Saregama India Limited (NSE: SAREGAMA) Q3 2026 Earnings Call dated Feb. 03, 2026
Corporate Participants:
Vikram Mehra — Managing Director & Executive Director
Pankaj Mahesh Chaturvedi — Chief Financial Officer
Analysts:
Unidentified Participant
Aryan Tripathi — Analyst
Sujit Jain — Analyst
Lokesh Manik — Analyst
Kavish Parikh — Analyst
Jyoti Singh — Analyst
Kunal Bhatia — Analyst
Aditya Nahar — Analyst
Hitendra Pradhan — Analyst
Presentation:
operator
It. It. It. It. Sam. Sa. Ladies and gentlemen, good day and welcome to Saragama India Limited’s earnings conference call hosted by MK Global Financial Services Limited. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Aryan Tripathi, MK Global Financial Services Limited. Thank you. And over to you sir.
Aryan Tripathi — Analyst
Good evening everyone. I would like to welcome the management and thank them for this opportunity. We have with us today Mr. Vikram Mehra, Managing Director, Mr. Panka Chaturvedi, CFO Mr. Anand Kumar, Group Head Investor Relations and Mr. Pankaj Kedia, Executive Director Investor Relations. I shall now hand over the call to the management for the opening remarks. Over to you gentlemen.
Vikram Mehra — Managing Director & Executive Director
Hi. Good evening everyone. This quarter saw our operating revenue of 260 crore and an operating PBT of 76.5 crore. In this quarter we have also taken the impact on account of the new labor code of around 7 crore which is a one time non cash exceptional item.
If I remove the impact of that we are looking at an operating profit of 83.5 crore. As always I will request you to evaluate us on a rolling 12 month basis and not on a quarterly performance basis. We have been maintaining that stand all throughout and I request you to do it. We have had a great EBITDA percentage in this quarter. But rather than taking that as our guidance we should continue with our guidance of 32 33% adjusted EBITDA for the mid to long term basis for the company. Let me start with the first vertical music which grew by 29% year on year basis during this quarter.
The primary reason for this growth was the release of newer content both on Hindi and the regional side and the partial negation of the Airtel Wink revenue in the denominator effect. As many of you may remember we were getting revenues from Airtel till mid November of 24. Hence it was part of the Q3 of the previous financial year. That’s the time Airtel Wink shut their operations. To some extent we had that revenue sitting in our denominator but now that effect has gone away. That also helped us in going and registering a 29% growth. This quarter saw the release of the super successful Hindi film Dhrinder which had the unparalleled distinction of all 11 songs being part of Spotify India Charts.
Its Biggest song Gehrawa even today as I talk to you is ranked in number one position on Spotify India charts and its other song Shararat is in fact ranked at global number one song today on YouTube. The other prominent releases of this quarter was Tumeri Me Tera Me Tera Tu Meri film from Dharma in Hindi and Darshan film Devil in Kannada. Non film album releases include one of our own pocket aces artist Danny Pandit with whom we people have released a Marathi song Zatpad Patapat which did extremely well for us and then we also worked with Amanraj Gill as part of a NAV Haryanvi deal and launched a song circle which has become the top song in the Haryanvi language.
Our new content strategic partnership with the ex promoters on NAV Haryanvi is going very strong. Three of the songs released by NAV in the last four months are even today sitting in Spotify top India charts. Overall company release 1100 odd original and premium recreations across Hindi, Bhojpuri, Gujarati, Punjabi, Tamil, Telugu, Malayalam, Marathi and Bengali languages and this sorry also includes Chhattisgadi and Odiya. Overall our spend for the new content this year will be in the space at 275 to 300 crore. This has come down compared to what we had earlier planned because many of the films that we had planned for the year their releases got pushed to the next financial year.
The two of the most prominent ones are Sanjay Leela, Bhanshali’s Love and War and Telugu superstar Nani’s Paradise. During the quarter the company made a strategic investment in Banshali Productions through a significant minority ownership with valuation that is linked to the financial performance of Banchali Productions over the next three years. We are proud of the structure of this deal which gives more weightage to the future performance than only to the past laurels. This arrangement with Bansali Productions also provides us exclusive access to marquee Hindi film music at a pre agreed cost structure with these people.
This will ensure that not only are we going to get guaranteed access to the music of one of the biggest film production houses of this country, but also without getting into bidding and hence in the long term is going to help our cost structures too. As partners we will be playing to our respective strengths with full creative control retained by Sanjay Leela Banchali while the financial oversight will be with Sharigama. For your understanding, this transaction finally got closed on the 30th of January 26th wherein we have paid the money that we were committed to during our last call we had informed you about creation of a new cell within a video team that’s generating latest music videos for our older catalog songs by licensing new Genai video generation tools.
During the last quarter we experimented with multiple videos got our own set of learnings which we will be using to further refine this video launch strategy of ours. The good part is that use of generative AI video generation tools for these older songs has helped us drastically reduce both time and cost to release these videos. What used to be earlier, something that used to take 10 to 12 days through the earlier possible tools or if we had to shoot used to take up to 15 days including editing, can now easily be done in less than three days.
And the way AI generation tools are moving, we like to believe this process should be completed in one one and a half day within a year or so. All this has serious impact both on time and cost to market. Overall we continue with the guidance of a five year payback period for all new music content that we’re acquiring and after that another 55 to 75 years of returns on the same music. As mentioned earlier, this quarter was the final quarter having partial impact of Airtel Wing closing. It has got over from the mid of quarter three and from Q4 onwards we will not be having that impact sitting in our denominator.
This will overall this and the release of the newer content will hopefully get us back onto our old growth numbers. Our YouTube revenue during the quarter grew as per expectations. The attempt by various audio streaming platforms to push subscription continues to be there. The two big platforms who still have a free service are making moves right now to push the paid subscription path. This is great news. Though slow but in a steady fashion, we are seeing a transition happening from the free to the paid side and with India is the last large opportunity which is sitting for many of these global streaming platforms also as an untapped market through which they can go and grow their subscription and hence overall revenue.
