Saregama India's revenues for Q3FY21 increased 3.4% YoY to Rs. 133.9 crore with growth being led by TV & films segment (Q3FY20 revenue was also impacted due to dip in Carvaan sales). Carvaan sales declined ~30% YoY to 138,000 units in Q3FY21. EBITDA grew 193% YoY to Rs. 40 crore with EBITDA margin at 29.9%. Cost reduction across all fronts (except for TV & films production), mainly in promotion costs for Carvaan and other expenses led to strong growth in operating profit. Subsequently, reported PAT was at Rs. 31.6 crore, up 211% YoY.
Valuation & Outlook
Increasing digital consumption via streaming and social media platforms has enabled the licensing revenue growth and has supported the company in a challenging year. New music acquisition and its monetisation along with pull of older content will be a key monitorable. Minimal marketing spends on Carvaan and other cost cuts will support the operating margins in the near term. However, subdued Carvaan sales and delay in its ramp up will limit overall growth. We will track the strategy of converting caravan into a platform and its monetisation. Although margins resilience has been surprising, we believe sharp run-up in stock price (up 61% in last three months) has already factors in all positives. We roll over our valuations to FY23 and raise our target multiple at 14x P/E (vs. 13x FY 22E P/E) to account for improved margins. We maintain HOLD rating with a revised target price of Rs. 1000/share (previous TP: Rs. 680/share).
For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Saregama_CoUpdate_Jan21.pdf
Shares of SAREGAMA INDIA LTD. was last trading in BSE at Rs.946 as compared to the previous close of Rs. 955.55. The total number of shares traded during the day was 3793 in over 633 trades.
The stock hit an intraday high of Rs. 979 and intraday low of 928.65. The net turnover during the day was Rs. 3596857. |
