Tips Music, one of India’s top five music labels, has caught the attention of brokerage firm JM Financial, which has initiated coverage on the stock with a “Buy” rating and a target price of Rs 800. This implies a potential upside of 23.6% from current levels.
As per the brokerage report, a combination of partnerships, content investment, and monetisation potential makes Tips Music a long-term bet in the entertainment sector.
Let’s break down the four key reasons why JM Financial is upbeat on the company-
JM Financial on Tips Music: Warner Music deal provides high revenue visibility
One of the biggest catalysts for growth is Tips Music’s four-year global distribution deal with Warner Music, signed in March 2024. As per the brokerage, “The partnership is likely to contribute 30%+ of its revenue in FY26 vs. 25% in FY25.” This Minimum Guarantee (MG) agreement includes annual escalations, offering reliable topline visibility through FY28.
JM Financial on Tips Music: Content investment strategy
According to JM Financial, Tips Music has planned to invest 25% to 30% of its revenue into new content creation annually. The label’s catalogue, rich in popular tracks from the 1990s and 2000s, is considered more monetisable compared to older competitors.
Additionally, the company has also inked a revenue- sharing agreement with Sony Music Publishing.
JM Financial on Tips Music: Outperformance in a sluggish market
While the Indian music industry contracted by 2% in FY25 (as per EY FICCI), Tips Music outperformed peers with 36% growth over FY21-25. JM Financial states that the company’s “pure play focus on music content monetisation,” combined with global distribution strength and recent catalogue, places it ahead of rivals like Saregama.
Furthermore, the report added, “Amongst the two listed music labels in India, we have a clear preference for Tips Music.”
JM Financial on Tips Music: Earnings outlook and Valuation
JM Financial expects the company’s earnings to grow at a CAGR of approx. 24% between FY25 and FY28. The brokerage uses a 15-year DCF model (WACC: 12%, terminal growth: 5%). The stock currently trades at 33x FY27E P/E, which is in line with global peers, but the brokerage believes “there could be further upside if paid subscription penetration or short-form monetisation exceeds expectations.”