So we believe the growth is just there curtsy subscription knocking at the door Artist Management the newer vertical within music where an artist are made popular through our IP releases and then we monetize these artists by booking them for live events, weddings and band endorsements from which Harigama gets its share. During the quarter 60 new artists were added taking the total artists managed by company to 270odd with more than 300 million followers and subscribers on Instagram and YouTube of these artists. As we continue our investment in all forms of content, we will use that power to make these artists big and as they become bigger the digital advertising following them will also grow and we end up earning a share of it.
We are very uniquely placed, as I’ve said multiple times in this content ecosystem that we are taking bets both on the content and the artist that is making the content. And our ability to make revenue is not just limited to content doing very well. At times even better revenue comes in because the artists whom we people are taking to create that content which help in artists becoming big also ends up generating large amount of revenue and profits for us. During the first nine months the music segment growth has come back to 18% on an year on year basis.
This quarter was 29% but overall we are back to an 18% growth rate. We believe that we are on track on a medium to long term basis coming back to 21 to 23% annual growth rate. This year the number may be closer to 1819 but next year onwards we should be back to 21 to 23. As shared earlier, with the acquisition of a minority stake in slp, we plan to wind down our in house movie business. Over the next 12 to 15 March we will release most of our existing movie projects that are currently in the pipeline but at the same time we will continue our work on short to medium length video content which goes either on short format channels on Instagram and YouTube shorts or goes as a licensing part to digital platforms or TV channels.
We will continue our work in that space with a specific focus on Gen C being the target segment. On live event side Saregama did shows with Diljit Dosage, Himesh Reshammaya. During the quarter we also did experimented with a lot of stand up comedy shows across the country. There are many more shows planned in Q4 including our first music festival in Bangalore in March. Shows around Lord Krishna with Manoj Muntahshir in Mumbai. We are big time got into Bhajan clubbing shows and we are doing with multiple people. The most popular one are being backstage siblings. Our long term belief in the potential of live ins in India keeps getting reinforced quarter after quarter and we will continue to put our focus and investments in this area.
Again as discussed last time, a new vertical around brand partnerships has been put in place where the objective is to maximize revenue from brands in the areas of music, live events and short format video. In the last quarter we partnered with brands like Hero, OpenAI, Maneuver, Fog, Greenlam, Karaplane, Gujarat Tourism, etc. This is our very strong endeavor to say that we have been making money either from licensing our content to platforms Netflix, Spotify, Star or by going directly to the customer, which we do by selling a Karma or a live event. But we now want to build a vertical whereby we can also make a sizable chunk of revenue from brands that are coming on board.
Over the next few years, we will continue investing in new music content. This will contribute not only to the immediate growth but also future proof the company from content perspective. We continue with our guidance of 21 to 23% growth in the medium to long term in music segment and an annual adjusted ebitda guidance of 32 to 33%. Tarigama’s growth narrative will continue to be steady in the medium to long term thanks to increase in digital consumption both in terms of new customers joining the market and existing customers consuming more. With over 550 million Internet footprint, cash reserves, professional managerial debt and access to the soundtracks of the best movies, we are hopeful that we will be able to generate earnings not just for next two to three years, but for next 30 to 40 years.
Sorry, I need to. I made a typographical error out here. The operating PBT of The company is 76.5 which is which without. If I remove the exceptional impact that we people have of the provision that we people have taken which are 7 crore on account of the labor act. If I include that then the reported PBT is 69.45 crore. I stand corrected. Please. My apologies. Thank you and we’ll be open to questions.
Questions and Answers:
operator
Thank you very much. We’ll now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the Touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles. Our first question comes from the line of Sujith Jain from Bajaj Life. Please go ahead.
Sujit Jain
Yeah, Vikram.
Vikram Mehra
Hi.
Sujit Jain
So just one, you know, philosophical question. A When you say judges with trailing twelve month basis it is best to present that in your presentation itself so that you know the numbers are for everybody to see including your own team as to how the numbers have panned out in terms of trailing twelve month basis because if I look at that data, that data is materially down. B How do we evaluate Pocket Aces and eventually Bansali production? We need to have clear roadmap in terms of the parameters that need to track so that we can track them.
C. This is a company with a great team and great Compounding, if I look at numbers, any numbers, 3 year, 5 year, 10 year compounded sales growth of 27, 18, 20% profit growth has also been phenomenal. And then there is some kind of plateau. How do we address that? And one last question is what about the shareholder who came in in 2021 at 400 rupees? If you’d invested that money even in a national savings certificate, his money would have been 540 rupees today. So I’m not the shareholder, what I’m saying I’m sure you want to basically service him as well.
So how do we get back to the previous glory and trajectory?
Vikram Mehra
Thank you all fair points out here. Let me try to answer those. See, our strategy has been very, very clear and we have been very open about it from the last four years onwards that we want to up the investments on the music content in a significant enough fashion and not just rest on the laurels of the older content. Today it’s very easy for us to take that decision that we should reduce our new content investment significantly. We will still be able to go back and show some amount of marginal growth coming in and the profitability is going to look extremely decent.
We have taken a conscious call that we will not do that. Music segment still continues. This is the first nine months where we are showing an 18% growth. Till last year we were continuing to grow at a 23% CAGR on the music segment of ours. Often what gets confused is the live music, part events, part live events is by nature a business right now which is slightly unpredictable. It all depends whether a large tour is going to be happening during the year or not happening during the year. Last year, same quarter we had Diljit Dosanj India tour happening now.
Diljit next such tour may happen two years later. There is no other tour. So you will have these kind of a periodic ups and downs both in our bottom line and the top line. The steady part of our business is the music part of our business which has been growing in a steady fashion over these years. The other part that you should track and if it’s not working, we are fully responsible for that are EBITDA numbers. Because if you look at the EBITDA numbers that shields us for the time being right now from the content charge that we people are taking and you will see there’s a substantial growth which is happening on the EBITDA side.
So we are at that phase of our company where we are trying to rebuild this company with newer content so that we don’t suffer the Same problem that we had 25 years ago when for a period of 2000 to 2020, there was no new music coming in the company and growth has started stagnating. That’s a process we are going through. You will see this part getting over of this very high investment that we people made out there in our content. Because right now the step function jump that is going on every year on the content side, we are happy with the kind of market share we people have started enjoying the newer content.
