Saregama India - Company Update - August 2020 - ICICI Securities

Saregama India's revenues for Q1FY21 fell 39.2% YoY to Rs. 76.5 crore due to Carvaan sales declining to 15,000 units vs. 219,000 in Q1FY20 as retail stores were shut during lockdown. EBITDA came in at Rs. 18.9 crore, up ~16x YoY, due to lower promotion costs (high marketing expense in base quarter) and reduced production costs and contract manufacturing charges with EBITDA margins at 24.7%. Consequently, PAT was at Rs. 15.8 crore.

Valuation & Outlook

Saregama's key revenue growth driver remains the B2B segment. Increasing content consumption augurs well for the segment with IP monetisation being key. Revenues through licensing deals with Spotify & Facebook have started to kick in. Saregama's strategy to develop Carvaan as a platform and its monetisation through ad/subscription revenue could provide long term visibility. However, subdued Carvaan sales and delay in its pickup, in the interim, is likely to remain an overhang. Therefore, we maintain HOLD rating on the stock with a revised target price of Rs. 510/share at 13x FY22 P/E.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Saregama_CoUpdate_Aug20.pdf

Shares of SAREGAMA INDIA LTD. was last trading in BSE at Rs.466.9 as compared to the previous close of Rs. 474.05. The total number of shares traded during the day was 2365 in over 240 trades.

The stock hit an intraday high of Rs. 476.75 and intraday low of 458.15. The net turnover during the day was Rs. 1108813.

Source : Equity Bulls

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