Saregama India Limited: Harmonizing Growth with Strategic Innovation in Q2 FY26

Saregama India Limited, a prominent player in the Indian entertainment landscape, has once again demonstrated a robust financial performance in the second quarter of Fiscal Year 2026. The company, part of the RP-Sanjiv Goenka Group, reported a healthy 11% quarter-on-quarter (QoQ) growth in Revenue from Operations, reaching INR 230 crore. This upward trajectory was complemented by an impressive 18% QoQ increase in Profit Before Tax (PBT), which stood at INR 60.1 crore. The Board's declaration of an interim dividend of INR 4.50 per share further underscores the company's commitment to shareholder value. While the overall picture is positive, a closer look reveals strategic maneuvers and innovative approaches driving this growth, even as certain segments navigate cyclical challenges.

The music segment, encompassing both licensing and artiste management, continues to be the bedrock of Saregama's performance, registering a commendable 12% year-on-year growth. This was fueled by successful releases like the Tamil album "Idli Kadai" starring Dhanush, the Bengali album "Dhumketu" featuring a hit Arijit Singh song, and the Malayalam film album "Sahasam." Non-film music also saw chartbusters with Badshah's "Kokaina" and Honey Singh's "Mashooqa." A significant strategic move has been the partnership with ex-promoters of NAV Haryanvi, which has not only expanded Saregama's catalogue but also strengthened its foothold in the regional Haryanvi market. This collaborative model is a blueprint for future regional expansions. The company's overall new music content spend for the year is projected to be between INR 320 crore and INR 330 crore, a slight adjustment from earlier projections due to some film album delays.

Financial Highlights: Q2 FY26

(All figures in INR Crore, unless otherwise specified. Percentages are rounded.)

While the music segment thrived, the video segment experienced a degrowth of 39% QoQ and 70% YoY. Management clarified that this is a cyclical issue, primarily due to the timing of releases. Q2 FY25 had multiple major video releases, whereas Q2 FY26 saw fewer. The company anticipates more releases in the upcoming quarters, emphasizing that the video segment's performance should be assessed on a rolling 12-month basis rather than quarter-on-quarter due to its inherent lumpiness. Despite this, Saregama continues to invest in video content, including new series like "Bakaiti" on ZEE and "Ye Saali Naukri" on YouTube.

Strategic Innovations and Future Outlook

Saregama is not just relying on its existing strengths; it is actively innovating. A significant initiative is the adoption of Generative AI for creating music videos for its older songs. Historically, Saregama only held audio rights for 20th-century music, making video production costly and time-consuming. With AI, the company can now produce these videos in 2-3 days, down from 10-12, with an impressive 70% cost savings and 80% faster execution. This strategic move aims to re-engage Gen Z with its vast classic library and unlock new monetization avenues.

Another key focus is the expansion into "Micro Series" content, specifically targeting the Gen Z audience, which is a rapidly growing segment. These short-form dramas, typically 1-3 minutes per episode, cater to evolving consumption patterns. The company is also building a new brand sponsorship vertical, led by a media sales veteran, to consolidate offerings across music, live events, and digital content. This integrated approach allows Saregama to offer brands a unique proposition: content creation, artiste management, and distribution through its 400 million digital footprint.

In the live events space, Saregama partnered with Diljit Dosanjh for his "Aura Tour" and staged the "Disco Dancer" musical in Dubai. The company plans to launch its first music festival in Bangalore next March and is expanding its focus to include standup comedy and experiential events, reinforcing its long-term belief in the potential of this vertical. Management maintains its guidance of a 23% CAGR for the music business and an adjusted EBITDA margin of 32-33% for the financial year, projecting a consolidated revenue growth of 30% (excluding Carvaan) between FY24 and FY27.

Saregama's Q2 FY26 performance reflects a company that is strategically adapting to market dynamics through innovation and diversification. By leveraging AI, expanding into new content formats, and consolidating brand partnerships, Saregama is not just growing its revenue but also future-proofing its business in the dynamic Indian entertainment industry. The company's disciplined investment strategy, maintaining a 5-year payback period for new content and capping capital investment in video and live events at 18% of total capital employed, further instills confidence in its long-term vision.