Saregama India Limited expects video revenue to fall further

Saregama India Limited said Q2 FY27 video revenue fell 16% year on year to Rs 18.3 crore and may decline further as it winds down its film business in favour of investing in Bhansali Productions. Management said Pocket Aces broke even in FY26, while Bhansali Productions is preparing Love & War for release in Q4.

Why is Saregama’s video revenue expected to decline further?

Saregama expects video revenue to decline further because the 16% year-on-year fall in Q2 FY27 to Rs 18.3 crore followed a deliberate decision to wind down its film business. Management described the lower revenue as part of a transition, rather than an indication that it intends to withdraw from all video formats. The company is redirecting video investment towards Bhansali Productions while retaining selected content categories.

The Q2 FY27 result makes video the contrasting segment within Saregama’s reported operations. Revenue from operations rose 37% year on year to Rs 314.3 crore, while the music vertical generated Rs 251.3 crore of revenue, up 35%. Video’s Rs 18.3 crore revenue therefore moved in the opposite direction to the company-wide and music growth rates, reflecting the stated film-business wind-down.

Saregama did not provide a revenue target, timeline or expected trough for the video segment on the call. Its stated expectation was limited to a further decline in the coming quarters as the transition plays out. That leaves the pace of the reported revenue reduction unresolved, even though management identified the strategic cause as the withdrawal from the film business.

How does Bhansali Productions fit Saregama’s video pivot?

Bhansali Productions is the investment Saregama identified as the alternative to continuing its film business, with its biggest release, Love & War, scheduled for Q4. Management said Bhansali Productions is also actively working on its FY28 slate. The disclosure connects the expected near-term video revenue decline with an investment-led move toward a separate production platform.

The call did not disclose Saregama’s investment amount in Bhansali Productions, its ownership interest, or the economics of Love & War. It did state that money previously earning interest income had been invested in areas including a position in Bhansali Productions and Pocket Aces. Chief Financial Officer Abhishek Kapoor said the decline in other income was the main reason unallocable cost appeared higher year on year.

Management’s description distinguishes the transition from a full exit from screen content. Saregama said it will continue to invest in GenZ-focused short-format video, along with television and web shows. In those formats, management said projects are generally low-ticket and that an advertiser or platform comes on board before any video is shot, establishing commercial backing before production begins.

What remains in Saregama’s video business after films?

Saregama’s continuing video business will centre on GenZ-focused short-format content, television shows and web shows, while its former film activity is wound down. Management said the formats it retains tend to have lower production tickets than films. It also said an advertiser or a platform is usually attached before filming, which differentiates these projects from a speculative production model.

Pocket Aces remains part of this video strategy. Saregama said Pocket Aces reached break-even in FY26 and is moving towards profitability in FY27. The company did not provide Pocket Aces revenue, profit or a date for achieving profitability, but the FY26 break-even disclosure provides a reported marker for one of its two video-related investments.

The format mix places the two investments at different stages. Pocket Aces reached FY26 break-even, whereas Bhansali Productions is approaching a Q4 release and developing its FY28 slate. Saregama’s video revenue can therefore continue to decline during the film-business wind-down even as the company funds these businesses and keeps producing selected short-form, television and web content.

How does music growth compare with Saregama’s video decline?

Music is growing while video contracts: Saregama reported Q2 FY27 music revenue of Rs 251.3 crore, up 35% year on year, against video revenue of Rs 18.3 crore, down 16%. Music EBITDA was Rs 154 crore, up 37%, and management said the segment benefited from a low base in the first half of FY26. The differing revenue trends show that the video transition is occurring alongside expansion in the much larger music vertical.

Saregama maintained music revenue compound annual growth rate guidance of 20% to 23% for the short to medium term, with a 60% to 65% EBITDA margin target for that vertical. Management said it plans Rs 300 crore to Rs 350 crore of new music-content spending in FY27. Using the Rs 325 crore midpoint, it expects around Rs 1,200 crore of new-content spending across FY28 to FY30.

The music programme is also tied to releases expected later in the year. Management named Love & War, Seyon, Dharma’s Kartik Aaryan-starrer Naagzilla, and a Tiger Shroff film produced by Sanjay Leela Bhansali among second-half movie albums. It said Saregama’s catalogue exceeds 180,000 songs and increases by 4,500 to 5,000 releases annually, providing the principal operating context for its emphasis on music investment.

Conclusion

Saregama’s Q2 FY27 video decline was an announced consequence of restructuring rather than an unexplained segment reversal. The company reported Rs 18.3 crore of video revenue, down 16%, as it winds down its film business, maintains lower-ticket short-form, television and web projects, and directs investment towards Pocket Aces and Bhansali Productions. At the same time, music revenue rose 35% to Rs 251.3 crore, making music the stated driver of near-term operating growth.

The next disclosed milestones are Love & War’s planned Q4 release and Bhansali Productions’ work on its FY28 slate. Saregama has also said Pocket Aces is moving towards profitability after its FY26 break-even, video revenue may continue to decline during the transition, and FY27 new music-content spending is planned at Rs 300 crore to Rs 350 crore.