Company Update - Saregama India - ICICI Direct

Saregama has demerged its entire distribution business of the company relating to sale of all its physical products including Carvaan on digital marketplaces along with identified non-core assets (i.e. investment in publication business).

- Demerged division topline was Rs. 17.4 crore in FY21 while bottomline (in our view) is miniscule. We highlight that demerger only involves digital distribution arm and Carvaan business stays with Saregama residual entity. As per our understanding, distribution arm enjoys non-exclusive rights of selling Carvaan on e-commerce platform, which will continue

- The scheme does not involve cash consideration and existing shareholders will receive "two fully paid up equity shares of Rs. 10 each of the resulting company (Digidrive Distributors Ltd), credited as fully paid up, for every one equity share of Rs. 10 each of the demerged company (Saregama)"

Key triggers for future price performance

- Growth trajectory in music licencing, which the management envisages to grow at 25-30%+ in medium term, along with new content performance

- Recovery in Carvaan on the back of economic reopening and expansion in movies and web series segment

For details, click on the link below:

Link to the report

Shares of Saregama India Limited was last trading in BSE at Rs. 4598.55 as compared to the previous close of Rs. 4379.60. The total number of shares traded during the day was 3982 in over 799 trades.

The stock hit an intraday high of Rs. 4598.55 and intraday low of 4380.05. The net turnover during the day was Rs. 18076952.00.

Source : Equity Bulls

Keywords

SaregamaIndia INE979A01017 Demerger CarvaanBusiness