Open Question to fellow investors tracking Music Industry.
A business like Universal which controls more than 1/3rd of all published music globally is selling for less than 6x FY20 Sales.
Why are Indian businesses like Saregama / Tips selling for 11x, 20x their sales?
FY 20 Revenues ~ 8.87 B USD or 7.4B EUR
Catalogue of Music includes every international artist you can possibly name
Either Universal is grossly undervalued or Saregama/Tips are grossly overvalued.
Homework for all the interested participants here:
— Intrinsic Compounding (@soicfinance) June 27, 2021
Q1.Why 20% and not 50%+ Margins for UMG
Q2. Differences in dynamics between Western&Indian cos?
Q3. Trends in West vs Trends in India in the industry.
Research and find the answers. My job is done \U0001f601\U0001f64f
If you see the ebitda of universal music its low 20% compared to our saregama 30% or tips 50%. So when you compare earnings saregama is 40x and tips is 30x and universal music is 30x. Also these type of companies are less( low or no capex with excellent and growinh cashflows)
— Srikanth V (@mynameisnani75) June 27, 2021
The rights are different here in India.
— Saket Reddy (@saketreddy) June 27, 2021
Indian labels own both publishing and master rights unlike the global peers.
Hence the 80% EBITDA Margins vs 20% EBITDA Margins for UMG.
Comparing them isn't useful IMO but should be only referred to study the Industry structure.
1. You own both the recording and publishing rights in India
— Saket Mehrotra \U0001f60e\u2615\U0001f4b0 (@mehrotra_saket) June 27, 2021
2. Streaming business in India is 85% of the industry compared to 52% globally
3. You should look at FY21 number for Tips as that is pure-play music streaming
4. Headroom in India builds optional value for paid converts https://t.co/mOBj83uZgH
All throughout the world, largecaps sell at lower valuations than smallcaps. Larger room for growth. + India growth narrative. + More rights with labels in India. + The whole bollywood industry means that imo moat is wider in india for indian labels than at global stage for umg
— Sahil Sharma (@sahil_vi) June 27, 2021
I think valuations based on sales is suitable only when the current profitability does not reflect the true profitability of the business. In the end valuations are based on profits
— Ankush Agrawal (@Ankush__Agrawal) June 28, 2021
UMG and Tips have very different margins and thus comparison based on sales is not a great way 1/2
Why do you think Bill Ackman is pouring in 28000 crore in Universal? He clearly believes that even at 25x EV/EBITDA, it is CHEAP.
— Neil Bahal (@NeilBahal) June 27, 2021
Universal has 20% ebitda margin. Tips has 60% net profit margin :) :) pic.twitter.com/6y8mEoLAU6
More from Tar ⚡
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Grab a cup of coffee, today I will tell you about all the tools and services I use in my investing journey
Some are free, some are paid but all of them are guaranteed to deliver value
Lets dive right in!
Service # 1
Name: @Regulation30
Type: Paid
Regulation30 is my go to source to hunt for exchange filings that are worth studying further
This is also the source where I get lot of special situation ideas that aren't that widely known
Every day thousands of filings are made over the exchange, among them only a handful are worth studying
Regulation 30 filters out the noise and sends me a daily email of every exchange filing that is worth reading
Here is a snapshot of the email they sent me yesterday
Apart from the newsletter, there is a Slack community where founders of Regulation30 routinely share great insights into less known companies
Service # 2
Name: CapTwist
Type: Free
Wouldn't it be cool if you could search across all exchange filings of all companies via keywords or phrases and join them together as a theme?
Well, CapTwist does just that!
https://t.co/9mwFRPZkws
Keep an eye on #SequentScientific
Already broken it's support at 200 today, can fall more on this event. https://t.co/jwqUwbUOXE
Already broken it's support at 200 today, can fall more on this event. https://t.co/jwqUwbUOXE
BREAKING: The Turkish lira falls to a record low after the central bank cut its interest rate for a second meeting in a row https://t.co/Sf4rfoo7Cz pic.twitter.com/2YM1Sh5DIU
— Bloomberg (@business) October 21, 2021
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2/The good news: It's now an issue that everyone's talking about, and that everyone cares about.
3/More good news: Florida's proposition to give felons voting rights won. But it didn't just win - it won with substantial support from Republican voters.
That suggests there is still SOME grassroots support for democracy that transcends
4/Yet more good news: Michigan made it easier to vote. Again, by plebiscite, showing broad support for voting rights as an
5/OK, now the bad news.
We seem to have accepted electoral dysfunction in Florida as a permanent thing. The 2000 election has never really
To me, the most important aspect of the 2018 midterms wasn't even about partisan control, but about democracy and voting rights. That's the real battle.
2/The good news: It's now an issue that everyone's talking about, and that everyone cares about.
3/More good news: Florida's proposition to give felons voting rights won. But it didn't just win - it won with substantial support from Republican voters.
That suggests there is still SOME grassroots support for democracy that transcends
4/Yet more good news: Michigan made it easier to vote. Again, by plebiscite, showing broad support for voting rights as an
5/OK, now the bad news.
We seem to have accepted electoral dysfunction in Florida as a permanent thing. The 2000 election has never really
Bad ballot design led to a lot of undervotes for Bill Nelson in Broward Co., possibly even enough to cost him his Senate seat. They do appear to be real undervotes, though, instead of tabulation errors. He doesn't really seem to have a path to victory. https://t.co/utUhY2KTaR
— Nate Silver (@NateSilver538) November 16, 2018
