Q1_2025 concall takeaway (Source: Screener note)
Financial Performance:
- Q1 FY25 operating revenue stood at ₹205 crores, representing a 26% year-on-year increase.
- Profit Before Tax (PBT) was reported at ₹51 crores.
- EBITDA increased by 9%, maintaining 33% of revenue, aligning with guidance for adjusted EBITDA.
Music Segment Insights:
- Music segment revenue showed a decline primarily due to the scaling down of Carvaan.
- Management reassured that music revenue, combining music and artist management, is on track for 25%-26% growth in FY25.
- Major releases included “Tauba Tauba” from “Bad Newz,” which topped multiple charts, including global YouTube and Spotify.
- A total of 330+ original and premium recreation songs were released across various languages.
- Upcoming releases include music from high-profile films such as “Stree 2,” “Jigra,” and more.
Artist Management:
- Over 150 influencers and music artists are now part of the portfolio, collectively boasting over 100 million followers.
- Artist management is expected to contribute significantly to revenue, with a target of 25%-30% growth in new music releases over the next 3-3.5 years.
Content Investment Strategy:
- The company is in a transitional phase, increasing content investment by 48% year-on-year.
- Long-term strategy includes investing over ₹1,000 crores in new music content over the next 3 years.
- Emphasis on a 5-year payback period for content investments, with the expectation of significant long-term returns.
Video and Event Segments:
- The video vertical is expected to grow at a CAGR of 25% over the next 5 years, driven by increased smartphone ownership and affordable data.
- The events business, while low margin, is projected to yield high Internal Rate of Return (IRR) due to short capital lock-in periods.
- Notable events include the successful “Dil Luminati” tour in North America.
Carvaan Strategy:
- Revised retail strategy focuses on e-commerce and modern trade, leading to a significant drop in Carvaan revenue to ₹24.7 crores compared to Q1 FY24.
- The management expects improved profitability margins as costs associated with physical distribution are reduced.
Industry Trends and Challenges:
- Transition from free streaming to paid subscriptions is anticipated to enhance revenue realization.
- The management believes that piracy is declining in major cities, with a significant portion of users likely to migrate to paid platforms.
- Management remains optimistic about the future, projecting a consolidated revenue CAGR of 30% and doubling PBT over the next 3-4 years.
Guidance and Outlook:
- The management maintains a guidance of 32%-33% adjusted EBITDA and a minimum of 26% growth in music revenue for FY25.
- Confidence in achieving long-term growth while maintaining profitability, despite initial investments in new content.
Disc :Invested
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