IGI Logo

Stock turns ex-split…

About the stock: Saregama India (Saregama) is India’s oldest music label owning ~1.3 lakh songs across various languages, which is monetised over various formats such as digitals (streaming, YouTube), physical (Carvaan) and television.

Apart from music, it is also into TV serials /(Tamil) and creates low budget films as well as web series for OTT platforms through Yoodlee Films

Event: Stock Split

Saregama had fixed April 27, 2022 as the record date for stock split in the ratio of 1:10 i.e. one existing share of face value | 10 gets sub-divided into 10 shares of FV | 1 each. The ex-date for stock spilt is April 26, 2022

On the ex-date i.e. starting today (April 26, 2022), the stock price has adjusted for stock split ratio at ~| 450/share i.e. one-tenth the closing price on April 8, 2022 (| 4496/share)

What should investors do? Saregama’s share price has grown by ~17.8x over the past five years

We expect digital monetisation to provide sustained growth. Furthermore, recent demerger of non-core activity i.e. publication is a key positive with likely to drive a focussed approach of management on key business of music. We maintain HOLD rating on the stock

Target Price and Valuation: Keeping our estimates unchanged, we value Saregama at stock split adjusted target price of | 489, at 40x FY24 P/E.

Key triggers for future price performance:

Growth trajectory in music licencing, which management envisages to grow at 25-30%+ in medium term, along with new content performance

Recovery in Carvaan on the back of economic reopening

Expansion in movies and web series segment with new titles

Alternate Stock Idea: Besides Saregama, we like Inox Leisure in media coverage

Beneficiary of cinemas recovery & merger synergy

BUY with a target price of | 680

To Read Complete Report & Disclaimer Click Here

For More ICICI Direct Disclaimer http://icicidirect.com/disclaimer.html
SEBI Registration number is INZ000183631

Above views are of the author and not of the website kindly read disclaimer