Saregama India's revenues for Q4FY21 increased 13.6% YoY to Rs. 123.5 crore with growth led by the TV & films segment, which was up 27.8% YoY. Carvaan sales volumes were up ~49% YoY to 110,000 units in Q4FY21, on a depressed base. EBITDA grew 59.9% YoY (down 14% QoQ) to Rs. 34.4 crore with EBITDA margin at 27.8% (up 806 bps YoY and down 205 bps QoQ, respectively). Cost reduction, mainly in promotion costs for Carvaan and lower other expenses (lack of new content), led to strong growth in operating profit YoY. Subsequently, reported PAT was at Rs. 37 crore, up 134% YoY, also aided by higher other income (Rs. 18.6 crore vs. 3.4 crore in Q4FY20) due to dividends from CESC and interest on IT refund.
Valuation & Outlook
We underappreciated the monetisation push led by digital consumption via streaming and social media platforms coupled with consistent cost discipline. Thus, we now raise our margins estimates to 27.5%, 27% for FY22, FY23 vs. 24%, 23% earlier, respectively. We, however, believe the sharp run-up in stock price (up 87% in last three months) already factors in all positives and valuation is demanding at 22x FY23 P/E wherein margin may taper with new content cost charge. We raise our target multiple at 21x P/E (vs. 14x, earlier). We maintain HOLD with a revised target price of Rs. 1825 (vs. Rs. 1000, earlier). New music acquisition and its monetisation along with pull of older content will be key monitorables. We will track the strategy of converting Carvaan into a platform and its monetisation ahead.
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Shares of SAREGAMA INDIA LTD. was last trading in BSE at Rs.1976.55 as compared to the previous close of Rs. 1908.6. The total number of shares traded during the day was 5845 in over 1151 trades.
The stock hit an intraday high of Rs. 2000 and intraday low of 1872. The net turnover during the day was Rs. 11329401.