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Tips Industries Ltd
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Ladies and gentlemen, good day, and welcome to the Q1 FY '24 Earnings Conference Call of Tips Industries Limited. [Operator Instructions] Please note that this conference is being recorded.
I would now like to hand the conference over to Mr. Nikunj Jain from Orient Capital. Thank you and over to you, sir.
Thank you, Carol. Good morning, ladies and gentlemen. I welcome you for the Q1 FY '24 Earnings Conference Call of Tips Industries Limited. To discuss this quarter business performance, we have from the management, Mr. Kumar Taurani, Chairman and Managing Director; Mr. Girish Taurani, Executive Director; and Mr. Sushant Dalmia, Chief Financial Officer.
Before we proceed with the call, I would like to mention that some of the statements made in today's call may be forward-looking in nature and may involve risks and uncertainties. For more details, kindly refer to the investor presentation and other filings that can be found on company's website.
Without further ado, I would like to hand over the call to the management for opening comments, and then we will open the floor for Q&A. Thank you and over to you, sir.
Good afternoon, everyone, and welcome to the Q1 FY '24 earnings call of Tips Industries Limited. It's my pleasure to share with you the highlights of our performance during this quarter. At Tips Industries, we have been working hard to create -- hard to create and deliver high-quality music that resonates with our audience. Our efforts are yielding results.
The company has reported a revenue growth of 54% for Q1 FY '24 as compared to Q1 FY '23. We now have over 85.5 million subscribers on YouTube in Q1 FY '24. Our YouTube views were 48.3 billion. YouTube views have grown 132% compared to the same quarter last year. The Board has declared an interim dividend of INR 1 per share as part of our ongoing efforts to reward our shareholders.
With this, I will hand over the call to Sushant Dalmia, our CFO, to take you through the financial performance in detail. Over to you, Sushant.
Thank you, sir and welcome, everyone, to our Q1 FY '24 earnings call. As you know at Tips Industries, we charge off the entire content cost in the quarter of release. We have followed this policy since the inception of the company and we will continue with this accounting policy in future as well. We find this to be the most prudent way of accounting for our business.
However, we continue to receive a lot of questions about the impact of our conservative accounting policies on our numbers from both our existing as well as potential new shareholders. To clarify the impact of different accounting policies, we have done some calculations and I'll share the same with you.
If we were to follow the industry accounting practice of amortizing content costs over 10 years, then our EPS for FY '23 would have been INR 7.91 compared to a reported EPS of INR 5.91, which means it would have been higher by 34%. We'll be doing these calculations on an annual basis and we'll continue to share the outcomes with you.
Now let me take you through the financial highlights of the quarter gone by. The company has reported a healthy quarter. Our revenue for the quarter was INR 52.6 crores as compared to INR 34.2 crores in Q1 FY '23. Year-on-year revenue growth was 54%. Operating EBITDA for the quarter stood at INR 35 crores versus INR 22.4 crores in Q1 FY '23. That's an annual growth of 56%. The operating EBITDA margins were at 66.6% for this quarter.
Our profit after tax for Q1 FY '24 stood at INR 27.1 crores versus INR 17.2 crores in Q1 FY '23, a growth of 58%. PAT margin for the quarter was 52%.
With this, I open the floor for discussion.
[Operator Instructions] The first question is from the line of [ Swapnil Khabra from SK Enterprises ].
Am I audible?
Yes.
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
Q4, it was around 33.6 billion and in Q1, it is around 48.3 billion views.
[Foreign Language]
Just a request, sir. [indiscernible]
[indiscernible] we can't do that.
Okay. Okay.
[indiscernible] better for us [indiscernible] we can't reveal our actual numbers. There is a competition also going on. [indiscernible]
Okay. Sir, another question about radio industry [indiscernible]
[indiscernible] and that order was valid till 2020. [indiscernible] we will see a big money coming from radio, not very big, but a substantial amount [indiscernible]
[Operator Instructions] The next question is from the line of CA Garvit Goyal from Nvest Analytics.
Am I audible?
Yes, sir, you are. You may please continue.
