Emkay Global Financial's research report on Saregama India
As the oldest music label in India, Saregama boasts of an enviable catalog of older-generation songs that are nearly impossible to replicate. Company is now putting the pedal to the metal on acquiring new content, to close the gap with the market leader and ensure that it remains relevant even a few decades later. The music licensing industry has flourished, with waning of piracy; Saregama has capitalized on this opportunity, consistently exceeding industry growth. We expect the steady growth to endure, though transition from the ad-supported to the paid-subscriber model for OTTAs might be a temporary speed-breaker. It now has its foot in the door to explore the fast-growing digital media landscape via its recent acquisition of Pocket Aces. Ramping up of non-music segments will offer added growth impetus.
Outlook
Growing digital revenue and ramp-up of paid subscribers ensure a long growth runway. We initiate coverage on Saregama with BUY and DCF-based TP of Rs 465/sh (25% upside).
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