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Adani Enterprises was up ~15% this week on the back of bumper earnings report. That’s fascinating, but not as much by Adani standards though. Bajaj Finserv was also up 9% along with Ultratech at 7%. Apollo Hospitals was down 4.3% leading the losers pack along with Axis Bank and Maruti.
Nifty50 index was up ~2% after having a nice October calendar month. USDINR, Crude & Gold saw little action this week.
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Capitalmind Outliers is our in-house screening tool that helps you discover stocks with trends and momentum in their favor. Every week, we at Capitalmind discuss what’s behind an outlier standing out.
This week, we have a Mumbai-based music label company in focus: Tips Industries. The company owns IP rights to a music catalogue of more than 29,000 songs across categories and languages, which it monetizes by licensing to streaming services, OTT platforms, cable, telecom companies, radio stations, advertisers, social media companies, and pretty much any sort of content aggregators willing to pay for it.
Until recently, the company had a loss-making movie production and distribution business muddying the waters. Earlier this year, Tips Industries demerged this unit out to Tips Films, which appears to have made Tips Industries more appealing to investors.
Why wouldn’t it? The streaming disruption has compelled the music industry to evolve its business models, especially for music label companies who are in a lucrative position by getting annuity-type monetization of their music catalogue (high repeatability, high value content). The domestic industry grew at 16% per year in the past five years, and the hymn is expected to continue reverberating going forward.
The industry tailwinds have translated very fortunately for Tips Industries: in the past five years, the company has grown its topline at 30% per year, its operating profits at 80% per year, and its bottom line at 113% per year. During the same time period, the margins and returns profiles have improved substantially: operating margins improved to 63%, net profit margins improved to 47%, and return on capital improved to 62% last year. Over a longer period, the company has also repaid most of its debt: debt-to-equity improved from 0.5 to 0.04 in the last ten years.
On the business front: last financial year, the company had 270 new releases, which received 280 crore views on YouTube (74.9 million subscribers) alone. The company licenses its music to all major content aggregators: a Facebook group of companies, YouTube, YouTube Music, Spotify, Apple Music, Prime Music, and JioSaavn among others.
What’s more, take a look at how Tips Industries fares against the other music label company that’s listed: Saregama India.
Lastly, the company’s board is meeting next week to consider a buyback.
Tips Industries is one of many stocks that ranked Grade 10 on the Capitalmind Outliers platform this week–subscribe to our premium offerings to access Capitalmind Outliers.
(Disclaimer: The information conveyed in this post is intended for informational purposes and shouldn’t be considered investment advice. Please do your own research before making investment decisions)
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