Things to note down for tips industries –
- The company has brought in seasoned management. They have invested in software upgradation.
- The company’s moat is a library of 30,000 songs, which will help them earn for the next 10 years. The major money-makers are 90s songs. The growth will continue to come from revised contracts/ new deals. 30% growth looks unsustainable beyond the next few years. Ultimately, they will converge to the industry growth rate of 14-15% plus or minus 2%.
- With new management, I hope they are taking an analytical approach to content acquisition, making sound assumptions on music’s ability to earn Vs acquisition cost.
- The company’s acquisition cash flow is quite less because they are bound by 30% topline and accruing everything in the same quarter. Whereas, Saregama is aggressive with cash outflow on acquisition. Being conservative, you can be picky on good music. Whereas, being aggressive can lead to a “spray and pray” approach.
- I hope that the company should master their ability to forecast music success. I will be happy if they invest in AI/ ML technologies to do the same.
- The other good thing I am hearing is comany’s focus on quality Vs quantity. You attract more audience with one superhit song Vs multiple flop ones. Also, superhits help you position your portfolio in front of the downstream players.
- I am quite hopeful for aggressive growth in next 3 quarters due to Warner deal. What will be next year’s catalyst? That is the question. If they keep on finding these catalysts, the stock should do good.
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