Saregama India Ltd Q2 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Abneesh Roy - Nuvama Institutional Equities - Analyst : Yeah, thanks, and congrats on good revenue growth. My first question is on the overall competition and the ecosystem. So Warner Music has said that India, along with China, will be their two most important focus market and they want to become much bigger. So I wanted to understand how worried are you because you clearly are ramping up significantly for the next three years? Is Warner's higher focus on India one of the reasons? So that's one part of the competition question. Second, Dharma production, 50% got sold to other Poonawalla. How does this impact because your company's name was also coming as one of the bidders? Eventually, that did not happen. So what was the thought process, why we did not go until the final acquisition? You could share your thought process on that and how this impacts buying from Karan Johar's Dharma production in terms of music rights? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2024 / 6:30AM, SARE.NS - Q2 2025 Saregama India Ltd Earnings Call

Question: Abneesh Roy - Nuvama Institutional Equities - Analyst : Sir, two follow-ups there. One, are you seeing initial signs of Warner Music bidding aggressively? And second, you don't see any change to your ability to bid for Dharma's future music rights, right?

Question: Abneesh Roy - Nuvama Institutional Equities - Analyst : Understood. Last question is essentially on your strategy of up-front three years, very aggressive spending on content. So one is, could you look at option B also where you remain aggressive, but because PBT growth rate will be much lower than the revenue growth, is there an option B available to, in terms of strategy, where you do it a bit more gradually. Second is on data point. So last six months where you have increased aggression, if you could tell us incremental market share in music. T-Series, Sony, We, Warner and You, how is it now in terms of the last six months, some data points in terms of market share?

Question: Abneesh Roy - Nuvama Institutional Equities - Analyst : And who will be the leaders there, Tamil and Punjabi?

Question: Abneesh Roy - Nuvama Institutional Equities - Analyst : Understood. And on the strategy part, if you could comment gradual versus very aggressive? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2024 / 6:30AM, SARE.NS - Q2 2025 Saregama India Ltd Earnings Call

Question: Abneesh Roy - Nuvama Institutional Equities - Analyst : Understood. That's all from my side. Thank you.

Question: Priyankar Sarkar - Square 64 Capital Advisors LLP - Analyst : Hi, sir. Good afternoon. One quick question. Why has the other current liabilities moved up to -- close to INR250 crores versus INR65 crores in March '24? And what does this exactly pertain to?

Question: Priyankar Sarkar - Square 64 Capital Advisors LLP - Analyst : Got it. But, I mean it was a sharp move, right, from INR65 crores to INR250 crores. So why that happened, I guess, in your industry?

Question: Priyankar Sarkar - Square 64 Capital Advisors LLP - Analyst : Fair enough. Thank you. That's the only question I had.

Question: Pulkit Chawla - Emkay Global Financial Services - Analyst : Thanks for taking my question. So my first question is on the music licensing side. If you look at the last couple of quarters, I think revenue growth has been slightly subpar. This quarter again, let's say, high single digits only. So if you could dwell slightly deeper into this trajectory, just trying to understand where the weakness is coming from in terms of platforms? So whether it's YouTube or any of the OTTs, which is sort of pulling out this growth. And second, also the margin side, for the overall music segment, that seems to have declined Y-o-Y even when there's a sharp decline in Carvaan where margins are obviously negligible. So is this decline in margin solely attributable to the higher content investment? Or is there something more here?

Question: Pulkit Chawla - Emkay Global Financial Services - Analyst : And on the margin point? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2024 / 6:30AM, SARE.NS - Q2 2025 Saregama India Ltd Earnings Call

Question: Pulkit Chawla - Emkay Global Financial Services - Analyst : Got it. Sir, secondly, on the event segment, clearly, there is obviously a great response for the Diljit's concerts that we had in Q3. If you could just explain what are the different sources of revenue that you have here? And how many -- how much revenue, let's say, that you typically would make on a per-event basis? You also alluded to some, let's say, change in strategy last quarter.

Question: Pulkit Chawla - Emkay Global Financial Services - Analyst : Got it. Thanks. That's all for me.

Question: Harssh K Shah - Dalal & Broacha Stock Broking Pvt Ltd - Analyst : Thanks for the opportunity. Two questions from my side. Sir, firstly, on the content, the music content that gets released in the industry on a yearly basis. Sir, is it the case that the number of songs are kind of going down, but the cost for each song is going up, and especially in the South Indian languages?

