Saregama’s shares saw a significant increase of 6.57 percent in early trading on Friday, reaching a high of Rs 393.35 per share on the BSE. On the previous day, the company’s shares had closed at Rs 369.1 per share.
This surge in Saregama’s share price followed its acquisition of a majority stake (51.82 percent) in Pocket Aces, a leading digital entertainment company in India. The deal was valued at Rs 174 crore.
Pocket Aces primarily creates and publishes digital content targeted at a younger audience. Their portfolio includes more than 3,000 pieces of content, including web series, music videos, sketches, and reels on platforms like FilterCopy, Nutshell, and Gobble. They release over 30 new content pieces daily.
The acquisition of the leading digital entertainment company will open up new opportunities for Saregama. It brings a wealth of intellectual property (IP) and a distribution network with over 95 million followers that Saregama plans to use to promote its music library.
Avarna Jain, Vice Chairperson of Saregama, expressed, “This acquisition represents a blend of tradition and innovation. While we have always been leaders in the music and media industry, this partnership with Pocket Aces will add new dimensions to our business as we engage with the growing digital-savvy young audience.”
Saregama will also acquire an additional 41 percent stake in Pocket Aces over the next 15 months at pre-agreed terms.
Domestic brokerage firm ICICI Direct noted, “The valuation for the initial transaction implies a Price-to-Sales ratio of 3.2x, which we find slightly high and may impact margins in the early years.
Pocket Aces boasts a distribution network of over 95 million followers, which Saregama intends to leverage to popularize its music library among the 18-35 age group. It will also create synergies across artist and influencer management and long-format video creation businesses.”
In the past year, Saregama’s shares have returned only 4.7 percent, compared to the Nifty 50’s gain of 16.2 percent during the same period.
Saregama India, formerly known as The Gramophone Company of India, possesses the country’s largest music archives. The company’s business segments include film and TV serials, music, digital content publishing, and marketing support services.