I would just like to make a point on Akashdeep’s observation regarding free music. People were listening to music for free due to piracy. Due to advent of apps, you cant have it for free any more. That is helping plug the revenue gap a lot. Once you move to listening music with ads, next step would be to pay to listen to music without ads.
You have to see it as steps, piracy music-> free music with ads → paid membership.
India is transiting from 1st stage to 2nd stage and will move to 3rd stage as the Disposable incomes increase.
When we say the music label gets paid per song played… do they get paid if the song is played in full ? or they get paid even if i play a song for say the starting 5 seconds…dont like the song and then move to the next song ? (apology if the question seems to naive
When the music platform like Youtube or gaana get paid subscribers, Do the music labels have a different revenue model here for paid subscribers ? since they r already getting paid per stream basis irrespective if the customer is paid or not, isnt it ?
In my view Tips is the better capital allocator. They did a buyback during the covid drop, they are going to demerge the music business and are not into any low margin business like saregama. Saregama also seems to pay out a dividend now and wants to raise capital via a QIP which does not look like good capital allocation to me.
They also have a policy where they write off the content aquisition cost every year unlike saregama which amortizes over 5 years. So Tips profits are understated.
Yes Tips song catalog is smaller 30k songs compared to Saregama’s 130k but you are also paying a lower price for it. And Tips is at a 30X multiple compared to Saregama’s 55X multiple right ?
Would love to hear the other side of the argument on this
To add to that I believe Tips songs are from 90’s which are more relevant than sargema’s collection which dates back to 60’s, 70’s, 80.'s too, I dont have data to back this point its just a guess , please correct me if i am wrong here.
The quality/popularity of the music portfolio can possibly be judged from the number of YouTube subscribers:
Saragama Music - 24 million
Tips Official - 46 million
That is not a good way to judge the quality in my opinion. Most of the videos of Saregama on their YouTube Channel are Lyrical videos whereas TIPS has video + audio, hence more views.
Better way to check would be how many people listening to music owned by these music labels on streaming apps like Sportify. (I don’t have that data)
I have the same doubt why Tips is trading at 30X and saregama at 60X but if we look at margins and business Tips is like pure music company(by demerging of film business) But saregama has low margin business like Carvaan (40-50% of total sales), Film & TV Segment (around 15% of total sales), Open Magazine. and only it has higher song library than Tips and generating net profit of 130 TTM than 40 TTM in Tips which is like Triple. In future Tips can over take the profit of saregama based on double the margin it has. Can any one explain why Saregama is trading at double the valuation than Tips. Like to invest in music Industry.
Because it is a larger company and part of RPG group which gives institutional investors more comfort than TIPS.
Very common for larger companies to trade at higher valuations. For example Havells trades at a massive premium to Crompton Consumer. Kajaria Ceramics trades at a big premium to other ceramics stocks.
So the hope is the big discount between TIPS and Saregama will narrow and off course earnings will grow which will provide the returns.
Yeah based on management Saregama is in better position than Tips and whether any thing based on business like Saregama trying different like carvaan (which is affecting overall margin of business) and Tips doing nothing.
My take on this is that the market is betting on a better future Potential for Saregama because of the capex/incremental spend to acquire music, which for Saregama is 10X of tips which would give them access to much more music content. The kind of deals that Saregama has signed are Pretty huge like tieing up with Sanjay Leela Bhansali for his film’s music and this paints a very bright future for Saregama and i think that the market is discounting that.
Since it’s a public forum we better be correct in our wording for such a specific thing, unless we are specifically skilled in matter of law.
Law’s main maxim/principle is "innocent till proven guilty’.
So you see, even if tomorrow you/me/anyone we know of, is accused of any crime, once he/she is acquitted, he/she is clean & innocent just like he/she was, before the accusation. People can talk anything behind the 4 walls based on their limited knowledge, but for public discourse, the person is innocent.
This promoter underwent the ordeal of something as painful as murder trial for 24 long years and has been finally acquitted by Bmobay HC. So, let’s respect our own democratic institution’s also and not trivialize a crime like murder saying ‘which is solved now’. Hope you understand.
Please have a look at segment results. It’s the distribution business which has shown big revenue and hence the jump. To my understanding this business will be hived off.
