54-56 cr for FY 21-22 bottomline is extremely conservative. TTM profits are already 52 cr because June 20 and September 20 quarter revenues and profits were half of the next three quarters. Even if there is no growth over the next few quarters from increasing paid subscription or ad revenues for streaming sites, Tips should conservatively do 65-70cr bottomline this FY. If there is growth, it can be higher.
Plus they will demerge the films business so the mustc business margins may rise further.
I think the Saregama premium, in spite of some lower returns businesses, is because of two factors:
- Promotor perception
- The market believes that with the larger song library and cash flows, they have more funds for incremental song aquisition as compared to Tips. And since listenership is generally skewed towards newer songs, listenership of Saregama songs may increase faster than Tips songs.
How Tips does on new song acquisition is the key monitorable for me. If they are able to acquire smart, the premium will definitely narrow.
Disclusure: Invested in Tips.
Full portfolio here The Vineet Jain portfolio