Summary
Saregama India Limited - Q3 FY26 Earnings Call Summary Tuesday, February 03, 2026 05:00 P.M.
Event Participants
Executives 5 Anand Kumar (Group Head - IR), Kuldeep Kothari (DGM - Finance), Pankaj Chaturvedi (CFO), Pankaj Kedia (ED - IR), Vikram Mehra (Managing Director)
Analysts 8 Aanchal Jalan, Aditya Nahar, Anand B, Aryan Tripathi, Govindarajan Chellappa, Hitaindra Pradhan, Jyoti, Kunal Bhatia, Lokesh Manik, Shivan Sarvaiya, Sujit Jain
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Operating Revenue | ₹260 crores | -35.6% YoY (approximate based on base effect of FY25 Diljit tour), driven by lower event volume vs prior year. |
| Music Segment Revenue | Not explicitly stated | +29% YoY; driven by new content releases (Dhurandhar) and easing of Airtel Wynk denominator effect. |
| Adjusted EBITDA % | 46% | +1300 bps vs long-term guidance; exceptionally high due to content release timing and mix. |
| Operating PBT | ₹76.5 crores | Reported PBT of ₹69.5 crores after accounting for a ₹7 crore one-time non-cash charge for the New Labour Code. |
| New Content Spend | ₹275 - ₹300 crores | Revised downward for FY26 as major films (Love & War, Paradise) pushed to FY27. |
| Artist Management | 270 artists | +60 artists added in Q3; cumulative digital footprint of 300 million followers across platforms. |
| Cash & Investments | Not specified | Management noted a reduction in other income as surplus funds (FDs/MFs) were deployed for Bhansali investment. |
Geographic & Segment Commentary
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Music: Segment saw 29% YoY growth this quarter, bringing 9M FY26 growth to 18%. Growth was powered by the Hindi film Dhurandhar (all 11 songs on Spotify India Charts) and regional hits in Kannada (The Devil) and Marathi. Management highlighted the success of Nav Haryanvi partnership and the launch of GenAI tools to produce music videos for the legacy catalogue in under 3 days.
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Video & Films: Strategic shift to wind down the in-house movie business over the next 12-15 months following the Bhansali Productions investment. The focus will pivot to short-format content (FilterCopy) and web series targeting Gen Z. Strategic minority stake in Bhansali Productions (closed Jan 30, 2026) ensures guaranteed access to marquee film music at pre-agreed costs.
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Live Events: Performance is “lumpy” and tour-dependent; Q3 featured Diljit Dosanjh and Himesh Reshammiya shows. The company is shifting focus toward smaller, higher-margin, capital-light events (e.g., bhajan clubbing, stand-up comedy) to ensure high single-digit steady-state margins. The vertical remains high-IRR due to rapid 15–20 day capital rotation.
Company-Specific & Strategic Commentary
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Bhansali Productions Investment: Acquired a significant minority stake with valuation linked to 3-year future performance. Provides exclusive, non-bidding access to SLB music, helping stabilize future content costs.
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GenAI Implementation: New cell using GenAI for video generation has reduced production time from 15 days to 3 days. This significantly lowers the “time to market” and cost for monetizing the 20th-century legacy catalogue.
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Brand Partnerships: New vertical launched to monetize IP via brands (Hero, OpenAI, Manyavar). Focus is on moving beyond platform licensing to direct brand revenue through music, events, and short videos.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Music Revenue Growth | 17% - 18% (FY26) | Expects to maintain current 9M momentum through Q4. |
| Long-term Music Growth | 21% - 23% (Medium-term) | Assumes steady digital expansion; does not factor in potential “hockey stick” from paid subscription shifts. |
| Adjusted EBITDA Margin | 32% - 33% (Annual) | Management maintains this conservative range despite 46% Q3 performance to account for segment mix volatility. |
| Content Investment | ₹1,000 crores (FY25-27) | Sustained investment to future-proof the library; growth in spend to normalize to 6-10% inflation-linkage post-FY27. |
Risks & Constraints
| Risk | Context |
|---|---|
| Event Volatility | High top-line dependence on major artist tours (like Diljit Dosanjh) makes quarterly comparisons difficult and unpredictable. |
| Content Concentration | Delays in major film releases (SLB’s Love & War pushed to Q2 FY27) directly impact the release calendar and related revenue timing. |
| Platform Transition | Revenue faces pressure as platforms shift from free to paid; growth is currently “slow but steady” rather than explosive. |
| Investment Risk | Strategic investment in Bhansali Productions carries inherent film-performance risk, though mitigated by 3-year performance-linked valuation and financial oversight. |
Q&A Highlights
Growth Trajectory
- Question: Why have growth and share price plateaued since 2021? (Sujit Jain)
- Answer: The company is in a “step function” investment phase for new music to prevent stagnation seen between 2000-2020. Revenue from newer investments will soon exceed the amortization charge, flowing to the bottom line. (Vikram Mehra)
Pocket Aces Synergy
- Question: How should we evaluate the Pocket Aces acquisition? (Sujit Jain)
- Answer: It is moving from a ₹10 crore loss to breakeven this year. Beyond its own 25% CAGR potential, it provides a 300M digital footprint used to market Saregama’s music IP effectively. (Vikram Mehra)
Bhansali Deal Structure
- Question: Does the Bhansali deal risk equity or debt funding for mega-movies? (Aanchal Jalan)
- Answer: Saregama has no obligation to put in more money over the next 3 years. The deal includes financial oversight and SLB’s ability to pre-sell rights to OTT platforms minimizes debt needs. (Vikram Mehra)
Paid Subscription
- Question: What are the assumptions for paid music penetration? (Jyoti)
- Answer: Current guidance (21-23%) does not factor in a paid-subscription explosion. If major players (Spotify/Saavn) move behind paywalls, it acts as a “booster.” (Vikram Mehra)
Key Takeaway
Saregama reported a stable Q3 FY26 with a notable 29% YoY growth in its core music licensing vertical, supported by the success of the film Dhurandhar. While overall revenue appears lumpy due to the high base effect of major concerts in the previous year, the music segment achieved 18% growth for the nine-month period. Strategically, the company is pivoting away from in-house movie production to a minority-partnership model with Bhansali Productions, focusing instead on high-margin music IP and capital-light live events. Management utilized GenAI to drastically reduce content production costs and is aggressively building an artist management vertical to capture brand and event revenue. Looking ahead, Saregama maintains a music growth guidance of 17-18% for FY26, aiming for a return to 21-23% in the medium term. Investors should monitor the impact of the Bhansali partnership on content costs and the stabilization of the live events vertical as the company transitions its business mix.
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