Tips Music vs Saregama: Which Company Leads in Profitability?

Synopsis: Tips Music posted Q2FY26 net margin of 59.6% versus Saregama’s 19.1%, with higher operating margin (76% vs 30%), stronger ROE (82.9% vs 12.5%) and faster profit growth.

In the Indian music and entertainment industry, Tips Music Limited and Saregama India Limited stand out as two of the oldest and most prominent players. Both companies generate revenue primarily through music rights, digital streaming, film soundtracks, and content licensing, but they differ in scale, content library, and business strategy. Comparing their profitability provides insights into which business model is currently more efficient in translating content ownership into financial gain.

Tips Music Ltd, with a market capitalization of Rs. 6,660.03 crore, closed at Rs. 521 per equity share, up by 0.58 percent from its previous day’s close price of Rs. 518 per equity share.

Saregama India Limited, with a market capitalization of Rs. 7,023.09 crore, closed at Rs. 364.25 per equity share, down by 0.82 percent from its previous day’s close price of Rs. 367.25 per equity share.

Industry Overview

India’s music and digital entertainment industry has witnessed rapid growth, with digital advertising and streaming becoming key revenue drivers. The global subscription streaming market has grown significantly, accounting for three times the revenue of ad-supported streams. In India, digital advertising reached Rs. 49,251 crore in 2024, with online video and social media leading the spend, and is projected to grow at a CAGR of 19 percent through 2026. The industry is supported by growing online engagement, with Indians spending 3–4 hours daily on social media platforms, creating a strong monetization opportunity for music and content providers like Tips Music.

Founded in 1988, Tips Music Limited, based in Mumbai, operates in India and international markets by acquiring and monetising music rights. The company creates and owns audiovisual music content, generates digital revenues from its library, and also organises live events and concerts.

The company is unique in expensing 100 percent of content costs in the quarter of release and is debt-free, holding Rs. 275 crore in cash and investments. With a catalogue spanning over 25 languages, Tips Music has established strong A&R capabilities, 105 employees, and 134 million YouTube subscribers, with over 25 media partners globally.

Saregama India Limited, founded in 1902 and headquartered in Mumbai, is a leading Indian entertainment company with operations in India and internationally. The company operates across four segments: its Music segment produces and sells music storage devices such as Carvaan, Music Cards, and Vinyl records, while managing related music rights; the Artist Management segment handles influencers and artistes on exclusive or non-exclusive contracts; the Video segment produces and distributes both long-form and short-form video content along with associated rights; and the Events segment organizes live musical events, generating revenue through ticket sales and sponsorships.

Q2 Performance

In Q2 FY26, Saregama India Limited reported a revenue of Rs. 230 crore, with an operating profit of Rs. 69 crore, resulting in an operating margin of 30 percent. Its net profit for the quarter stood at Rs. 44 crore. Calculating the net profit margin, which is net profit divided by revenue, we find that Saregama earned approximately 19.1 percent in net margin for the period. 

By contrast, Tips Music posted a revenue of Rs. 89 crore in Q2 FY26, with an operating profit of Rs. 68 crore, translating into an impressive operating margin of 76 percent. Its net profit was Rs. 53 crore, giving it a net profit margin of roughly 59.6 percent, significantly higher than Saregama’s. Several factors contribute to Tips Music’s superior profitability.

Why Do Tips Music Earn More Margins?

• Unlike Saregama, which invests in Carvaan devices that involve manufacturing and distribution expenses, Tips revenue comes entirely from zero-inventory digital channels, keeping operational costs low and margins high.
• Unlike competitors that bid aggressively for high-cost Bollywood soundtracks, Tips acquires only a small number of selective music rights each year and ensures a strict 3-4 year payback period. This approach prevents capital from being tied up in low-return assets. Since about 85 percent of Tips revenue comes from its existing catalog, the company avoids recurring costs for constant content acquisition, creating a highly profitable and low-reinvestment revenue stream.
• International streaming revenues often pay up to three times more per stream compared to Indian platforms, significantly boosting profitability. Additionally, Tips licenses its catalog for Hollywood productions and international advertising campaigns, creating premium revenue streams that further enhance its net margin.
• Every track in its catalog is leveraged across multiple channels, including digital streaming, sync licensing, global distribution, and performance rights. This ability to continuously earn from past content gives Tips a structural advantage in margins over competitors that must spend heavily on new content to sustain growth.

Financials

Saregama Ltd in the past five years, the company has demonstrated strong growth, achieving a revenue CAGR of 18 percent, a profit CAGR of 34 percent, and a price CAGR of 35 percent reflecting its operational performance and market confidence.

A return on equity (ROE) of about 12.5 percent and a return on capital employed (ROCE) of about 17.2 percent, and debt to equity ratio at 0 demonstrate the company’s financial position. The stock is currently trading at a P/E of 35.7x lower as compared to industry P/E of 43.4x.

Whereas, Tips Music Ltd in the past five years, the company has demonstrated strong growth, achieving a revenue CAGR of 28 percent, a profit CAGR of 70 percent, and a price CAGR of 73 percent reflecting its operational performance and market confidence.

A return on equity (ROE) of about 82.9 percent and a return on capital employed (ROCE) of about 109 percent, and debt to equity ratio at 0.01 demonstrate the company’s financial position. The stock is currently trading at a P/E of 38.7x lower as compared to industry P/E of 43.4x.

Tips Music outperforms Saregama in profitability despite lower revenue. Its digital-first model, selective content acquisition, and ability to earn repeatedly from existing music keep costs low and margins high. Saregama, though larger and more diversified with products like Carvaan and video content, faces higher operational expenses, which reduces its net profit margin.

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