Alpha | TIPS Music Ltd. – Equity Research Desk

TIPS Music Ltd – The Must Have HITS

Incorporated in 1996 and headquartered in Mumbai, TIPS Music Ltd. is one of the leading entertainment companies in India. The company is engaged in the business of creation, acquisition and exploitation of audio-visual content of music libraries in India and overseas through licensing on various platforms. The music library of the company is one of the most exhaustive in the industry comprising a collection of 31,000+ songs, which are available for streaming and download across leading digital marketplaces like iTunes and Google Play, as well as popular streaming platforms like YouTube, Spotify, Jio Saavn, Resso, Apple Music, etc.

Products and Services

The company operates in the digital content business, focusing on the creation and acquisition of audio-visual music content and the digital monetization of its content library through licensing across various platforms in India and abroad.

Subsidiaries: As of FY24, the company does not have any subsidiary, associate and joint venture company.

Investment Rationale

• Established position – TIPS owns a diverse music catalogue of over 31,000 songs spanning all major genres and languages, from 90s classics to contemporary hits, available on multiple platforms worldwide. In FY25, the company released 105 new songs—37 from films and 68 non-film tracks. As of FY25, TIPS has 117.1 million YouTube subscribers, reflecting a 22% CAGR over the past three years. The company has established partnerships with over 25 media entities. Looking ahead, TIPS remains focused on sustained long-term growth across platforms, driven by its extensive catalogue and continued acquisitions from both films and independent music. 
• Growth strategies – In FY25, the company partnered with TikTok to broaden the global reach of its music, aiming to capitalize on the growing demand for Indian music, particularly in the USA, Canada, the Gulf, the UK, Australia, and New Zealand. TIPS also expanded its global publishing agreement with Sony Music Publishing to include YouTube (excluding India), enhancing international monetization of its extensive catalogue. Additionally, the company deepened its collaboration with Warner Music. Moving forward, the focus remains on producing high-quality songs with strong potential for repeat viewership.

• Q4FY25 – During Q4FY25, the company generated a revenue of Rs.79 crore, achieving an increase of 25% as compared to the Rs.63 crore of Q4FY24. The content cost has increased by 25% YoY, from Rs.24 crore to Rs.30 crore. Operating profit improved by 23% YoY, from Rs.30 crore to Rs.37 crore. Net profit stood at Rs.31 crore, an increase of 19% from Rs.26 crore of Q4FY24. During the period, healthy consumption of content was seen in YouTube, Spotify, Meta, Amazon, Apple, Gaana, Sawan, Snapchat etc.

• FY25 – The company generated revenue of Rs.311 crore, an increase of 29% compared to FY24 revenue. Operating profit is at Rs.207 crore, up by 30% YoY. The company posted net profit of Rs.168 crore, a jump of 32% YoY. The company’s operating profit margin has improved marginally from 66% to 67% and net profit margin has increased from 52% to 54%. As of the end of FY25, the company holds Rs.271 crore in cash and investments.
• Financial Performance – The company has generated revenue and net profit CAGR of 32% and 37% over the period of 3 years (FY21-24). Average 3-year ROE & ROCE is around 78% and 101% for FY21-24 period. The company has a debt-to-equity ratio of 0.02.

Industry

India’s Media and Entertainment (M&E) industry presents a compelling investment opportunity, driven by strong growth projections and transformative digital advancements. With a projected annual growth rate of 9.7% to reach US$ 73.6 billion by 2027, the sector is outpacing global averages due to factors such as rapid internet penetration, rising disposable incomes, and a tech-savvy population. The expansion of OTT platforms, rural digital adoption, and innovations like 5G and 8K streaming are unlocking new markets and consumer segments. India’s youthful demographic and its booming digital infrastructure position it as a global hub for content creation, distribution, and consumption—making it a high-potential industry. 

Growth Drivers

• The rise of social media and increasing user generated content that enables users to create and share their own music covers, remixes and original compositions. 
• The scope to monetise music content multiple times.
• Growing population and a rapidly increasing internet penetration rate and smartphone usage.

Peer Analysis

Competitors: Saregama India Ltd.

Compared to its competitor, the company is delivering stronger returns on invested capital, supported by steady revenue growth – highlighting effective capital allocation and solid revenue-generating ability.

Outlook

With India being the fastest-growing market by volume, there is substantial potential for monetizing this rising demand in the film and music industry. For FY26, the company has given top-line and bottom-line growth guidance of 30% each.  It has also given operating margin guidance of 64%-67% for FY26. It has also set aside 25-26% of its revenue for new content acquisition, which would account for ~Rs.95-120 crore. The company continues to emphasize quality over quantity, anticipating higher per-unit costs but a stronger success rate.

Valuation

We believe the company’s growth is being driven by several key factors: a rising number of paid subscribers on streaming platforms, longer short video durations that open up greater advertising opportunities, the renewed popularity and successful relaunch of older songs, increasing remuneration revenue from a growing number of stage performances, and higher publishing income from international partnerships. We recommend a BUY rating in the stock with the target price (TP) of Rs.746, 36x FY27E EPS.

SWOT Analysis

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