So as we go forward, the increase in content investment will be falling more of a linear curve right now rather than step function, which means the revenue that’s going to be coming, coming on account of older investments from the newer investment will now soon be exceeding the charge that we are taking of that particular content and hence the impact will start flowing back to the bottom line. Have I answered your question?
Sujit Jain
No. My suggestion is that can anybody in your team tell me that number X of event sales trailing 12 months versus the 12 month period in the base, what was that number? We’ve been saying that that number should grow at that guided range. Has it done that? So you can tell me the exact numbers or we can, you know, exist offline, but it is best to then.
Vikram Mehra
Sure, please go ahead.
Sujit Jain
Every time when we say it is best to basically support that with actual numbers rather than just the narrative as that, you know, please look at this way, that way. Let us put everything in numbers so that everything will be clear in black and white.
Vikram Mehra
Absolutely. Point is very well taken. From next quarter onwards, our presentation will now be showing the growth numbers on a rolling 12 month basis also and.
Sujit Jain
Exop events, which is a fair ask. We, we completely understand that. What my suggestion is that I can say that we are not there. Can your team tell me that? No, no, we are there with numbers.
Vikram Mehra
We are there with numbers. By the time the call gets over, I’ll give you the numbers music has shown on a 12 rolling 12 month basis versus the previous 12 month. We’ll get to the numbers correct.
Sujit Jain
X of events which we understand because that is a lumpy item.
Vikram Mehra
I think the right part is music licensing. Numbers is what we should be looking at. Adding karma to it makes no sense because karma, we have been very public about it. Focus has changed. We are reducing the revenue but increasing the profitability on Garwa. So the core part of the business, which is a steady income part of the business is music. We’ll give you the music numbers before the call ends.
Sujit Jain
Fair enough. And I still don’t get the answer as to how do I evaluate Pocket Aces and this new investment is absolutely right in terms of direction the industry has to take. But we need to have clear parameters as to how good we are in terms of our capital allocation, the capital that we last raised.
Vikram Mehra
I’m with you completely. So the our guidance on Pocket Aces has been that this year we will not only show a growth right now which is upwards of 25% but will also be break even. And last year we people had still written a loss. This year is a breakeven year for us. All the synergies that we needed to drive with those people seems to be falling in place now. So you will have a break even year going there post that I am expecting right now that the Pocket SL part of the business which is a combination of artist management and some amount of video content should be growing at a 25% CAGR.
Sujit Jain
Would it lead to meaningful roe in that business after five years or after seven years? And if yes, what is that number?
Vikram Mehra
Sure. So I will come back to you on this but please every time you’re looking at Pocket Aces even when we acquired it I had said this and I’ll repeat myself. Pocket Aces on its own makes a lot of sense but it makes even more sense from the music perspective today. If Sarigama has got the biggest hit rate in the market today in terms of music albums not just happening because because we are smarter on maybe little bit contribution to that. But the fact of life is we have the most effective marketing machinery on the digital side and Pocket Aces numbers that they bring in of the followers and subscriber base Both on Instagram, YouTube Shorts, YouTube and Facebook are a very big contributor which is helping our music business.
So we are able to drive bigger number of hits on the music side in spite of having marketing costs which are under control. So there’s a large help that that part of the business is providing to music part two. But that does not mean Pocket Aces will ever become the loss leader. You will see numbers improving. So there also for us to get this company from a -10 crore loss into now a break even as in a successful journey. And from now onwards we’ll build and I we will share with you the parameters on which you can go back and change.
Sujit Jain
Yeah and one last suggestion is when we say in YouTube we met our internal expectation, I don’t have anything to judge in terms of numbers what your expectation was against which you said yes it’s a goal but I don’t know.
Vikram Mehra
The goal post you need to judge me at a 29% music revenue growth during the quarter and 18% on a nine month basis. So beyond that I’m. I can’t share information I can just tell you that I get. But yeah, ultimately it should show up in numbers for us. That’s the basic answer. Evaluators on a 29% quarter growth and an 18% nine months growth.
Sujit Jain
Sure. All the best and thank you.
Pankaj Mahesh Chaturvedi
Just to, just to add up on your query, this is Pankaj Kedia. The presentation which we have filed to the Exchange, slide number 15 of the presentation talks about last 17 quarters music licensing income quarter by quarter. So what Vikram was talking about the rolling last four quarters. That data is already filed with the exchange. Yeah, sure.
Sujit Jain
Thanks.
Vikram Mehra
Thank you.
operator
Thank you. Our next question comes from the line of Lokesh Manik from Vallum Capital. Please go ahead.
Lokesh Manik
Yes. Hi, good evening Vikram and team. A couple of questions from my end. One is, you know you’ve seen good success with Durangar and other Flynn regional releases this quarter. So do you expect this momentum you mentioned one of them is continuing even in Jan to aid the growth in Q4 as well going forward the momentum from all these releases.
Vikram Mehra
So I let me not go back and talk on a specific quarter. In general we believe that revenue growth, apart from whatever little digital expansion that’s happening and the subscription growth, the primary revenue growth that we people are getting is coming out of the newer content investment. Majority of our release calendar that was scheduled for Q1 and Q2 was had got pushed which was bunching up in Q3 and some amount is coming out there in Q4. So that’s a content strategy which will help out there in the revenue part too. Even last quarter when we people had what looking at 11 to 12% growth in music licensing, music business of ours, I had mentioned very clearly that we will should end the year closer to 18%.
We are already on a ninth month basis on 18% and I hold at this juncture, I have reason to believe that around 8% should be the number for the end of the year. Also on the music part of the business.
Lokesh Manik
Fair enough. And Vikram, just to add to this, do you see, you know, this success, you know, allowing you to negotiate better with the contracts with the platforms coming up because that’s where new music also has an advantage. You mentioned in the past it helps you to negotiate better. So are you seeing that with the discussions with the platforms that you’re having?
Vikram Mehra
Yeah. Let me put it this way sir. The strength of catalog that we people own literally Anything and everything of the 20th century apart from maybe the last 10 years of the 20th century anyway puts us in a very decent position from negotiation perspective. And these big album hitch that we have seen in Hindi or a Telugu or a Tamil, we have few very big hits coming out of Malayalam. Definitely makes our position pretty strong when we are negotiating with people. Especially the platform which are still on a fixed fee basis. A lot of short format content platforms are still on a fixed fee basis.
