Saregama Q2 Results revealed a dip in share price, falling by 4% on November 5, after the company reported a decline in net profit and substantial margin compression for the September quarter. The decrease reflects challenges in profitability despite a strong increase in revenue.
For the September quarter, Saregama’s net profit fell by 6.2% year-on-year to ₹45 crore, though revenue grew by 40.5% to ₹242 crore compared to the same period last year. The growth in revenue was driven primarily by music licensing and video business segments.
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The company’s EBITDA remained flat at ₹61 crore compared to last year’s corresponding quarter, while EBITDA margins dropped significantly. Margin compression was evident, with the EBITDA margin narrowing by more than 800 basis points to 25.2% from last year’s 35.3%, reflecting increased operational costs.
A notable contributor to the revenue decline was the Carvaan segment, which saw reduced sales both year-on-year and sequentially. This shift was attributed to Saregama’s strategic transition from distribution channels to primarily e-commerce and modern retail, aimed at cost efficiency.
Saregama emphasised that while the sales volume of Carvaan might shrink, transitioning to e-commerce and retail would support margin improvements by reducing distribution costs. The company’s statement highlighted that despite this reduction, the business remains profitable through controlled costs.
During the quarter, growth in Saregama’s segments was led by Music Licensing and Artist Management, which rose by 22%, and an impressive 377% year-on-year growth in the Video business. Despite current pressures, Saregama’s stock remains up 41% year-to-date, trading at ₹522.6.
