The depreciation was primary due to the production and release of movie Bhoot Police and this was sold off/ given away rights of future licensing hence they need to write off expenses which they did using depreciation instead of showing it as expenses
They use this approach only for movies and not for songs
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Itâs Bhoot Police not Bhootnath
Nothing again TIPS, but saregama clearly show its strength in negotiations and tips not able of negotiate with 2 of the top streaming players.
I think in the last 2 quarters, tips is not able to produce any top 10 trending songs unlike saregama (pani pani of badshah, mazaa of B praak, shakhiya 2.0) and the recent of Madhuban with Sunny that is why they are not able to negotiate a deal on their terms (my thinking) And not to forget the large content library of saregama.
All the most viewed songs of TIPS are mostly old 3 to 9 year old. Clearly there is a lack of new blockbuster songs.
All this we can see in the valuation gap between Saregama and tips. Until some blockbuster songs come from tips , i donât think there will be any rerating.
Also actively tracking the demerger.
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Tips Punjabi had some decent traction in the past few months with music from top Punjabi stars. However, nothing close to Saregama. The highest viewed song had 6.2 crore views. In comparison, the three songs of Saregama mentioned above had 10, 20 and 60 crore views.
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From the latest Negen PMS newsletter which is publically available
An important decision by âT-Seriesâ which highlights the changing fundamentals of the OTT and Production industries.
Ok, so long story short:
âT Seriesâ recently made 2 movies (Chandigarh Kare Aashiqui and Satyameva Jayate 2) with strong casts and released them in Cinemas.
As you would have guessed, both FLOPPED badly.
This has apparently made âT Seriesâ rethink their production strategy and now they are planning OTT releases for a bulk of their upcoming projects.
(OTT âRightsâ guarantee money upfront)
Like we discussed in the past, the âOTT warsâ between Netflix, Disney Hotstar, Amazon Prime, Zee5 and some smaller players has resulted in big money and profits even for mediocre content.
*Now this just reconfirms our stance on Tips Industriesâ production business which is currently getting no valuation.
(The market still does not realize that the fundamentals of movie production marked for OTT release have changed forever).
Tips Industries to their credit have understood this.
First, they somehow made 25cr approx profit on a movie like âBhoot Policeâ and now, they are just repeating the winning process by launching more projects like âMerry Christmasâ which will see Katrina Kaif and will release in December 2022.
Conclusion: I could be wrong but sooner or later, the market will realize this change in fundamentals of the OTT production sector and will give valuation to TIPSâ Production business.
(In my opinion, currently the Production arm of Tips gets zero valuation. The entire share price is reflecting only the value of the Music business as per me).
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Tips looks Interestingly poised for a valuation closer to Saregama.
However not having fiiâs and diiâs Invested despite such strong future potential seems to baffle me.
Can few experts in the forum share their thoughts please?
Dis:Tracking and keen to Invest
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The difference between two is
- Management- one is professional run the other one is having an overhang of family business.
- Tips is not aggresive when it comes to acquistions and not savy and industry influencer and trend setter like that of Saregama
Disclosure I own both in equal parts of my PF
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I remember in one of the concall, they(TIPS) wanted to hire some senior professional, mostly to bring professionalism into game.
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Thats true but they are also cost conscious in hiring which they mentioned in one of the concalls and I donât think they are ready to hand over the operation to a new entrant.
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Yes, what i remember is they mentioned that they are looking for a senior professional to run the business till his son acquires required experience.
A deviant thought, maybe the films business will have a better risk-reward equation post demerger, not a compounding growth story but purely from value arbitrage perspective.
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Anyone with access, Summary please
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Tips Industries acquires global music rights of two Telugu films - Shaakuntalam and Hari Hara Veera Mallu!
2 big films with big stars and music by iconic composers Mani Sharma (for shaakuntalam) and MM Keeravani (for Hari Hara Veea Mallu)
While this is definitely positive news for Tips Industries, we need many more acquisitions like this from Tips to compete with Saregama.