Question: Harssh K Shah - Dalal & Broacha Stock Broking Pvt Ltd - Analyst : Correct. So why I asked this question is because certain labels in the certain part of this country have kind of said that the cost of acquisition of the song kind of in say 2020 to right now where we are, the cost is going up. So meaning will that impact the payback period for at least that language? Or you don't see that happening?

Question: Harssh K Shah - Dalal & Broacha Stock Broking Pvt Ltd - Analyst : Okay. Secondly, on the video segment, sir, how should one kind of look at the media vertical in terms of the contribution to my overall revenue? I understand that this segment is kind of lumpy in nature where in one quarter, it should be high, another quarter should be low. But on an annual basis, how should one look at this segment in terms of contribution?

Question: Harssh K Shah - Dalal & Broacha Stock Broking Pvt Ltd - Analyst : Got it. And lastly, on the short format video platform. So here I'm talking specifically about YouTube short. So basically, they are kind of generating massive volumes in terms of views, but the monetization will kind of not to that extent. And considering how YouTube has changed the guidelines in terms of the definition of what a short video is, what sort of indicative time line do you all have in terms of when the monetization can start? I mean if you could give some color on that?

Question: Harssh K Shah - Dalal & Broacha Stock Broking Pvt Ltd - Analyst : Correct. So then can we expect that in the next three years, maybe within three years, we could see the monetization happening?

Question: Jyoti Singh - Arihant Capital Markets Limited - Analyst : Yeah, thank you for the opportunity. Sir, just wanted to focus on the language side. Sir, what is your view on the Bhojpuri songs side, which you mentioned we are getting high traction, which is still 2% for us as per last annual report?

Question: Jyoti Singh - Arihant Capital Markets Limited - Analyst : And we are on like number one, something on the Bhojpuri side or --

Question: Jyoti Singh - Arihant Capital Markets Limited - Analyst : Okay. Thank you, sir. And sir, any focus on working with the brand for the background music and like our competitor working on that side, if you can shed some light on that.

Question: Jyoti Singh - Arihant Capital Markets Limited - Analyst : Like a lot of label company, they are working with the brand to sometime it uses from the existing library like Bajaj and Marico, they use the music.

Question: Jyoti Singh - Arihant Capital Markets Limited - Analyst : And sir, if you could guide us on the margin side, how much we make on the brand front?

Question: Jyoti Singh - Arihant Capital Markets Limited - Analyst : Great, sir. And sir, just a last question. Like anything we are doing with the Netflix on the movie side?

Question: Jyoti Singh - Arihant Capital Markets Limited - Analyst : Okay. Thank you so much, sir.

Question: Jayesh Jain - DSP Mutual Fund - Analyst : Hello, hi. Thanks for the opportunity. I wanted to understand that if you adjust for the artist revenue, music licensing revenue has grown by around double digit. And given the spend you have done in the last one year, two years is about INR300 crores. So lot of this revenue growth has come from the addition of new songs. Has the monetization per song has not increased as far as we would have expected? And following to that question, does your five period payback calculation account for the anticipated rise in monetization per stream due to the known factors we all know? Could you just throw light on that? And how should we think about this?

Question: Jayesh Jain - DSP Mutual Fund - Analyst : Okay. So the five year payback period is on the current revenue per stream or broadly?

Question: Jayesh Jain - DSP Mutual Fund - Analyst : Okay, cool. And what is -- do you guys have an idea let's the acquisitive cost per song should be around so that IRR doesn't sort of fall below 26%.

Question: Jayesh Jain - DSP Mutual Fund - Analyst : Understood. I don't understand there is loss factor in the business, but you would have still some color on, let's say, high-end Hindi songs versus

Question: Jayesh Jain - DSP Mutual Fund - Analyst : Understood. So there is an implication of weighted average of songs and we could average the IRR of regions? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2024 / 6:30AM, SARE.NS - Q2 2025 Saregama India Ltd Earnings Call

Question: Jayesh Jain - DSP Mutual Fund - Analyst : Okay. Understood. That was very helpful. Thank you.