Congratulations for a good set of numbers, sir. My first question is in your presentation, names like Instagram and Facebook are not getting appeared while these names were there as our digital partners in last presentation. So what is the reason for it, sir?
Instagram, Facebook, we have not renewed our deal. [indiscernible] will give my content for 2 billion people. [indiscernible] we need the correct price. [indiscernible] we will work out a -- make a model like a YouTube [indiscernible] will also make money. [indiscernible] But after 2 years, they have not done anything in that. [indiscernible] And they again said [indiscernible] is too less money. So we can't do that. [indiscernible]
Sir, if this deal is not renewed, so in FY '24 how our revenues are going to be impacted?
[indiscernible] So I'm okay with that. [indiscernible] We have to aim for a bigger thing. [indiscernible]
Understood, sir. And, sir, second is we did 56% kind of OPM margin in FY '23. And in this quarter, it is around 66%. So how do we see this metric on full year basis for FY '24 going forward?
[indiscernible] and I strongly think it's achievable. 30% top line will grow and 30% bottom line also will grow.
So, sir, I was asking from the OPM margin perspective, sir. Sir, last year, in FY '23, you did around 56% margins, OPM EBITDA margins. And in this quarter, first quarter, it is [ 67% ]. So that's why I am asking on a full year basis, what is your target for the EBITDA margin, sir?
Sushant [indiscernible]?
Mr. Goyal, in terms of EBITDA margin, will be similar to last year. And let's say this year -- let's say this quarter 66.5%, let's say, don't compare it on a quarter-on-quarter basis and compare us on a full year basis. That would be the request. And the top line and, let's say, the bottom line will grow by 30%.
Understood.
[Operator Instructions] The next question is from the line of Ravi Naredi from Naredi Investment.
Taurani, sir, thank you again for posting nice result. You are magician in this industry and doing good things for the company. Sir, YouTube user rises 41% in quarter 1 and -- against the quarter 4. So where you see optimum level of this user base?
Thank you, Ravi. [indiscernible] YouTube is like an ocean. [indiscernible] It's really a big thing.
[Foreign Language]
[indiscernible] please don't value us on quarter-to-quarter basis [indiscernible]
[indiscernible] quarter-to-quarter. But whatever is the themes are going on [indiscernible]. Sir, content cost is INR 12.2 crore and rising continuously. That is good also. So have you make up your mind how much it will be in percentage of revenue terms? It is 22%, 23% now. [indiscernible]
[indiscernible] so we should go up to 32%, 33%, 35% also. [indiscernible] I feel.
Okay. [indiscernible]
[indiscernible] We close the deal in first meeting itself. [indiscernible] and we are very happy because [indiscernible] without having 2, 3 big services with us [indiscernible] So we will maintain that. [indiscernible]
Yes, yes, yes. [indiscernible]
[Foreign Language]
The next question is from the line of [ Priyank Sarkar from Fahmy and Capital ].
I just wanted to touch base on the IPRS part, sir. What was the growth of IPRS in FY '23? And I'm not looking quarterly deliberately. And sir, how is the outlook going to be from this revenue coming from the IPRS segment?
Yes. IPRS is a publishing body. [indiscernible] So that's a big business going to happen, I feel.
[indiscernible] FY '24, your expectation is INR 500 crores for the industry.
Yes, yes, yes.
[indiscernible] it can go up to INR 1,500 crores.
[Foreign Language]
[indiscernible] that is my main question actually.
[indiscernible] also you have to give publishing rights. [indiscernible]
The next question is from the line of Mayur Parkeria from Wealth Managers.
Am I audible?
Yes, yes.
Sir, congratulations on good set of number and again congratulations for continuing with the policy. Every quarter we'll keep on just reiterating this and congratulations so that I know you don't intend to change it, but it's an amazing policy. And I think, sir, in the start of the call, you mentioned that we have done some working with respect to if the content cost was to be charged over 10 years, how the profit would have been looked. Sir, I think we should be the benchmark and let others do the recalculation of what if their profits would have been impacted had they followed you. I don't think we need to follow the others policy. We should -- this is a more rational and conservative and let others follow you rather than we following the others practices. So that was just a small observation.
