Saregama India sees paid subscription upside as music licensing growth accelerates

Investment View and Valuation

ICICI Securities’ August 5, 2026 result update upgrades Saregama India to BUY, supported by the medium-term monetisation potential of paid music subscriptions, strong licensing growth and expected operating leverage. The broker sets a target price of Rs 650, based on 38 times FY28E EPS, premised on paid-subscription monetisation gaining traction.

Saregama is India’s oldest music label and is owned by the RPSG Group. It has more than 1.8 lakh songs monetised through digital streaming and YouTube, physical Carvaan products and television.

Q1FY27 Financial Performance

Revenue increased 27.5 per cent year-on-year to Rs 264 crore in Q1FY27, led by the music and artist-management businesses. Reported EBITDA rose 68.8 per cent year-on-year to Rs 93.3 crore, while EBITDA margin expanded by 8.7 percentage points year-on-year to 35.4 per cent, reflecting operating leverage and a favourable revenue mix. PAT increased 40.6 per cent year-on-year to Rs 51.6 crore.

Licensing growth benefited from a benign base following the discontinuation headwinds from Wynk, Resso, Gaana and Hungama. Management said music performance should be assessed on a rolling 12-month basis rather than quarter-to-quarter because release schedules are inherently volatile.

Music Content and Licensing Outlook

Management reiterated medium-term annual revenue growth guidance of 20 to 23 per cent for the Music vertical and EBITDA margin guidance of 60 to 65 per cent for that vertical. FY27 spending on new music content remains at Rs 300 to Rs 350 crore, with most of the pipeline committed.

Saregama released nearly 750 original and premium recreation tracks across languages during Q1FY27. The FY27 slate includes Love & War, Naagzilla, Rajinikanth’s Dharman, Paradise and another Bhansali production. Management also cited a multi-year, multi-language Indian pop-content partnership and renewed investment in Punjabi music, including an Arjan Dhillon album expected in Q2.

The content-acquisition approach targets a five-year payback while building long-duration intellectual property. Paid streaming is the principal long-term opportunity identified by management and ICICI Securities. Management estimates Indian paid-streaming penetration at around 3 per cent, compared with 57 per cent in the US and 67 per cent in Sweden. An IMI/E&Y study cited by management suggests that 64 per cent of free music users could shift to paid plans if free supply were curtailed. Each 1 percentage-point increase in penetration could add more than 10 million paid subscribers, with potential for nearly 100 million paid subscribers at pricing of Rs 100 per month.

Broker Forecasts

ICICI Securities estimates music licensing sales to record a CAGR of about 22 per cent over FY26-FY28E, reaching Rs 916 crore in FY28E. Artist-management revenue is forecast to rise from Rs 131 crore in FY26 to Rs 220 crore in FY28E. Overall earnings are expected to record about 25 per cent CAGR over FY26-FY28E.

New Growth Initiatives

Pocket Aces, which broke even in FY26, is expected by management to report a profit in FY27. Saregama is using Pocket Aces’ 400 million to 450 million social-media subscriber base to engage Gen Z audiences.

The company has expanded its artist-management roster to 309 artists with combined social-media reach exceeding 440 million followers. Monetisation opportunities include concerts, weddings and brand partnerships. Saregama has formed a centralised brand-partnerships team and is developing proprietary live-event intellectual property.

Future film investments will be routed through Bhansali Productions as Saregama exits in-house film production. Internal video efforts will focus on short-form digital content, television shows and web series under FilterCopy.

Key Monitorables and Risks

• Execution of the FY27 content slate, market-share gains and acceleration in Indian paid subscriptions are the key monitorables.
• A larger film foray could restrict valuation-multiple expansion because of volatile growth.
• Stated risks include slower music-licensing growth and high losses from the film foray.