Saregama’s Retro Bet, Carvaan, Sends Its Shares Soaring Over 250%

The RP-Sanjiv Goenka Group company sold 95,000 units of Carvaan in three months to September.

Saregama Caraavan.

(Photo Courtesy: Saregama.com)

Investors are grooving to Saregama’s contrarian beat.

In the age of streaming services, the music label unveiled a retro-looking audio player that comes preloaded with 5,000 Bollywood songs. Its shares have gained more than 250 percent since the May launch.

Carvaan, also a Bluetooth speaker and an FM radio, is in demand. The RP-Sanjiv Goenka Group company sold 95,000 units of the device in three months to September, according to the company’s investor presentation. Brokerage Kotak Securities estimates that it will sell more than two million of these in the next three years.

(Photo: BloombergQuint)

Saregama, which claims to have one of the largest music archives in the country, is targeting music lovers who are 35 years and more. 

Basically, those who remember that there was a time before the internet and loved singers like Kishore Kumar, Lata Mangeshkar, Mohammad Rafi and Jagjit Singh. That’s when streaming apps like Gaana.com and Saavn have been downloaded by millions of millennials in India. Saregama itself sells music online and has its own streaming apps.

Sales of the audio player, made by a Chinese supplier, helped Saregama report its highest revenue in over 10 quarters in the three months ended September, according to its exchange filings. Revenue from music rose 134 percent over the year-ago period to Rs 73.20 crore in the quarter ended September, according to its exchange filing. The music revenue from companies, including royalties from telecom operators and YouTube, rose 19 percent during the period.

(Photo: BloombergQuint)

Kotak Securities initiated coverage on the company’s stock with a ‘Buy’ rating and a target price of Rs 1,264, a potential upside of 43 percent.

Carvaan has been the most-significant consumer-focused initiative of the company and a game-changer for its earnings, the brokerage said. Its sales could grow at an annualised rate of 49 percent in the four years to March 2020, the brokerage said.

The device was launched in two variants: at Rs 6,490 and Rs 6,990 and the company lowered prices after the GST rates were cut. It also came out with a smaller variant called Carvaan Mini last month, priced at Rs 2,490, with 251 of songs preloaded.

It’s sold both through retail outlets and online and is available in the US at $165. The company said plans to launch a variant in the UK, besides offering music in Tamil, Bengali, Marathi, Punjabi, Malayalam and Classical music in India.

(This article was originally published on BloombergQuint)