Watch the interview of SP Tulsian of sptulsian.com with Anuj Singhal, Latha Venkatesh & Sonia Shenoy on CNBC-TV18, in which he shared his readings and outlook on fundamentals of market and specific stocks.
Below is the verbatim transcript of the interview.
Anuj: What is your long term stock bet?
A: My long term stock pick is Saregama India and in fact this is a company belonging to RP-Sanjiv Goenka Group holding the old music library rights. They have a rights over about 1.2 lakhs songs and we all know that old songs and all that and apart from that they have 3,000 hours of Tamil TV serials, they have the library. Now coming on specifically on Q3 numbers, in fact there is a lot of confusion, people have seen this Q3 numbers has bad. But I think that is a wrong analysis in fact I have been seeing that in many of their results somewhere the links are missing and not able to analyse the results properly by the few experts or may be by the analyst.
If I just come quickly on the numbers for this company they have posted income of Rs 94 crore against Q2 of 84 crore. If you take a call on the Q3 they have provided stock appreciation rights provision of Rs 7.75 crore. In fact the word SAR the word which we have used is stock appreciation rights this is nothing but employee options the employee stock ownership plan (ESOP) which are offered to the employees in a similar way. So, profit before tax or maybe I would say that the profit before tax without SAR provision rose to Rs 12 crore from Rs 2.45 crore on a YoY basis and even on QoQ basis this was marginally up.
After deducting this SAR provision of Rs 7.75 crore the profits have seen flattish or maybe little lower on QoQ basis though it has shown the excellent numbers on YoY basis. Now the main kicker for the company in Q3 has been the music business where the growth of 114 percent has been seen and now 60 percent of the music business is coming from B2C because the company has launched their radio kind of instrument that is called Carvaan which is pre-loaded with 5,000 hindi songs and that was launched in the later part of first half for Q1 of FY18 when they sold about 14,000 pieces, in Q2 they have sold 95,000 pieces and Q3 they have sold 1,32,000 pieces and I tell you that radio instrument is really working excellent response and I think that the sales will keep moving up like this.
Coming quickly on the music revenue for 9 months of FY18 they have shown music revenue of Rs 202 crore against Rs 101 crore of the same period last year with an EBIT having almost doubled to Rs 60 crore from Rs 30 crore. It is a debt free company cash is of about Rs 140 crore in the books which translates to Rs 80 per share. If you take the valuation of all this library effectively it gives you Rs 50,000 value for each song. You can just imagine the kind of potential which they are capturing by B2C and by FM radio and all that seen mushrooming so taking all this into consideration shares having corrected post this numbers to Rs 690 now looks a good buy with a price target of about Rs 830 in next six months or so.
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