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Good results
Music
- On 9 month basis 103 cr revenue and 67 cr profit ( 50% type YoY growth)
- on Q3 annualized they can do 180 cr revenue and 110 cr profit
Current mkt cap is 2700 cr, this is despite not being on top two streaming platforms in India yet. Tips seem to have three major growth triggers
- Upside as and when it happens will to sign up deal with remaning top two platforms (Gaana and Wynk?)
- Demerged entity will likely see better market / institutions participation- some rerating as music profit basis they are at sub 25 PE - significant discount to Saregama
- Industry level triggers such as subscription etc as and when it play out
- Film biz also at 9 month level decent margins biz - most will be not keen in it though
Good to see meaningful growth in music biz, keen to hear mgmt commentary
Invested
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Not yet. As far as I remember, they usually upload it next day of result.
Also a Quick Trend for Music Segment. Superb result after many Quarters of stagnation. Waiting for Concall / Presentation to know the reasons for this growth.
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The music segment growth was possibly due to the Punjabi Youtube channel. They has indicated this in the previous investor presentation as well.
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Iâm 99% sure thatâs not the reason. One Punjabi YouTube channel cannot add 12-13 crores of revenue in a quarter and that channel is there since many quarters. They have at least 5+ YouTube channels and their main channel Tips Official is the biggest, looking at it this way all their revenue of 44 cr is coming from YouTube only. So no thatâs not the reason.
Iâm also equally curious about where the growth is coming from. I think they might have signed 1-2 new deals in the quarter or there is a revision in the pricing of some existing deals or both.
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Sharing my Q3FY22 Concall notes of TIPS Industries:
- Released 86 songs highest in any quarter in this financial year.
- Total songs at 9 months: 203 songs
- Film division:
- No new release this quarter
- Will talk about film business after demerger.
-
Q: Where did the growth come from? Guided for 30% but did 41 YoY.
- Answer:
- From new releases, streaming platform, advertising prices increasing. (I did not like the answer- they should have elaborated on it)
- Management VERY VERY confident on 25-30% YoY growth for next 3-5 years. Profit 15-20%. Profits canât grow at same rate because of instant write off policy.
- From new releases, streaming platform, advertising prices increasing. (I did not like the answer- they should have elaborated on it)
- Answer:
- Management is looking for acquisition.
- They wonât shy away to spent more on quality content.
- Negotiation is a part of business and keeps on going.
- Management saying that there can be times when they wont agree with others terms but the deal has to happen in some quarter.
- Acquired content from Balaji Telefilm. Movie name: Freddy, Songs by Pritam with minimum four songs guarantee.
- Further, acquired 2 big telegu films and small 10-12 films also.
- Punjabi they have already acquired 4-5 films.
- They will keep focusing on regional content.
- Management says they are aggressive in acquiring in quality content but competition is there and sometimes they can compromise of getting back the returns period (eg: instead of getting money back in 2-3 years you get that back after 4 years).
- Management says that just because stock price is increasing that doesnât mean they have to go out and acquire any content at any price.
- When they do deal with a customer 99% of the time it is full content deal.
- Update on demerger: deadline of March or before April.
- They have seen substantially increase in paid viewers on YouTube. The monthly payout have increased from YouTube.
- For new release the formula they keep in mind that in 2-3 years they should get that money back.
- Q: Why there was drop in margin?
- Because of new content. This volatility will be there down because of constant new content acquisition, which they write off in the same quarter.
- Management says that judge them on topline basis.
- They have invested more on content due to which the margins fell.
- Because of new content. This volatility will be there down because of constant new content acquisition, which they write off in the same quarter.
- Warner Music Group (WMG) deal was done in September 2020 till March 2024.
- They are confident of giving 50% more than they kept the conditions. Like minimum song guarantee
-
Management has denied to share the names of the platform where they are not present.
- Further says that it happens with all music labels.
- Girish Taurani, promoterâs son, is the CEO of the company.
- All their deals of music is lump sum basis. There is no royalty to be paid or no minimum guarantee and this will be the future policy.
- Per stream they earn 7-8 paisa to 20-30 paisa players in industry get.
- Management believes that they would have gained market share this quarter.
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Sir, donât the industry leaders get 10 paise, and not 20-30 paise?
Are you talking about YouTube streaming over here?
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