These things strengthen our position. Yes, for sure.
Lokesh Manik
Great. Vikram. My second question is on Pocket Aces in a maturing phase, we are right now in a growing phase, nascent and growing phase. In a maturing phase, do you see this commanding the same EBITDA margins as the music business? Or this would be more on the video side of the EBITDA margin.
Vikram Mehra
This will be more on your side of the business because the music business by its very nature is an IP business where you invest heavy and you take your take hitch in the first couple two, three, four years and then buddy later you have 55 to 75 years of pure margin which is not the model which is followed either on the talent side or on the video side. So the capital investment out there is always much smaller but the profile of the margins is also lower.
Lokesh Manik
But then do you see the payback extending beyond the five years for the acquisition?
Vikram Mehra
The please may I said in the first respond question also whenever you look at Pocket Aces please also look at the side benefit that the music part of the business is getting out of it. At the end of the day we have if I am got a music album and a producer has to take a call that should they send the album to us or should they give the album to any of my competitors. The biggest thing money typically becomes the same we at times under code compared to a competitor. We are still able to get it only because of a marketing muscle for a film producer.
It’s not just the money that he makes out of the licensing of music for him or her. Very important part is will the music be marketed large enough so that Friday morning when the movie opens there are enough footfall in the hall. What Pocket Aces is able to go back and bring to US is around 350 million digital footprint today on across Meta and Google apps which makes it easier for us to take any song and make it sampled by millions of people on an overnight basis. So there is a large benefit of that also coming in which and those benefits are captured in different verticals.
They’re not just captured strictly sitting out there under pocket assessment tomorrow I can go back and start giving them large marketing monies to show them profitable. But that’s the wrong thing to do, right?
Lokesh Manik
Just last clarification. The big releases of Love and more and one more, they’ve been pushed into Q1, Q2 of next year or Q4.
Vikram Mehra
As of now understand is paradise Q1 and love and war. Today is Q2 okay. Movie planned for next year in the Hindi space which currently they are in Q2. My expectation is going to get pushed to Q3.
Lokesh Manik
Now Q3, you have a good lineup then for Q1, Q2, Q3 following on big revision.
Vikram Mehra
So typically Q1 anyway goes a little lighter because most film producers are scared of the cricket phenomena at that time. Less releases happen. They start bunching up towards May, end in June. July, August becomes a very big release period. And then Diwali to Christmas is a very big release period for South India. January is a very big release period across the country, romantic films. February is a big period.
Lokesh Manik
That’s it. From my side. Thank you so much.
Vikram Mehra
Thank you sir.
operator
Thank you. Our next question comes from the line of Kavish Parikh from BNK Securities. Please go ahead.
Kavish Parikh
Hi Vikram. Thanks for the opportunity and congratulations on a great set of numbers. Vikram, on the event segment, while I do understand that numbers here can be lumpy basis events calendar and all your initiatives seem to be on the right track. What kind of absolute revenues or say growth can we expect here on a sustainable basis? Say some sense on numbers two years out. And secondly, what kind of margin upliftment do we expect at the consolidated level as the revenue contribution from the movie business goes down over the next two years?
Vikram Mehra
So let me try to answer the first one on the events business, I’ll be honest with you. We still are at a very early stage of this event economy in the country. Two years back, two and a half years back when we started the events business, we were not and I said in a quarterly call that we will take a call after one year whether we want to continue in this business or not. And then Diljit happened and after that Himesh happened and we are realizing there’s a large enough potential but there are still serious infrastructure challenges in our country to make live event business genuinely a profitable business.
We are bullish on that part. But I will be in a better position to give a guidance maybe 12 months from now. I don’t think today it will make sense for me to give a guidance on the revenue side. What I can tell you is on the profitability side, we Are very very clear in our hedge that in a steady state we want it to be a high single digit margin percentage on a margin basis will look very small. But even business by very nature is a very high IRR business because the cash gets deployed at best for 15 to 20 days.
The some of the times right now even business we get a positive working capital. So we are getting money right now to go back and fund our own events. So our attempt is going to be high single digit margin percentage. That’s where we people are moving. But it will take two to three years to go out there and on a steady basis achieve these percentages. Today it’s a hit and a miss. Some of the events end up delivering this. Some of the events which are at an early stages or wherever we are building a brand new IP ends up even contributing negative to the margin.
Your second part was on the video side. So what you are going to be seeing that our own internal video where the biggest share was of the film spot. We will wind it down over 12 to 15 months. So those numbers will start moving out of our books. But we will get to the extent our strategic minority ownership is there in in Banchali Productions we will start getting those numbers contributing to our own pnl.
Kavish Parikh
For the moving part, my question pertains to consolidated EBITDA margins. What kind of upliftment do you expect as the share of video which is a low margin business goes down? Do you expect to revise your EBITDA margin guidance say next year or maybe for F28 going ahead?
Vikram Mehra
So just give us. So if you see our EBITDA numbers there in the presentation on a steady basis we have typically if I take out the events while apart we have always beaten the 30 to 33% guidance. I just want to get this mix a bit stabilized. Over the last one year we have brought down karma dramatically. We are now bringing down films business dramatically. But live events business is going up. We will need a little longer time for us to to get the confidence to go and give a higher guidance. So we are continuing at this juncture with the adjusted ebitda guidance of 30 to 33%.
But if you go in the past history we have always beaten out.
Kavish Parikh
Understood. Thanks for that, Vikram. EBITDA margins this quarter surprised us positively. But you have maintained the guidance at 30 to 33% for adjusted EBITDA here. What extent the beat this quarter and the 57 million odd profits in the events business. What does that pertain to.
Vikram Mehra
Your question? And can you please once again tell Me.
Kavish Parikh
So EBITDA margins this quarter at the consolidated level surprise us positively. But annual guidance for the adjusted EBITDA number stays at about 30 to 33%. The long term guidance that I’m giving here, I’m not necessarily giving guidance right now for this year alone because only 1/4 left. I.
Vikram Mehra
I can’t go more specific than that today. So 33% is a medium to long term guidance for our business at a consolidated level.
Kavish Parikh
Sure. And the 57 million, The 57 million-odd profit that you have shown in the events business this quarter, what does that pertain to?