Question: Prolin Bharat Nandu - Edelweiss Public Alternatives - Analyst : Hi, Vikram. Thank you for sharing these insights. You have answered my question, but slightly more color on your comment on data-driven, AI driven model to buy the content. So can you tell me as to from that reliance on the model when we started, how has that model developed over the period of time? What is the way in which you marry the model with human intelligence? And if a competitor were to decide to follow a similar kind of an approach, how easy or difficult it would be? Is data the only differentiator or the key mode that model has? Can you just give some more color because everything hinges in a way on that and you're going to spend INR1,000 crores over the next three years. So can you help me better understand this part of the -- your business?

Question: Prolin Bharat Nandu - Edelweiss Public Alternatives - Analyst : Thank you. That's very clear. I want to probably drive your attention back. I mean you shared a part of your model back at the analyst meet, right, I mean, as to how you arrive at a particular pricing based on the artist and so on and so forth. So in the same presentation, you also had a projection in terms of FY28 where do you want to reach? And you said that the -- in the call, you said that the -- for five more quarters, the investment on content will continue to be high, probably higher than the quarterly run rate or half yearly run rate that you have probably we have seen in the H1 of FY25. But is it fair to say that this gap between the revenue growth and adjusted EBITDA growth that with the PBT growth that will narrow much sooner than the five quarters. Is that a fair assumption to make?

Question: Prolin Bharat Nandu - Edelweiss Public Alternatives - Analyst : I understand. Thanks a lot, and all the best.

Question: Lokesh Manik - Vallum Capital Advisors - Analyst : Firstly, wishing Vikram, you and your team a happy Diwali and a new year. Secondly, I had one question on the film vertical line and I know you addressed it by asking for some time for the next few quarters to gain some clarity. But just a little more detail on how I see it in two components. One is the TV series vertical, which was historically there with Saregama and then you introduced web series and movies in 2019, '18 onwards. So just to get a sense of our deal out there was that we would do a costless model with three platforms and license it for a period of three years. Post which, the IP would be exclusively ours. So is that now maturing? Is that margin of maturing and coming back and adding to the profitability that is reported in that vertical this quarter? And can this be the margin side that I know the revenue is lumpy. The margin, the 10% margin can be sustainable and whatever revenue comes in the following quarters because this is the first quarter that we reported a good profitability in that vertical. So has that model now matured where these movies are now going back to other platforms and there's very little cost (inaudible)?

Question: Lokesh Manik - Vallum Capital Advisors - Analyst : Fair enough. Just to understand a little more on the success of the model. So are you seeing takers for the series that we have developed pre-licensing in 2019 and '24. Are other platforms interested in taking these up? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2024 / 6:30AM, SARE.NS - Q2 2025 Saregama India Ltd Earnings Call

Question: Lokesh Manik - Vallum Capital Advisors - Analyst : Got it. Got it. And the pre-licensing period would be the same three years, roughly?

Question: Lokesh Manik - Vallum Capital Advisors - Analyst : Okay. Understood. That's it from my side. Thank you so much.

Question: Ravi Naredi - Naredi Investments - Analyst : Sir, I was waiting in queue (inaudible) and now time is over, but still you have took my question. Sir, whatever song, Sarma ji ki beti or other we have sold. Can you tell how much amount Saregama is earning in a quarterly basis?

Question: Ravi Naredi - Naredi Investments - Analyst : No, no, total. I'm not asking individuals.

Question: Ravi Naredi - Naredi Investments - Analyst : There's advertisement clips and whatever you had wrote the Sarma Ji Ki Beti, other like Khel Khel Mein.

Question: Ravi Naredi - Naredi Investments - Analyst : That I know. I'm a shareholder since last 15 years, so I knew each and everything. Sir, from Diljit Dosanjh, can you give the margin in percentage of 1%, 2% or less than 1% by the --

Question: Ravi Naredi - Naredi Investments - Analyst : Okay, sir. And in last 18 months, how much your music has grown on a paid basis? Can you give some idea about this?

Question: Ravi Naredi - Naredi Investments - Analyst : In last 18 months, how much your music was on live the paid basis?

Question: Ravi Naredi - Naredi Investments - Analyst : Subscription basis.

Question: Ravi Naredi - Naredi Investments - Analyst : Really, thank you very much to give me the opportunity to ask the question. Vikram-ji, so listening you, is always good, and we wish all the best.

Question: Ravi Naredi - Naredi Investments - Analyst : It is a really very honor to talk to you, sir.