Sir, on the content cost, sir, press release [indiscernible] Sir, my request is if you can add that in the presentation table also, then same information we can get in the presentation also, so along with the results table, because otherwise presentation [indiscernible] that is actually a replicate of your -- the press -- of your statutory release. [indiscernible] and the information is similar on both the presentation and the press releases. Just a small request.
Yes.
[indiscernible] So that is approximately 9% market share. So over long periods of time, over 4, 5 years, do we have any target that we want to reach there in terms of market share? Or do you think that the normal industry growth will play? I know we have outperformed the industry significantly. But do you think that do we have any market share in our mind with respect to which one to which?
Yes. [indiscernible] this is just a comparison and [indiscernible] We are very, very [indiscernible] stick on that [indiscernible] we should keep writing off same quarter -- same [indiscernible] written off in that quarter itself. Last year [indiscernible]. Agree to that point also. We will put it there. It's not a problem.
[indiscernible] market share also, we should look for that. [indiscernible] the way our content, our catalog, our repertoire is performing or [indiscernible].
Okay. Okay. Yes.
Mayur, Just to add the content cost is there in the presentation. We have highlighted separately in our P&L. You can refer to slide # 14.
14.
Slide number #14?
14, yes. You can see the line item, content cost.
Slide #14 is industry-leading financial performance.
Page 14. Page #14. There is P&L statement and you will see the content cost separately highlighted.
I'm so sorry. My apologies. My apologies. I missed this. I'm so sorry.
No problem.
Thank you so much for highlighting this. [indiscernible] based on your understanding of how the industry is shaping up, [indiscernible] subscription revenue I am sure would be very small and marginal. Sir, how do you see that shaping up? Or do you think [indiscernible] what we need to focus on is the same advertising -- share of advertising revenue and other revenues which will come through the subscription revenues. Based on your understanding with the -- how the platforms and other things, the consumer behavior, what would be the current scenario and how do you see that in the next 3, 4, 5 years?
[Foreign Language]
[indiscernible] So sir, all this should play out over the next 3, 4 years, right sir?
Yes, absolutely. Absolutely.
The next question is from the line of Mythili Balakrishnan from Alchemy Capital.
A couple of questions...
Ma'am, I'm so sorry to interrupt. This is the conference operator. Requesting you to please speak a bit louder ma'am so that your audio is audible.
Sure. Wanted to check whether [ Saavn ] and Warner, the revenues have started for us? Or is that something that's still not there in the current top line?
Warner is -- so already last 3 years, we are -- monies were coming. We are showing in our every quarter-on-quarter basis. And Saavn also, we started in March. So every quarter Saavn also, it will come. And only left out is Instagram and this one Wynk, Airtel. That's it. All-- we are available on all other platforms.
Wynk and [indiscernible]
Instagram, Facebook.
Okay. Got it. So -- but its agreement happened in March. [indiscernible] mentioned the fact that there were some INR 3.75 crores, which you had billed some person, which went into bankruptcy. Could you just explain [indiscernible]?
[indiscernible] but they were not closing the deal and [indiscernible] But again, we see it they are not -- only talking, talking, talking. So we put a NCLT case on them. And -- so [indiscernible] now they have sent us a request [indiscernible] let's talk, let's talk [indiscernible]. So that's why we have kept it aside.
[indiscernible] In terms of the upcoming content, could you just comment on some of the key movies that [indiscernible] you will be able to do it over the next couple of quarters?
Yes. We had 2 movies [indiscernible] Merry Christmas, which is in Hindi, Tamil and Telugu. Plus we have 1 more movie [indiscernible]
Okay. And all of them will probably get released this year itself?
Yes. This year. [indiscernible]
[indiscernible] Is there any pressure from YouTube or other people to accept a lower share on the ad revenues per se because [indiscernible] So just curious on that front.
[indiscernible] majority of people have taken those lines. [indiscernible] But ultimately, they will -- everybody will pay. [indiscernible] initially 15, 20 days, you will be seeing without ads. [indiscernible] ultimately they are also making a huge money without paying us anything. [indiscernible] Not to worry at all.
