TIPS Industries Limited Q3 FY22 Earnings Conference Call Insights

Key highlights from TIPS Industries Limited (TIPSINDLTD) Q3 FY22 Earnings Concall

Management Update:

• TIPS released 86 new songs in 3Q, the highest number of songs released in any quarter so far in FY22. The company’s new Bhojpuri song Tumsa Koi Pyaara by Pawan Singh and Priyanka Singh crossed 60 million YouTube view that was released on 10 Dec, 2021.

Q&A Highlights:

• Akshay Sam from SAM Capital asked about growth, if it was due to re-negotiation of contracts with existing platforms or more revenue from minimum guarantees. Kumar Taurani MD said that the growth came from new releases. Additionally, increasing ad prices and all streaming platforms contributed to growth.

• Akshay Sam from SAM Capital also asked if any negotiation is going on with any other platforms and what big releases are coming in the next few quarters. Kumar Taurani MD answered that as far as negotiations, it’s a regular thing. On the content side, the company has acquired a big film from Balaji Telefilms, called Freddy with music of Pritam. In Telugu, the company has acquired two big films and 10-12 small films. Kumar added that the company plans to add more markets in the next 2-3 quarters.

• Saket Mehrotra of Tusk Investments asked that in YouTube, is the company’s strategy to recycle old songs as these comes in the list of trending songs as well. Kumar Taurani MD answered that the company’s major music, about 60-65% is of ’90 music. And a specific channel on that has given a big boost to its investments. Additionally, Kumar said that all languages should have a focused channel.

• Saket Mehrotra of Tusk Investments also enquired about the income from collections societies and has the lockdown wave affected the company. Kumar Taurani replied that people are used to the pandemic now and there is no stoppage of celebrations. Societies are giving more than what is projected of 30%. Therefore the company is positive and the company is not affected by the pandemic.

• Kamal Verma with Morgan Stanley asked about the revenue split from music streaming app, YouTube and other sources. Kumar Taurani said that the breakup cannot be shared for competitive reasons but digital platform is always in the 65-70% range.

• Kamal Verma with Morgan Stanley asked that in terms of pricing how has it moved for the company’s own library of songs. Kumar Taurani answered that the company is doing 25-30% extra on its own library of songs, which is very comfortable.

• Ankit Babel of Subhkam Ventures asked about which major platforms are not company’s clients. Kumar Taurani MD commented that there are 3-4 platforms of which names can’t be revealed. The company added that of the overall music business, 40-45% of the money YouTube generates. Therefore if the company is missing on 3-4 platforms other platforms do compensate for that.

• Ankit Babel of Subhkam Ventures clarified that whether the share of paid viewers increasing in YouTube means viewers with paid subscription. Kumar Taurani MD answered that it means paid subscription plus any video where ad are run.

• Ritul Lamba from Lamba Investments enquired that in the post COVID world if the digital viewership growth may slow down for TIPS, as Netflix guided to its viewership coming down internationally. Kumar Taurani MD answered that on the contrary, the company’s business will grow substantially because people post COVID will start travelling and music will be consumed more.

• Ritul Lamba from Lamba Investments asked that in the movie business what is the long-term plan of revenue targets. Kumar Taurani answered that there is a small focus on the movie business currently and the company is waiting for the demerger to get over. And once that’s over, the company will reveal its plans.

• Ankush Agrawal of Surge Capital asked that of the new content the company is acquiring, if the deals are fixed or royalty based. Kumar Taurani answered that the company does not have a sharing of royalty infrastructure and from beginning all acquisition of music has been on a lump sum basis and it will be the same going forward.

• Ankush Agrawal of Surge Capital queried that on the demerger, if the cash would go to the music business or it would go to film business also. Kumar Taurani replied that that cash would also go to the film business. On a percentage basis, about 40% of cash will go to film and 60% will go to music.

• Ravi Naredi from Naredi Investment asked how much percentage growth is in the company’s mind for its music business in the next 3-5 years. Kumar Taurani said that for the music business, the company believes 25-30% is comfortable in topline and bottom line in the range of 15-20% is comfortable.

• Swechha Jain of ANS Wealth clarified about the company’s content cost and in how many years it is recovered. Kumar Taurani answered that the content cost is getting recovered in 2-2.5 years. But as a company, TIPS writes-off the cost the same year with the profits the company makes and the liability is not there for the next year.