Saregama Share Price Target at Rs 740: ICICI Direct
ICICI Direct, the retail research arm of ICICI Securities, has reiterated its BUY call on Saregama India with a 12-month target price of Rs 740, about 16% above the Rs 638 market price, after the RPSG Group music label posted a robust September quarter. Revenue rose 36.6% year on year to Rs 314 crore, licensing income climbed 28.8% to Rs 180 crore and artist management nearly doubled to Rs 51 crore. EBITDA jumped 48.3% to Rs 102 crore as margin widened 255 basis points to 32.4%, while net profit grew 47.6% to Rs 64.6 crore. The brokerage values the stock at 42 times FY28 estimated earnings.
Side A · Q2FY27 Result Update · ICICI Direct
Saregama India Hits a High Note: ICICI Direct Keeps BUY, Sees Rs 740 as Paid Streaming Gathers Pace
A 36.6% revenue surge, a near-doubling of artist management and a 255-basis-point margin expansion give India's oldest music label a chart-topping quarter.
BUY · Maintained
CMP Rs 638
Target Rs 740
Upside 16%
SAREGAMA
Rs 740
42x FY28E
52-WEEK RANGE · RS 307 – RS 671
The Verdict From ICICI Direct
ICICI Direct analysts Bhupendra Tiwary and Anjini Sharma have stayed with their BUY rating on Saregama India after a quarter in which almost every revenue stream except video moved decisively higher. Their target of Rs 740, dated Nov. 5, 2026, is derived by applying 42 times to estimated FY28 earnings per share of Rs 17.6. The underlying wager is unambiguous: accelerating paid subscriptions in India, which the analysts call a potential "game changer," should lift the yield on every song in the label's catalogue of more than 1.8 lakh tracks.
The Quarter, Track by Track
Q2FY27 Tracklist · Rs crore · change year on year
Sequentially, revenue rose 19.2% from Rs 263.6 crore, though EBITDA margin slipped 296 basis points from the June quarter's 35.4% as operational expenses, which include production and event costs, swelled 45.5% quarter on quarter to Rs 118.5 crore. Other income fell 20.1% year on year to Rs 9.2 crore, so the profit expansion was earned at the operating line rather than the treasury desk.
The Mixing Desk: Which Channels Were Turned Up
Year-on-year growth by channel · fader height to scale (0 to 100%)
+95.3%
Artist mgmt
+36.6%
Total revenue
+28.8%
Licensing
+1.9%
Carvaan
-16%
Video
Licensing remains the bassline. Management described the music vertical, which by its own definition includes artist management, at Rs 251 crore, up 35%, with segment EBITDA up 37%. The Telugu album Paradise was the quarter's biggest film hit, and its track Yeshanagula reached No. 1 on YouTube's global daily music video chart.
Artist management is the breakout single. Saregama represented 340 artists with a combined Instagram and YouTube following of about 45 crore, and closed more than 20 brand deals with partners including Apple, Airbnb, Google, Cadbury and Tanishq. The analysts stress that this line needs no upfront investment and project it at Rs 220 crore by FY28, against Rs 131 crore in FY26.
Video is being deliberately faded out. The decline follows the planned wind-down of the film business and the investment in Bhansali Productions, and management warned revenue may slip further during the transition. Pocket Aces broke even in FY26 and is moving toward profit in FY27.
Now Playing: The Paid-Subscription Thesis
Free users willing to switch to a reasonably priced paid service if free supply is curtailed
Management said paid subscriptions are growing much faster than ad-supported listening and earn a higher revenue yield per stream. Spotify, YouTube and JioSaavn are working with labels to accelerate paid conversion, and pricing is expected to emerge as an additional lever over the next two to three years. Management reiterated medium-term music revenue growth guidance of 20% to 23% at 60% to 65% EBITDA margins, and asked investors to judge performance on a rolling 12-month basis given lumpy release schedules. FY27 new-content spending stays at Rs 300 crore to Rs 350 crore, rising about 10% a year thereafter.
The Setlist for the Second Half
Releases
Love & War, Seyon, Dharma, Naagzilla and a Tiger Shroff film produced by Bhansali Productions. Love & War, slated for Q4, is the analysts' chief monitorable.
Live and events
54 Carvaan Live shows for about 10,000 people, Ilaiyaraaja's 11-city U.S. tour for about 20,000, and 17 devotional shows. Event revenue was Rs 45 crore in Q2 and Rs 61 crore in H1; start-up costs of owned IPs are expensed.
