According to Nuvama, Saregama India plans to invest ₹700 crore in new music content over the next two years, targeting a 25-30% share of incremental music content. The music segment contributes around 60% of the company’s business.
Investments are expected to have a 4-5 year payback, with new music generating an internal rate of return (IRR) of 26%. The company is also leveraging AI to cut content creation costs.
Once costs are fully charged off in 10 years, music margins could expand to 90%. Saregama intends to allocate 50% of its capital to Hindi music and the rest to regional music, where margins are higher.Overall, Nuvama expects the music business to grow at a 20-23% CAGR, while live events may expand at 25-30% CAGR.
On the subscription side, Saregama is betting on paid music services as the next growth driver. Currently, penetration in India is just 1%, compared with 13% in China.
As free streaming consolidates, platforms like Spotify and JioSaavn are expected to drive paid subscriber growth over the next 18 months.
According to Nuvama, if India reaches 5 crore paid subscribers, it could generate ₹6,000 crore in additional revenue, with ₹3,000 crore flowing to the music licensing segment. Saregama, with a potential 30% market share, could capture ₹1,800 crore. The company is eyeing 10 crore paid users, each generating around ₹100 per month, with paid subscribers delivering 2.5-5x more revenue than free users.
Meanwhile, Saregama is also expanding into live events, a low-risk, high-IRR business with single-digit margins, and has built a presence in artist management, currently handling over 230 artists, a high-margin vertical.
