The Indian Media and Entertainment (M&E) industry is a booming, vital sector for the economy, currently experiencing rapid growth on many fronts. A growth powered by factors like the growing accessibility of low-cost, high-speed internet, rising personal incomes, and higher sales of consumer devices. India’s Entertainment sector is quite different from its global peers, defined by both its huge user base and a positive trend of rising Average Revenue Per User (ARPU).
According to a recent industry report, the Indian entertainment sector could unlock an estimated Rs 50,724 cr (US$ 6 billion) in unrealised value by FY30. This growth potential is attributed to international collaboration, technology adoption, and strategic changes in content creation. No wonder India’s Entertainment industry is set to outpace global growth, with a compound annual growth rate (CAGR) of 8.3%, projected to reach US$ 43 billion (Rs 3,65,000 cr) by FY28.
Debunking the “Risky Sector” Myth
And all of this is contrary to a widely held belief that the Entertainment industry is, if we can use the word, “bad”. So, before you fall for the myth, look at these two stocks from the sector that are causing ripples with their super-efficient capital management and profit growth, with near-zero debt.
Case Study 1: Connplex Cinemas’ High-ROCE Growth
Incorporated in 2015, Connplex Cinemas Ltd is in the business of running a chain of cinemas. The company focuses on under-served markets in Tier 2, 3, and 4 cities for now, but has expansion plans across cities in India.
With a market cap of Rs 488 cr, the company recently came up with its IPO and was consequently listed around 14th August 2025.
Before we move to the core financials for the company, here is what one must know about it.
The company has a current ROCE (Return on Capital Employed) of 163%. In simple words, for every Rs 100 the company uses as capital, it makes a profit of Rs 163 on it. That’s an enviable number because the current industry median ROCE is 5%.
The difference is huge, and Connplex Cinemas is setting new benchmarks for its contemporaries.
Furthermore, the company is operating at near zero debt, which means it does not have to worry about any big interest payments, making it free to use the profits earned under ROCE to grow the business further or give back to the investors that trusted it.
Moving on to the core financials, the sales of the company grew at a compounded growth rate of 141% in the last 3 years, from Rs 7 cr in FY22 to Rs 96 cr in FY25.
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), or in simple terms, Operating profits grew from Rs 1 cr to Rs 26 cr in the same period logging a compounded growth of an envy-worthy 196%.
Looking at the net profits, the company logged in a compounded growth of 170% from Rs 1 cr in FY22 to Rs 19 cr in FY25.
The share price of Connplex Cinemas Ltd when it was listed in August 2025 was around Rs 186, and as of closing on 31st October 2025, it was Rs 240 which is a jump of about 30%.
The stock is trading at a modest PE of 25x which is lower than the current industry median of 33x.
The company plans to utilize the funds raised through the IPO to fund the capex for purchase of a corporate office, purchase of LED screens and projectors and funding other working capital requirements.
Case Study 2: Tips Music’s Debt-Free Turnaround
Incorporated in 1996, Tips Music Ltd is engaged in the business of production and distribution of motion pictures and acquisition and exploitation of Music Rights. The company is also a leading producer of Punjabi films in the country.
With a market cap of Rs 6,760 cr, the company has deals with Maddock Films, Dharma Production, Viacom 18, Netflix, TATA Sky, Excel entertainment, and others. It also has broadcast partners namely, Zee, Star, Sony, and Viacom 18.
The company has a current ROCE of 109%, which means that for every Rs 100 the company uses as capital, it makes a profit of Rs 109 on it. The current industry median around 4%.
Just like Connplex, Tips is also laughing its way to the bank when it comes to earning profits in the capital employed.
Between 2014 to 2023, Tips Music repaid its entire debt of Rs 133 cr along with the complete interest of Rs 54.5 cr. As of today, the company is operating at near-zero debt, giving them the liberty to use it for growth, buybacks or dividend purposes.
The current dividend yield is 1.51%, which is gold standard for the industry, as the industry median is 0%. In the same period the company repaid all its debt, it also paid dividends of Rs 24 cr.
The sales of the company grew from Rs 91 cr in FY20 to Rs 311 cr in FY25, which makes it a compounded growth of nearly 29%.
EBITDA or operating profits went from recording losses of Rs 2 cr in FY 20 to profits of Rs 207 cr in FY25.
The net profit is a turnaround story, with profits growing at a compounded rate of over 70% between FY20 and FY25.
The share price of Tips Music Ltd climbed from Rs 23 in early November 2020 to Rs 529 as of closing on 31st October 2025. This is a jump of 2,200% in 5 years. Rs 1 lac invested in the stock 5 years ago would have been Rs 23 lacs today.
And that’s not all, even at its current price of Rs 529, the stock is trading at a discount of 44% from its all-time high price of Rs 950, making it an interesting entry point for readers who are excited by the growth.
The company’s stock is trading at a PE of 39x, while the industry median is 44x. The 10-Year median PE for Tips Music is 32x and the industry median for the same period is 34x.
In the recent earnings call and subsequent investor presentation from October 2025, the company has declared the second interim dividend of FY26 of Rs 4 per share.
While the company lists Copyright infringement, Piracy, Usage of stream-ripping websites and Reduction of cinema screens as its major challenges, its vision is to beat them and be amongst the top 3 music companies in India by creating, acquiring and delivering quality music having high catalogue value.
Should You Buy a Ticket to The Show?
Both stocks, Tips Music and Connplex Cinemas that we saw today, seem like the beacon of light in what the common man regards as a risky sector. Movies might be flopping in big numbers, but like the famous dialogue says, the world works on just 3 things. Entertainment, Entertainment and Entertainment.
With enviable profits on capital employed, net profits, sales growth, cash efficiency, both the companies check off many of the boxes smart investors look for when picking stocks.
However, whether to buy into these stocks is something that must be a thoroughly researched decision. How these 2 stocks and the industry do in the months and years to come is unknown to anyone. But adding these stocks to a watchlist and following them closely could end up being a good idea.
Note: We have relied on data from www.Screener.in and www.trendlyne.com throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
Suhel Khan has been a passionate follower of the markets for over a decade. During this period, He was an integral part of a leading Equity Research organisation based in Mumbai as the Head of Sales & Marketing. Presently, he is spending most of his time dissecting the investments and strategies of the Super Investors of India.
Disclosure: The writer and his dependents do not hold the stocks discussed in this article.
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