AI studio
Two internal teams target content creation and process efficiency; about 100 hours of GenAI podcast content are planned for Q3, alongside protection of IP against unlicensed covers.
The Equaliser: Revenue and EBITDA Through FY28
803 / 247
1,171 / 277
985 / 337
1,220 / 433
1,445 / 521
Violet: revenue, gold: EBITDA, Rs crore. Lighter shades are ICICI Direct estimates.
The analysts estimate revenue will compound at 21.1% and EBITDA at 24.4% over FY26-28, with margin climbing from 34.2% to 35.5% in FY27 and 36.1% in FY28 as content acquired over the past two to four years earns more than its amortisation charge. That translates into a roughly 28% earnings CAGR and a return on equity rising from 12.2% to 17%. FY25's higher revenue reflects the larger film business since wound down.
| Rs crore | FY26 | FY27E | FY28E |
|---|---|---|---|
| Music licensing | 614 | 765 | 937 |
| Artist management | 131 | 193 | 220 |
| Net profit | 207.1 | 270.7 | 339.1 |
| EPS (Rs) | 10.7 | 14.0 | 17.6 |
| P/E (x) | 59.4 | 45.4 | 36.3 |
| EV/EBITDA (x) | 35.2 | 27.5 | 22.7 |
| RoCE / RoE (%) | 16.3 / 12.2 | 19.2 / 15.0 | 22.0 / 17.0 |
Valuation and the Target for Investors
CERTIFIED TARGET · ICICI DIRECT
FY28E EPS Rs 17.6
× 42x target multiple
Rs 740
16% upside · 12 months
For investors with a 12-month horizon, ICICI Direct's target is Rs 740. At Rs 638, the stock trades at 45.4 times FY27 and 36.3 times FY28 estimated earnings, so the target assumes the market will pay a premium for faster paid monetisation. The 16% upside sits just above the house's 15% threshold for a BUY, leaving modest headroom for slippage.
The shares have roughly doubled from their 52-week low of Rs 307 and trade within about 5% of the Rs 671 high, a reminder that much good news is already in the price. Foreign institutions have raised their holding from 5% in December 2025 to 9.4% in September 2026, while promoters hold a steady 60.8%. The balance sheet is near debt-free, with Rs 70 crore of borrowings against Rs 528 crore of cash and investments, and a FY27 dividend of Rs 8 per share is pencilled in.
Advisory: Risks to the Rhythm
ADVISORY · PRINTED RISK
Slower music licensing growth. The FY28 target leans on licensing compounding near 24% to Rs 937 crore; any stall in paid conversion would compress both estimates and the 42x multiple.
ADVISORY · PRINTED RISK
High losses in the films foray. Although the in-house film business is winding down, exposure continues through Bhansali Productions, with Love & War due in Q4.
TOPNEWS WATCH
Working capital. The house models inventory days rising from 90 to 100 and inventories from Rs 243 crore to Rs 334 crore in FY27, with year-end cash dipping to Rs 80 crore before recovering.
Editor's Note
1. Where artist management sits. The report's quarterly table excludes artist management (Rs 50.6 crore) from "Revenue from Music Business" (Rs 200.7 crore, up 25.3%); it appears to sit within the Rs 113.6 crore "TV, Events & Film" line, which equals artist management plus Rs 45 crore of events and Rs 18 crore of video. The segment projections and management's Rs 251 crore music vertical (up 35%) place it inside music. We cite management's definition and flag both.
2. Duplicate row. The same table prints identical figures (Rs 179.6 crore, up 28.8%) for "Music Streaming" and "Licencing Revenues"; we treat them as one line.
3. Enterprise value. The data box prints EV of Rs 11,773 crore, but market cap of Rs 12,301 crore plus Rs 70 crore of debt minus Rs 528 crore of cash and investments gives Rs 11,843 crore. The report's own FY26 EV/EBITDA of 35.2x matches the higher figure, suggesting debt was subtracted rather than added.
Sources
ICICI Direct Research (ICICI Securities Retail Research), Saregama India Q2FY27 Result Update, Nov. 5, 2026; analysts Bhupendra Tiwary, CFA, and CA Anjini Sharma. Company disclosures and management commentary as cited in the report. Fader, equaliser and progress-bar graphics are drawn to scale from the report's printed figures.
Disclaimer: This TopNews Stock Report is based on a brokerage research report and is for information only. It is not investment advice. Stock market investments are subject to market risks; consult a registered financial adviser before making investment decisions.