Vikram Mehra
But we had Diljit show during this quarter, we had himeshows during this quarter and we have some of these stand up comedy that we people did during this quarter.
Kavish Parikh
All right. And lastly, unallocable expenditure has witnessed a sharp increase over 9 months F26 as compared to the last year. Could you highlight what explains the same?
Vikram Mehra
I’ll ask my CFO Pankaj to take this one. Pankaj please. Just a moment. Sir, Mr. Pankaj is not on the line. He’s just disconnected. I’ll connect him to the college.
Pankaj Mahesh Chaturvedi
So we. Sorry, Kuldeep is going to answer that one. So if you see this is basically. Basically due to the decrease in the other income which is interest income which we were having surplus fund which we have invested in FDs and mutual funds. So now we are utilizing those funds for the business purposes. So that is where other income has reduced. And this is a main difference of unallocated expenditure over income.
Kavish Parikh
Understood. Because of netting off. Understood. Thanks for that. Thank you Vikram. All the best.
Vikram Mehra
Thank you. Hello, Mr. Pankaj is on the call with us.
Pankaj Mahesh Chaturvedi
I think that Kuldeep has answered that.
operator
All right. All right. Our next question comes from the line of Jyoti from Arihant Capital. Please go ahead.
Jyoti Singh
Yeah, thank you for the opportunity. Sir, might be this question you have got multiple time but wanted to ask again like India is a paid music penetration which is approximately 1%. So what Apple and subscriber assumption are embedded in our medium term revenue outlook. And also wanted to understand what percentage of license revenue today is subscription link and. And how. How fast can this mix shifted can shift. And also with 550 million plus follower across platform, what is your revenue per million followers? And how do you plan to scale this up going forward?
Vikram Mehra
Ma’, am, you have lots of questions. Let me see if I can answer. When we people give our music medium to long term growth guidance of 21 to 23% we are not factoring in Any major change in paid subscription in the country. So whatever comes on the paid subscription side will be a booster on top of this guidance of our that’s point number one. We as company believe that India is ready if all the remaining two platform which are on the free spot side that they both of them decide to go on the completely behind a paid wall as Amazon, Apple, Ghana have gone.
Only Spotify and Savan haven’t gone yet. Once they do, we believe India has a very easily a potential of 100 rupees per month or 90 rupees per month. At least 100 million people going out there and opting for a paid subscription that are believing the market potential is massive in our country. The success of earlier days dth, then digital cable and now video OTT services, even transactions being done on gaming services today and give us the confidence that one there’s affordability second there is an inclination to go and pay for entertainment content and the second fabulous job done by government on the digital infrastructure has ensured that the payment has become very very easy and glitch free.
All these factors coming together create this perfect recipe right now where a large number of people can go out there and move to the paid subscriber base. When we also look to other countries like Brazil or any of the other Latin American countries which on the economic side and not very different from ours, we have seen that the market continued on a free flight for a very long time. And the day the one or two big guys decided to start pushing pay there was a hockey stick effect and the paid subscriber numbers went through the roof.
Something very similar happened in China around seven years ago. We believe a similar story eventually is going to go and play out in India. Also on the music side as a company we have that stronger belief in this hypothesis that we are when we are doing new content acquisition we keep in mind that which are the languages where there will be a higher takeoff or the first takeoff will happen of the paid subscriber base and we skew our spend on that particular language. It’s a matter of one, two, three years where when you will see paid subscribers fruition taking off in our country.
Have I answered your question?
Jyoti Singh
Yes sir, largely. And the last question follow up on the EBITDA side like you have guided 30 to 33% but once CAPEX over by 27. So what’s our outlook on that side? On the EBITDA side not only revenue like you mentioned you cannot guide but on the EBITDA side what kind of trajectory we can follow Ma’, am, on.
Vikram Mehra
Revenue I’ve given the guidance on the music side that music which is a steady part of the of the of verticals will continue growing at 21 to 23% on a medium to long term basis. So we have given a revenue guidance on the adjusted EBITDA guidance remains 32 to 33% on medium to long term. Because we have multiple businesses here. This is at the consolidated company level. You have music business, you have video business, you have live events business and a small place sitting here with us, the karma business also which is part of the company.
Each of those other businesses take very little capital but they’re also lower margin, lower capital kind of businesses. Music is a heavier margin because we have an old catalog helping us out but also requires large amount of capital flow from investments from our side. So the other part I want to clarify is our music investment on newer content we have given a guidance around thousand crore over financial year 25, 26 and 27. After that it’s not that we will stop investing in newer music. We need to keep your company completely future proof. So then 2050 also people are listening to the music which is also owned by Saragama.
So we will continue investing. But the increase in the content spends is not going to be so steep as you have seen over these three years. It will then start moving at the rate of inflation maybe which will be anything within 6 to 8% to 10% every year. Not this 30 to 40 at times 50% jump that you’ve seen over the last three years. Ma’, am, have I answered your question?
Jyoti Singh
Yes sir. Thank you so much.
Vikram Mehra
Thank you.
operator
Thank you. Our next question comes from the line of Kunal Bhatia from the Lal and Prochar Stockbroking Ltd. Please go ahead.
Kunal Bhatia
Yeah. Hi sir. Thanks for the opportunity. So if we look at the overall numbers like a, what gives you the confidence that Q4 would be a better number? Taking into account that there has been already some shift in the movie launches to the next year also. Secondly, so talking about events, if we look at the number when we hit the 400 plus crores of revenue in last year, Q3FY25, so does that thing becomes more of a one off for the next say one or two years till we don’t have a larger event in place. So taking into account these large investments of 100 odd crores, we more or less stay at around that same 260, 250odd crore of a top line which is not a significant sort of a growth number as Far as the top line is concerned, could you give some thoughts on this?
Vikram Mehra
So let me answer the first question. I have not said anything about Q4. All I maintained is that last at the end of Q2 we had given a guidance that of 17 to 18% music revenue growth by the end of the year, at the end of nine months we are sitting on 18% growth on a nine month basis. We are still hopeful to I can maintain our guidance of 17 to 18% on a full year basis when we end Q4. That’s all I have stated till now. There are releases that are planned and as I talk right now there are various regional language releases that are also happening.
