Detailed Narrative
Strong Annual Performance Despite Q4 Headwinds
Saregama India achieved its highest annual revenue of INR1,171 crores in FY25, representing a robust 46% growth over FY24. Adjusted EBITDA also reached a record INR356 crores, an 18% increase year-on-year. However, Q4 operating revenue remained flattish YoY, primarily due to the shutdown of streaming platforms like Wynk, which impacted short-term music licensing revenues. Despite this, the full-year music revenues grew by close to 12%.
Aggressive Content Investment Strategy
The company's investment in content for FY25 was INR316 crores, a significant 62% increase over FY24, aligning with its strategy to future-proof the business through aggressive new IP purchases. Over the last 12 months, Saregama spent close to INR300 crores on new content alone. This investment has yielded results, with 10 songs released in FY25 crossing the 100 million views mark on YouTube, and an album like Stree 2 garnering 3.1 billion streams across YouTube and OTT.
Digital Footprint Expansion and Paid Subscription Focus
Saregama's digital footprint across YouTube, Instagram, and Facebook saw massive growth, expanding from 239 million to 350 million during the year. The company is actively transitioning towards a paid subscription model for its music business, noting that revenue from paid OTT and YouTube services grew at a very high double-digit percentage. Management believes paid subscriptions will become the single biggest growth driver and expects the subscription economy to take off in the next 4-5 quarters.
Video Vertical's Transitional Phase and Future Outlook
The video vertical, encompassing Yoodlee, Dice, and FilterCopy, experienced a challenging FY25 due to significant flux in digital platforms, including mergers and leadership changes, which affected licensing. Despite this, the company projects a CAGR of 25% for this vertical over the next five years. Saregama is experimenting with various models, focusing on sustainable content creation that is greenlighted by platforms, rather than high-risk, make-or-break films.
Carvaan Business Restructuring and Profitability Target
The Carvaan business has transitioned to a 100% e-commerce-driven model, with manpower reduced from over 100 to under 25. While Carvaan was at breakeven in Q4 FY25, the company expects it to achieve mid-single-digit margins by the end of FY26 through continued rationalization of manpower, SKUs, and distribution expenses. This strategic shift aims to make the product viable and profitable in the long term.
Strategic Diversification and Long-Term Growth
Saregama is diversifying from being solely a music label to a broader entertainment IP company, encompassing music, live events, and video. This strategy aims to reduce overdependence on any single vertical and create revenue synergies. The company has committed to investing over INR1,000 crores in new music content between FY25-27, with INR525-530 crores already secured, positioning it for sustained long-term growth and aiming to double PBT in the next 3-4 years.