Hi Saket,
I am invested in saregama so i know a bit about the business but it is a biased view.
- Yes correct, this gap is typically 1 to 3 years so average 2 years. The music they purchased the music rights of in say 2021, will actually come out in 2023. So content acquisition goes in different PnL and Sales come in different year PnL statement.
- I do not have a clear answer. I think no one has. This is my perspective.
Right now huge investments are going into 5g by Reliance and Airtel. User acquisition is still happening in telecom and will continue for next 2-3 years. Whatever platforms they telcos have like Jio saavan or Airtel Gaana (Youtube is independent). Consumers will consume content (Music) as long as cost of data is low in India. - Yes, This has started happening. Content acquisition cost will only rise.
- I do not know. I guess unless Saregama mess up capital allocation should be ok. They are very old company, they have experience on their side.
Yes hard to know true E but easy to know that this is high margin business. We can check other competing businesses (Tips)
Saregama margins should improve with time as the contribution from music increases over other segments. More users and better margins i guess should support atleast 20% earnings growth for next 3-4 years unless again they mess up capital allocation.
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