How music label Saregama is keeping itself relevant

Music label Saregama boasts a large catalogue of older-generation songs that are nearly impossible to replicate. The company is now putting the pedal to the metal on acquiring new content to close the gap with the market leader and ensure that it remains relevant even a few decades later, observes an Emkay Research report.

"The music licensing industry has flourished with the waning of piracy; Saregama has capitalised on this opportunity, consistently exceeding industry growth. We expect the steady growth to endure, though transitioning from the ad-supported to the paid-subscriber model for OTTAs might be a temporary speed-breaker. It now has its foot in the door to explore the fast-growing digital media landscape via its recent acquisition of Pocket Aces," says the report.

"Ramping up of non-music segments will offer added growth impetus. Growing digital revenue and ramp-up of paid subscribers ensure a long growth runway. We initiate coverage on Saregama with BUY and DCF-based TP of Rs465/sh (25% upside). Key risks: i) content costs rising, ii) piracy re-flaring, iii) non-adoption of the paid subscription model," says the Emkay report.