Got it. And in terms of the non-digital revenues [indiscernible] could you just help us understand what are the parts of it and [indiscernible]?
[indiscernible] Touch wood, we are doing well. [indiscernible] so why not TV will pay us more. [indiscernible]
Got it. And my last question is on regional content. Could you just help us understand [indiscernible]. And incrementally is that something [indiscernible] it's better to be focused on the mainstream Hindi [indiscernible]?
[indiscernible] 85%, 90% we will on the main thing and 10%, 15% will be on regional.
The next question is from the line of [ Sagar Jethwani ] of Phillip Capital.
Yes. So we have taken 5, 6 names, film names where we wish to acquire the content. So out of this INR 85 crores, INR 90 crores full year guidance that we have given [indiscernible] including promotions and all?
[Foreign Language]
Ballpark, any numbers you can provide?
[Foreign Language]
Okay. Okay. [indiscernible] including marketing, promotions, et cetera?
Yes, yes.
Okay. Okay. This is first. And second is that Saregama uses artificial intelligence in song selection. Are we also using any kind of technology for same? Or is it purely judgmental?
[indiscernible] very soon you will hear some more news from us [indiscernible].
That's great to hear, sir. And next is that in the last con call, I had asked you, sir, that [indiscernible] Have we gone through that? Any comeback on that, sir?
[indiscernible] You can say that.
Okay. Okay. So we are not in a position to monitor that ad where is it playing? Because we get a sharing pool from the ads as well. So that's why this question I thought to ask you.
[indiscernible] But, Girish, can you find out and tell, tell him [indiscernible]?
Yes, yes, we can surely do that. In fact, last time we had actually done some analysis and we found that on every second video of ours, we are getting an ad placed. So we were very -- we saw that number. We've done that deep analysis. But this particular aspect, we will come back to you for sure.
Sure, sure, sure. Okay. Okay.
The next question is from the line of Saket Mehrotra from Tusk Investments.
Sir, any visibility on how do you see the paid subscriptions shaping up like in the last 2, 3 years and across these quarters would be helpful to like know what your views are.
[indiscernible] and Spotify is also pushing customers [indiscernible].
Okay. And, sir [indiscernible] quarter, we've mentioned that we've released almost 260 plus -- 259 new songs. So does this -- like, is this across all channels and does it like include -- so a lot of times I see we reupload our old songs. So is this like -- does that account for that as [indiscernible]?
[indiscernible] And now we are focused [indiscernible] we will focus more on the quality, better quality [indiscernible] -- next year onwards, we will maybe do 200, 250 songs a year. [indiscernible] So we'll see, we'll take a call in third or fourth quarter [indiscernible].
Okay. [indiscernible] And then you're saying you'll table it to 200?
Yes. [indiscernible] Yes.
The next question is from the line of [ Akshay Sam from Sam Capital ].
Taurani ji, first of all, congrats to you and your team. I mean, you've been delivering for the last few years consistently. It's great for us as shareholders. [indiscernible] I mean our target is to become the Top 3 music label in the country. But the thing is content costs [indiscernible] Top 3 competitors. I know quantity is always not equal to quality-wise. But the Top 3 competitors of our Top 4 are heavily outspending us in terms of content costs, at least [indiscernible] at least on the big budget films and all that. I mean, what is your view on that?
Yes, that's true. But [indiscernible] So on the contrary, we should be more cautious. [indiscernible] I still think it's achievable. [indiscernible]
Because ultimately [indiscernible] in the future, I mean that will also strengthen our hand in negotiating with the likes of DSPs and Spotify [indiscernible] at least it will become -- our company will become future proof as well.
Akshay ji [indiscernible] -- everybody, 90% of the company is now saying [indiscernible] will not -- we don't know your content. [indiscernible] So they feel [ this is ] better than all those players. So the way we are happening on Spotify and [indiscernible] performance is 2 different things. [indiscernible] So that's -- I feel that's very positive for Tips and [indiscernible]
The next question is from the line of [ Surbhi from PwC ].
Hi. Am I audible?
Yes, ma'am. You are.
