 crores.
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Monetising artists also. Precondition for long-term contract.
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Music: OTT revenue negatively impacted by MG going away. This was offset by youtube and artist management.
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Charge of content 37% YoY.
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New investment in music content 200 crore in FY24 (80% jump vs. FY23). Intensive investment in new content.
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Content charge off will grow linearly going forward. So bottom-line will grow much faster after 18-24 months.
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Catalogue may grow in 16-18% range post pay (subscribtion) mode.
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Filter copy hit 1.2 billion views in FY24. To benefit from advertising growth.
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Audio and Video gives negotiation power.
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Need one more year for live events to take call on it.
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AI music learning app, changes will be made if required.
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Carvaan flattish revenue, taking away on-store resence of emlpoyees (not very sure on this part). Single digit mi-level profitability in carvaan targeted.
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From Q2, shall be back to old rates in OTT.
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In Q4/Q125 election impacted youtube advertising due to political campaigning.
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Music licensing revenue: Management: There is no one-off (no overflows).
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A&P cost (17-18 past run rate to 27 crores+ from now on) increased due to newer content and marketing related to that.
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Artist management: pre-condition to artist for a long-term contract.
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Netflix vs. theatrical: cost is lower in OTT vs. Theatrical (also count of screens taken into account). Chamkila example.
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513 crores intangible assets on balance sheet: goodwill 300 crore+ due to pocket aces. Liability increases due to commitment. 100 crores for music.
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New trend in USA: Gen G. 9 different LPsby Saregama so in line with global trends. Remains on top of whats happening across markets.
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Any film right re-sold: 3 movie licensed to second platform. That time making 1-2 crore movies so re-sell will not have much impact.
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Shift to paid from free: Saregama paid non-youtube subscription in India % grown by 40% in FY24. Now revenue for Saregama touched in double digit in crores.
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Charge off policy: life of content is 10-years. Marketing (~20%) gets charged immediately, remaining 80% - FY-20%, SY-15%, remaining spread over remaining years.
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Strategy for pocket aces: advertising moentisation. Digital advertising is huge growth factor. It chases eye-balls. Use both pocket aces and Saregama for negotiations. Use Saregama song through influencer. Use filter copy to advertise, product/services company don’t need to make separate ad for brands.
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Paying subscribers were 25lakh (bundled by telco also). 125 million cable and dth paying so paid subscriber is good. Within 3-year 50-75 million paid subscribers possible for industry – need to confirm this data.
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New content making money that’s why making profits. Payback period is 5 years. Last 4 years doing better.
Discloure: own around 3.5% of portfolio. Bought today in personal portfolio.
Disclaimer: I am not a financial advisor and nor a SEBI registered Analyst. The content shared here is only for learning purpose. All the names mentioned here are for example purpose. I may buy more, exit or partly sell the stock/bonds without any prior intimation . Also note that I recently joined a investment advisory firm. My portfolio is not a recommendation for anyone. Some of these stocks might be in clients portfolio as well so please be aware of vested interest.