So we are at this moment still confident that we should be able to meet continue with this momentum and end the year at somewhere close between 17 to 18% revenue growth. On the music part of the business. It’s only on a medium to long term that we are going back to an old trajectory that we followed till financial year 25 or 21 to 23% growth on the music side. That’s your first part sir. On the events part of the business, these large events, where are the big shows? Shows are happening and it’s completely 100% controlled by us.
They don’t happen that often. And we are very very clear what we are chasing on the event business is not the top line but the bottom line. We want even if there are smaller businesses, events that are happening. We are very happy doing 200 smaller events but where we have a higher assurance of profitability than doing this very very large events where the risk factors are pretty high. There are only few artists in this country, you can count them on a single palm where there is a high assurance that if you do an event with them there will be profits coming in.
We are working with, we are grateful that we get a chance to work with two of those artists. The numbers will grow in a steady fashion. But this kind of a lumpy revenue that you saw in Q3 of last year which was not seen before and even when it was shown, if you listen to my call last year I had said this is one off, please don’t hold it against us. This may or may not happen but eventually Vertical in a steady fashion will keep on growing up. And the great part about even vertical is there’s very little capital which remains locked in it even now.
If you see at the end of this quarter we have what close to 15 crore which is locked into the events vertical. Events Vertical does not have to ever major cash that gets locked there because you blocked. So the very nature is that you put the money in, you rotate the capital gets rotated right now within 30 to 40 days one gets out. So I think events vertical we will follow the same strategy. Keep yourself very very capital light. Don’t get into any of the infrastructure related large projects part of the events business. Go back and produce great shows with artists where there’s a high probability of success.
Find business models where in case things go wrong you can hedge that downside by doing something with the artist. Maybe on the recorded music side because we are uniquely placed being the only entertainment company not just in India, globally now which is present both on the recorded music side as well as the live event side. We want to take the benefit of this so that we will always be able to control the amount of losses if any that come out in the event side. Have I answered your question?
Kunal Bhatia
Yeah, but so going forward say on a medium to long term basis, how does one have certainty or predictability for the events business?
Vikram Mehra
Take out that one off things. So just take out the one off things which when it again I’m repeating when that one off thing happened we had said it’s a one off thing. You take that out, there is a steady growth you’re going to find year after year. So let me. Every time there’s a one off thing we will call out that one off thing and please don’t consider that as part of a growth strategy. It will be imprudent on my part to say no when a one off activity like that happens. But that’s a nature of the beast here.
If you are going to be working with Indian artists and we are very clear that’s a space we want to be in. We work with Indian artists, artists with whom we also have a relationship on the music side. Their all India tours of that size are not that many happening in the country. Most of those are very very small. Dilji Dosanj is the only and the only tour of its shape size that has happened in the last five years in this country. And you can’t come every year to India please. Dilji Tukush Quarter and then please evaluate her.
So remove these one off events and you will see a steady growth happening on the event side.
operator
Thank you ladies and gentlemen. In order to ensure that the management will be able to address questions from all the participants in the conference, kindly limit the question to one per party. Our next question comes from the line of Dalal & Broacha Stock Broking Pvt. Please go ahead.
Unidentified Participant
Hi, thanks for the opportunity. So the question is regarding your content investment. You said 275 to 300 crores of investment this year. And our historical guidance three year guidance has been around thousand crores of investment. Now does that thousand crores of guidance. Include the investment that you had done in the Bansali Productions or it is a completely different.
Vikram Mehra
So whatever music that we will end up buying from Banchali Productions will be part of this investment. So there are two relationships we have right now. We have gone out there and taken an equity stake in Bansali Productions as part of that deal we also have a pre agreed formula basis which all sims that is produced by Banchali Productions and legal entity. The music will always come to Saregama. So there’s a guaranteed flow of music without any bidding going on. That music that will come in will be part of this thousand crore. Got it. And just as a second question is with respect to your video segment now historically it’s a quick one just this is just a short one.
It used to have TV serials revenue from thumbnail right. And then there used to be some.
Unidentified Participant
Bit of pocket SS revenue also. So when you say that you will take down the movies business to zero over a period of time will this. The the entire revenue go away then. We’Ll still have some bits and pieces here.
Vikram Mehra
We will have. I said my opening statement that what we are winding down is a films business. But we will continue with the focus on the video side on short format content which goes goes as under filter copy and medium sized content which goes on various web series or TV series. That part of the business is a stable part of the business. Profitable part of the business that will continue. Thanks.
operator
Thank you. Our next question comes from the line of Aditya Nahar from Alpina Enterprises. Please go ahead.
Aditya Nahar
Yeah. Hi Vikram. Just a suggestion with the new treatment on buybacks I hope you all consider. A combination of buybacks and dividend both. Just a suggestion. Obviously it’s up to the board but if you would consider it that would be great. Become there was some news report that said the music for Bhrunder 2 has gone to a competitor. If you would want to talk about. That or was the bidding too high. Your logic or rationale behind it? If that’s possible.
Vikram Mehra
So all I can say instead of commenting on a specific movie we are very very clear content investment in a fashion that we end up getting a back period. We don’t do content keeping vanity in anybody. So whatever we were good something maybe if we believe that there is a very Low probability of us managing a five year payback period. We don’t, don’t go out there and opt in for that kind of content. It just stays there. I think to some extent it reflects that as a management team we don’t allow our own personal emotions ever to go back and come in place.
There are hard nose financial calls that are being taken.
Aditya Nahar
And just a point. About the buybacks and the dividend. Thank you.
Vikram Mehra
So point is well noted and inshot. We’ll convey your feedback to the board.
Aditya Nahar
Thanks Vikram. Thank you.
operator
Thank you. Our next question comes from the line of Anchal Jalan from Lotus Wealth. Please go ahead.
Unidentified Participant
Hello. Thank you for taking my question. So my question is regarding the risk on the side of our investment in Bhanpali Production. Our company in future has options to even increase this investment to 51% by 2030. And the business of Banpali Production is very volatile. It can even be a blockbuster or otherwise. So does our investment risk in future stable equity or a more adventurous risk of debt funding tool to the company whenever it is required for any mega movie or anything. Can you please tell me about it?
