Saregama India is a company which retains the old music right. It has seen growth in income coming from the telecom companies & radio business. Call back tunes, Caller tunes and growth in FM business has increased their profit margin. In Q1 FY11 the company posted an EPS of rupees 1.50. Though in the financial year FY11 the company has lost its money mainly in the film making business.We don’t think that there is any corporate making money in this business and this may force the company to reconsider the thought of going forward with the film making business. They might exit from this business gradually. They are having a couple of films under production but we are not sure whether they will pursue the same.
The Company also holds more than 15 lakhs shares of CESC whose market value is around 45 crore. The Company is existing from last six decades and they are having a couple of land & building. The last evaluation of the assets were exercise 3-4 years ago in the company’s book but if we consider the present valuation of the same land & building we estimate it at around 200 to 250 crore.
Saregama India has a debt of 35 to 40 crore and have a market cap of only rupees 100 crore. If someone is planning to invest for a period of 12 months this stock can fetch you good returns. Presently the stock is trading at Rs 67-68 and we expect the stock to move close to Rs 250 to 275 range in the next1 year.
“Bell the bull says: Saregama India can see Rs 250-275 range in the next 1 year.”