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Tips Industries is a prominent Indian entertainment company involved in music production, film production, and distribution. It has an extensive catalog of popular Bollywood music and movies, making it a key player in the Indian entertainment industry. The company also engages in digital content creation and management across various platforms.
Table of Contents
Business Metrics
| Metric | Value | Comments |
|---|---|---|
| Market Cap | ₹7900Cr | Looks high in comparison to the sales (SAREGAMA sales - ₹845Cr Market cap - ₹10kCr) |
| PE | 55 | High but in range of industry (46) (SAREGAMA - 52) |
| Promoter Holding | 64.2% | Good, this quarter it has increased |
| OPM | 67.6% | Very Good, but is this sustainable? No other company has been able to sustain this level. Mostly this is because new content acquistion has not eaten up the margins yet (SAREGAMA - 29.4%) |
| Interest Coverage | 622 | No debts |
| Sales | ₹263Cr | (SAREGAMA sales - ₹845Cr) |
Other Comments - Employee cost for Tips is only 4% in comparison to 10% for SAREGAMA. Also FII+DII has decreased this quarter in comparison to SAREGAMA where it has increased.
Concall Q1FY25 Highlights
Revenue and Growth
- Tips Industries reported a quarterly revenue of ₹73.9 crores, marking a 40% ⬆️ compared to the previous quarter.
- The content expense was in the range of 28-30% of revenue, comparable to Saregama’s content expense ratio.
Revenue Drivers
- YouTube contributed 45-50% to the total revenue, with Spotify and JioSaavn being other key growth drivers. Comparatively, Saregama also relies heavily on digital platforms for revenue distribution.
Content Addition and Strategy
- During the quarter, Tips Industries added 97 songs to its catalog, comprising 79 non-film and 18 film songs. The company emphasized a quality-over-quantity approach.
- The content cost for the quarter was ₹12.7 crores, with an expected year-wise increase from ₹55.6 crores to ₹62.4 crores, and a projected cost of ₹80 crores.
Profitability
- EBITDA saw a 55% ⬆️ , contributing to a PAT margin of 58.9%. This significant increase was mainly due to a settlement with Wynk, which brought in ₹5 crores this quarter, with an additional ₹7 crores expected next quarter. Without the Wynk settlement, the PAT increase would be around 30-31%.
Future Expectations and Strategy
- The company anticipates a 30% growth in both top-line and bottom-line for FY25, with plans to release 300 songs for the year.
- Revenue from the new catalog is expected to be in the range of 10-15%.
- Tips Industries aims to recover the cost of songs within three years, projecting a four to five-year recovery period for investors for all songs.
Digital and Streaming Platforms
- Due to agreements with Warner, platforms like Wynk, Hungama, and Gaana are expected to start generating revenue. Additionally, an Instagram license has been granted to Warner, which could significantly impact future revenues, especially from Instagram reels.
- 75% of the company’s revenue is generated from digital platforms, with YouTube views increasing by 29%, reaching 104 million subscribers, up from 97 million last quarter.
Film and Non-Film Segments
- The company plans to produce 3-4 Hindi films and 10-12 regional films. Non-film music, however, is not a substantial contributor to revenue at this stage.
Financial Position and Workforce
- Tips Industries has a strong cash and investment position, with ₹262 crores available.
- The workforce increased from 87 to 95 employees this quarter.
Other Key Points
- The company follows a strict write-off strategy within the same quarter.
- It is projected that premium subscriptions will take 2-3 years to become a significant revenue stream.
- The company has a catalog of 30,000 songs.
These highlights showcase Tips Industries’ robust growth and strategic focus on digital platforms, content quality, and cost recovery, setting a positive outlook for the upcoming fiscal year.
General Industry Trends