Vikram Mehra
See at this moment first the decision of what this equity stake will be will be taken three years from the time the deal was done and during this. And it will be based on the average financial performance during these three years. So the onus is fully sitting out there with the management of Bansali Productions to be extremely prudent about what kind of movies are they making and at what cost structures are they making. We also have a complete financial oversight as part of the agreement on Bansali Productions. So we are reasonably confident that things will be in control.
Also I can give you comfort that if you look at the past numbers of Bansali Productions they run a very very tight ship and we believe that trend to continue. Our understanding of the next few years plans is that the combination of the capital infusion done by Saregama and Bansali Productions and this ability, unique ability Bansali Productions has that they can go to a digital platform and pre sell the rights even right at the script stage and pick up massive advances from them, the combination of these two will come very very handy for them to go back and finance all their films without any need to raise debt.
We don’t see any need for any debt race to happen. Regarding your last point on the majority stake, do we want to go out there and take or not? That’s a call board will be taking at the end of the three year. We have the Right. Not the obligation to go out there and do that.
Unidentified Participant
Okay. So if, if there is any requirement for debt by chance then the company is open for that.
Vikram Mehra
You’re asking me a very theoretical question right now. We don’t see the need. But if debt has to be raised in the servicing or debt is going to affecting the financial performance of that company and that will have an impact on the valuation of that company. So I have, I’m very confident of the banshali management that they will be extremely prudent while going out there and doing this. Regarding equity infusion, apart from the money that we have put in, we have no intent to put any obligation or intent to put any more money over the next three years.
Unidentified Participant
Okay, sir, thank you so much.
operator
Thank you. Our next question comes from the line of Govinda Rajan Chilappa from csim. Please go ahead. Yeah.
Unidentified Participant
Hi Vikram. Hi. I think like many others I’m also confused on the, on the guidance. Just interest me for a few seconds. So you have guided to music business accelerating back to its historic trend of 22 to 23%. At the same time you also said that the consolidated margins will fall from 39% we saw in the first nine months to 32 to 33% which is what you’ve been guiding in the past. Now is this because you expect the other lower margin businesses to grow much faster and therefore the mix changes adversely or do you expect margins in the music business to come down?
Vikram Mehra
So I think at least the guidance you got right, I’ve been holding on to 32 to 33% guidance I think for last four or five years now. And I’m saying this repeatedly because of the mix that we people have. Suddenly you have a large Diljit dosage kind of an event happening again and the margin in that quarter, if I remember it correctly, EBITDA margin fallen down 29 or 30%. So I want some amount of stability to come in. As video business wanes down, live events become business becomes little more predictable. We will be in a better position to if needed be to go back and change our guidance.
Music profitability is not going to come down. There’s no reason not come down over the years. There’s no reason for us to go back and come down at all. If anything, subscription is going to be ensuring as subscription goes up that the yield per view or a stream is going to go up so profitability of anything will improve rather than coming down. I don’t want to change the corporate level guidance till the time these verticals that we people have get a proper stability. If we people like. If you see this quarter’s EBITDA percentage sitting at 46% now, these are aberrations that keep on happening.
Or 46% cannot be offered right now on quarter and quarter. It just depends on which content got released or which revenue peaked. While the cost may be sitting on quarter two or quarter four basis. So long term, it’s not that we believe EBITDA percentages are going to come down. We will change our guidance once the mix of a vertical stabilizes.
Unidentified Participant
I think the confusion comes because you give guidance on top line just for music, but margins is for the whole company. So there is an inherent assumption you’ve made for growth in other businesses which mathematically would suggest that you are expecting other businesses to grow much faster than 20 to 23%. Which is. Which is why all this confusion.
Vikram Mehra
Okay, fair enough. Let me see next time onwards. Right now when we do the annual call, what more refinement in our guidance for individual verticals can we people give?
Unidentified Participant
Yeah. Just to be clear, you don’t expect music margins to be very different from what it has been for the the last 12 months.
Vikram Mehra
Music margins are not going to fall down. If anything, over time, music margins may marginally improve.
Unidentified Participant
Okay, that’s comfort. Thank you.
operator
Thank you. Our next question comes from the line of Anand P from Sema Wealth Private Limited. Please go ahead.
Unidentified Participant
Yeah, good evening. Just want to note, do you have the exact margins out of as of this quarter, the exact margin for each segment.
Vikram Mehra
You can go out there in the results. It’s given for the various segments. The margins are there as part of the segment results.
Unidentified Participant
The top what is the revenue breakup for margins on each segment? I don’t see exactly to be there there.
Vikram Mehra
It’s on the page two of the results. The first row is for segment revenue. Second is for called segment results where the margins are there. If you can ask me the question, I can hopefully answer that.
Unidentified Participant
In the case of live events now the. What do you say the grades for like okay, concerts and events like growing up more and more. Now is there any Sariga basically relying on an existing artist for live events. Or would it move to other artists. Beyond its list of artists under the catalog? Let’s say even foreign artists or someone to come as basis of mag events. Would that be possible or would it come under let’s say music license problems?
Vikram Mehra
No, there’s no problem. It’s a strategic call. Our focus always has been to work with the Indian artists. Because of the unique position that along with being a live events producer, we are also a music recorded music company. So when we work with these artists like Diljit or Himesh or a backstage siblings and likes of many of these, we also very often do a combined deal whereby we buy their music as well as sign them up for the live events business, does it stop us from working with any of the international artists on a pure live event business? No, it does not.
Today our focus is higher on the Indian artists. We believe the financial performance on the bottom line is far better on the Indian artists because the cost structures are something we can manage better than cost structures on many of the international artists.
Unidentified Participant
Okay. Okay. Thank you so much.
operator
Thank you. Our next question comes from the line of Shivan Sarvaya from Humidiction Investment Advisors llp. Please go ahead.
Unidentified Participant
Good evening sir. Thank you for the opportunity. Am I audible?
Vikram Mehra
Yes please.
Unidentified Participant
Yes sir. So my question was on the artist management business you spoke in your opening remarks that we manage around 270plus artists. So if I want to view these art, the name of these artists and the details of these artists, where can I, where can I get this or where can I source them from because I can’t see them on your website.
