Saregama India Ltd: India’s premier music publishing label

Agree with narratives that there might be a slowdown, but it isn’t yet showing up in data. Q1 has always been soft. Yet from Q4 (Q3&Q4 seasonally the best Q’s). The company has still grown revenues QoQ in licensing division:-

Secondly, the pre-ceding Quarter and the current Quarter has been weak in terms of launches. This becomes clearer from the fact that majority of the content that was acquired last year will get launched in H2 this year or by Q1 next FY. Here:-

Thirdly, Capital allocation. Ideally, no one likes the Carvan division, but if the product is contract manufactured and little capital is deployed. How does it matter? Wasn’t decision to Demerge the magazine biz a bigger positive here?

A Quarter or two of softness or even some consolidation in the stock is good after a huge run up we saw. Helps to build more clarity for people already holding the business.

Multiple approaches one can take here:-

1. One can act like a positional trader/investor, and re-enter when the growth journey resumes.

2. One can just sit tight, and accept such bumps of quarterly variations as a part of the journey. In India, Paid subscriptions haven’t even taken off. Find it hard to digest how a recession directly impacts. Indirectly yes, unviable businesses like Gaana might suffer. In USA, last I checked market is pretty consolidated:-

Yet, the Labels make the money and control nearly 60% of the profit pools of the industry.

Last I checked, this Q Spotify’s revenue also grew at a very healthy clip and they ended up beating all the estimates. Here:-

What can the long term picture be here like and a counter view point to consolidation?

Disc: invested. Willing to take Quarterly bumps and not trade around too much in personal pf.