Saregama India

Saregama India reported a strong Q4 FY26, with revenue from operations reaching INR 287 crores, marking a 19% YoY growth. Adjusted EBITDA for the quarter stood at INR 133 crores, a 31% YoY increase, and operational PBT was INR 105 crores, growing 37% YoY. The company emphasized evaluating performance on a 12-month rolling basis to account for content release phasing and cost recognition, noting that H2 FY26 saw a 26% growth compared to H1's 8%.

For the full FY26, the music vertical (combining licensing, artist management, and retail) generated INR 814 crores in revenue, a 17% YoY growth. This segment achieved an annual EBITDA of INR 517 crores (22% YoY growth) and a net margin of INR 377 crores (28% YoY growth). Management highlighted that the growth trajectory, particularly in H2 FY26, vindicated their strategy of phased content releases and financial prudence in acquisitions, avoiding vanity purchases and focusing on a five-year payback guideline.

The company spent INR 235 crores on new music content and INR 105 crores on inorganic catalogue purchases in FY26. A significant strategic move was the investment in Bhansali Productions through a significant minority ownership, securing exclusive access to marquee Hindi film music for 24-30 months at a predictable cost. This partnership ensures a strong content pipeline for FY27, including films like 'Love & War' and 'Naagzilla', and reduces the need to hunt for content in the open market.

Saregama continues to build its artist management and live events verticals, which are becoming meaningful EBITDA contributors. The company added 30+ artists in the quarter, bringing the total to over 300, with a combined digital follower base exceeding 400 million. The first music festival IP, UN40, was launched, generating 12,000 footfalls and attracting 8 sponsors, though it incurred initial losses and is expected to break even by FY28.

The video vertical's revenue declined 44% YoY to INR 108 crores in FY26, a planned reduction as the company winds down its in-house film production under the Yoodlee brand. The focus for video will now be on TV serials and short-format digital content, with film ambitions primarily fulfilled through the Bhansali Productions partnership. Capital allocation to video and live verticals has significantly reduced from 18% to 'mid-single digits' of total deployed capital.

Management expressed bullishness on subscription growth in India, noting that paid streaming penetration is less than 3% compared to 50-67% in developed markets, representing a massive runway. They also addressed AI, stating that while AI-generated content is spreading, it lacks traction, and Saregama is working with platforms to ensure genuine IP is monetized. The company has also launched a dedicated AI efficiency team to improve internal processes and overall efficiency.

The company reiterated its commitment to a long-term growth path, driven by content investment, aiming for a 20-23% CAGR in music vertical revenue and 60-65% annual EBITDA. Management acknowledged that aggressive content investment, particularly in step-function jumps, impacts short-term profitability but is crucial for building value over decades and increasing ROE from the current 13.3%. They plan a linear increase in content investment post FY27, rather than large step-function jumps.