Vikram Mehra
We typically don’t give the names that easy because the moment my competition knows everybody in detail, it becomes easy to go out there and poach. I’m happy to share that the entire full list. You have the big artist names that are mentioned but the entire list of 270 strategically. I also thought we should go out there and put it and the team was really up in arms saying why you giving it on a platter to our competition especially on the influencer side. So bigger artist names are there all across the long tail that we people have here.
We keep it only to ourselves. I’ll be happy to share with you if please come over to the office and I’ll show you.
Unidentified Participant
Okay sir. So just one couple of queries in that in the same breath when I see Your presentation page 27, you’ve given a list of few artists. So is it suffice to say that these are the top means the largest artists that you manage.
Vikram Mehra
It’s a combination of the artists and some of the newer names that have come out here in the recent times. So what we do is see there are three of those star marked. We are intentionally going out there and highlighting the names of the artists who have been onboarded, who have a large fan following and been onboarded in this quarter itself. Please, I don’t know if you have that feeling. But a lot of people when I talk to them that we also are managed artists, they start thinking that we’ll be managing Bollywood. We are very, very clear as a company we don’t manage Bollywood talent.
There is no value that we can go and bring in into a large Bollywood talent. We bring value to talent which are midterm basis right now or in non Bollywood by giving them a large opportunity to appear in our video or music content. And that’s how we build the artists and build a long term relationship with them. So if you see a face out there called Viraj Gilani now with Viraj Gilani, he is a, he’s a very big talent today on the digital side specializing in Gujarati stand up comedy. We have now done a movie with him.
We are also now doing stand up acts with him both India and abroad. And there is a play right now on one of the Gujarati songs that he will be featuring. So that’s how we make the talent bigger. It gets into a much more stronger relationship then just a transaction relationship with the talent.
Unidentified Participant
Got it, Got it. And sir, in this 270, could you give me the split between users?
operator
But if you have a follow up question please.
Unidentified Participant
It’s the same, it’s the same question.
Vikram Mehra
There’s no clear cut differentiator. Many of the artists like you are not going to be calling Viraja traditionally music artist but Viraj is doing music video for us. We have just done this massive, massive Marathi song Zatpad Patapat with Danny Pandit. Now Danny Pandit traditionally was not a music guy. He is doing a lot of music. So the way we manage in our system is all talent is working primarily in music because that’s the biggest content investment that we people do. But also in some of the video content I have Mahi, a young kid who happens to be Shaan’s younger son and we match him, he does music with us but we also done web series with him on Filter Copy.
So that’s the power that we people bring in that we are there in music as well as video and live events and we plug in our talent that we people manage across all and then sell it to the corporate market or the vending market or to the branch market and earn our commissions.
Unidentified Participant
By music I meant singer, non singer. If you can give me that split and just one.
Vikram Mehra
Happy to chat with you.
Unidentified Participant
In just one last one quick one.
operator
You have a follow up question please.
Unidentified Participant
It’s just a quick one. If I may say in your compensation structure do you have A minimum guarantee that you give out to these artists.
Vikram Mehra
Are you getting now getting into too much of details? I can’t get into real structures with my talent.
Unidentified Participant
Okay, okay sir, no problem. Thank you very much for this. Thank you.
operator
Thank you. Our next question comes from the line of Hitendra Pradhan from Maximal Capital. Please go ahead.
Hitendra Pradhan
Thanks for the opportunity. I hope I’m audible.
Vikram Mehra
Yes, please.
Hitendra Pradhan
So the core business which is like music licensing, that is going at as you mentioned earlier also like you know, 20 plus and our guidance is, you know, it can grow at 20 to 25%. My question is, you know, what is the contribution of our older catalog and the New York catalog like you know, the say you know, last term, three, four quarters. So one year, one year of catalog for this kind of, you know, growth rate.
Vikram Mehra
So I will, I’ll not be able to give you last one year data. It’s too much. Competitive, intensive ballpark like you know, like.
Hitendra Pradhan
What is the next plate of contribution? Basically what.
Vikram Mehra
Because what we have shared in the past, I can go back and tell you this, that this is the data I think we shared in the last annual presentation of our fifth overall. So around 56% of all the. Sorry, 56% of all the revenue that we have made in financial year 25 actually came from music that was released in 21st century. And 44% of the stuff came right now from an older catalog, which is the 20th century catalog. Kishore Da Rafi Sahib Lata Didi, that kind of a part. We are steadily seeing a larger though catalog is growing for us.
But the large increase that we people are seeing on the growth side is coming from the newer content investment industry is growing, growing anything between 5 to 8% year on year basis. Remaining growth that is coming in is coming in because we are investing heavily on your content and a market share is going up.
Hitendra Pradhan
So faith like bulk of our growth in the music licensing is coming from our new catalog, right? Like the ones we are investing.
Vikram Mehra
If I’m saying 21 to 23, not 22 to 25, 21 to 23% is the guidance that we are giving for future growth in music business. This is assuming subscription will continue growing at the same pace. And the hockey stick effect is not going to happen anything. The industry grows at 6 to 8%. So the older content will continue growing at that particular pace and remaining growth is going to come because of the new content investments that we people are making.
Hitendra Pradhan
Thank you sir. Thank you sir.
operator
Thank you. Ladies and gentlemen, in the interest of time, that was the Last question. I would now like to hand the conference over to the management for closing comments.
Vikram Mehra
Thank you everyone. This quarter I’m just going to repeat some of the key numbers which are important for us. This quarter saw the music vertical revenue grow by 29% year on year basis. On a nine month basis we are back to 18% growth rate. We are confident that we will be able to meet our guidance for the full financial year or of 17 to 18% growth in music business on a medium to long term basis. We hold a guidance of 21 to 23% which we have been able to achieve over the last eight years leaving this year every year in the past and we are very confident we will be able to achieve that.
Our adjusted EBITDA percentage during the quarter this quarter was exceptionally high at 46%. Our guidance though remains at 32 to 33% because of the mix of various verticals that we have. But with time we are expect endeavor is to go out there and better it. We will continue investing in newer content keeping data and five year payback period as a sole guidance factor because that will ensure that every new piece of content that we people are bringing in is going to be adding something to the bottom line today and very substantially to the bottom line in the long run.
Thank you and look forward to your continued support. Thank you and good evening.
operator
Thank you on behalf of MK Global Financial Services limited That concludes this conference. Thank you for joining us and you may now disconnect your lines.