Sir, congratulations on a great set of numbers. I have 2 questions. Firstly, on margins. We've seen a significant improvement in margins in this quarter. So can you throw some light on how this margin improvement has happened and what has worked in our favor this quarter? I understand we should not look at it from a quarter perspective. But still, if you can share some insights.
Yes. Sushant, take this one. [indiscernible]
[indiscernible] on account of the content cost. If you see this quarter prime focus on this quarter [indiscernible] on account of content cost it says around INR 12 crores. But what we say is do measure us on a year-on-year basis for the full 12 months and don't look specifically on the quarter and that quarter's margins.
Sir, we followed this policy of booking the content costs in the same quarter of the release. And now you said that we've added like around 259 songs, which is higher than the run rate of the songs that we've been releasing in the last 2, 3 quarters. So, like, do you see content cost softening? Or are there any other reasons behind this cost going down?
Sorry, can you repeat your question?
The number of songs that we've released is higher on a sequential basis. And I believe the case when the content cost is going up, your content cost would have gone up or stayed in the same range where it was in the past 2, 3 quarters. But we've seen significant savings on the content despite high number of songs that we've released. So what explains -- I'm trying to understand how the content cost has come down so significantly for you in this quarter.
So primarily, if you look, there were no big movie songs released this quarter. These were primarily, let's say, regional songs and Hindi songs both. But there was no big movie. Let's say last year we had PS I, PS II [indiscernible]. This quarter, let's say, we didn't had a big movie release. But, let's say for next 9 months, as we have communicated in this call, the pipeline is good for us.
Understood. Understood. And could you share some insights of what is the cost which has gone behind the new content and what is the revenue potential? So which new content you can say content which has got released in the last 6 months.
What we share typically is, let's say, for every content, let's say, the payback period would be around 4 to 5 years. It would be difficult to, let's say, break down and give you the 6 months numbers, but let's say, any content we acquire on a basket basis, the payback period would be around typically 4 to 5 years.
And has the payback period like stretched for you a little bit because of increase in content cost versus what it was, say, 2 years back?
It has, marginally it has. But as you know that we are not aggressively bidding for the content. We need quality content. And that's why we are sticking to our payback period of 4 to 5 years.
The next question is from the line of CA Garvit Goyal from Nvest Analytics.
Just a clarification on -- in slide number -- page #6 in your slides, you have mentioned the music sector is [indiscernible] FY '23, right? So what is the expected growth for that number or overall industry for the next 3 to 5 years? Because you are saying after 3 to 4 years, you will be targeting somewhere 11% to 12% share in that. So that's why I'm asking.
I think industry [indiscernible] industry numbers.
That means it will prevail for next 3 to 4 years as well.
Yes, yes, yes.
[Operator Instructions] The next question is from the line of Mayur Parkeria from Wealth Managers.
Actually, I forgot to ask last time. Sir [indiscernible] if we can -- on an annual basis we are on any periodicity, sir, if you can give the understanding that how much of our revenues come through movie releases, which have been before 2000 then before 2010, then before [indiscernible] broad color, if you can give a suggestion so that [indiscernible] where we are more strength and how we are progressing. [indiscernible] So just one more request again, sir, if possible.
Yes. [indiscernible]. We will come back.
Right, sir. Right, sir. And, sir, have you mentioned that in this year we are going to spend INR 85 crores, INR 90 crores because I missed that, I think. For content, is that the target because INR 65 cores and INR 70 crores...
[indiscernible] content cost.
[indiscernible] As a percentage of revenue, last year, we had spent INR 60 crores. So [indiscernible] content cost broadly [indiscernible] it will significantly increase?
[Foreign Language]
Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference back to Mr. Nikunj Jain from Orient Capital for closing comments.
Thank you. I would like to thank the management for taking the time out for this conference call today. And also thanks to all the participants. If you have any queries, please feel free to contact us. We are Orient Capital Investor Relations Adviser to Tips Industries Limited. Thank you so much.
Thank you. Thank you.
Thank you. On behalf of Tips Industries Limited, that concludes this conference. Thank you all for joining. You may now disconnect your lines.
Thank you.