Amagi Media IPO review (Not Rated)

•    The company is engaged in providing cloud native SaaS technology to media companies and their customers.
•    The company posted losses from FY23 to FY25 and has just turned the corner for H1-FY26.
•    Based on its annualized FY26 numbers, the issue is at a P/E of 601.66, and at a negative P/E for based on its FY25 numbers.
•    Considering its business model, the company is set for bright prospects and thus, it’s a pure long term story.
•    Well-informed/cash surplus/risk seekers may park moderate funds for long term. 

ABOUT COMPANY:
Amagi Media Labs Ltd. (AMLL) founded in 2008, it is a software-as-a-service (“SaaS”) company that connects media companies to their audiences through cloud-native technology. Its platform helps content providers and distributors upload and deliver video over the internet (commonly known as streaming) through smart televisions, smartphones and applications, instead of traditional cable or set-top box services. The company also helps monetize such content through targeted advertising services for advertisers. Its technology has enabled the streaming of marquee events, such as the 2024 Paris Olympics, Union of European Football Association (“UEFA”) football tournaments, the Academy of Motion Picture Arts and Sciences Awards (commonly known as the ‘Oscars’), and the 2024 U.S. Presidential debates. 

According to the 1Lattice Report, the media and entertainment (“M&E”) industry is undergoing a structural shift towards a “new video economy”, led by the transition from traditional cable television to video delivery over the internet. This shift is driven by changing viewer preferences, as audiences now expect to be able to access content anytime and, on any device, including smartphones, smart TVs and other internet-connected platforms.

According to the 1Lattice Report, as of March 31, 2025, nearly 90% of broadcast media operations are based on legacy on-premise physical infrastructure, indicating significant growth potential as media operations transition to the cloud over the coming years and presenting a significant opportunity to modernize the use of technology in the industry.

As of September 30, 2025, AMLL served over 400 content providers, over 350 distributors and over 75 advertisers across more than 40 countries. According to the 1Lattice Report, as of September 30, 2025, it worked with more than 45% of the top 50 listed ‘media and entertainment’ companies by revenue (which comprise companies with a presence in streaming and broadcasting and excluding companies which are exclusively only into print media, outdoor advertising and content creation). Its customers include global media companies such as Vevo, Lionsgate Studios, DAZN, E.W. Scripps, Sinclair, Inc., VIZIO, Roku, The Trade Desk, JioAds and the Tennis Channel. As of September 30, 2025, it had 986 employees on its payroll.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route combo IPO of 49546221 equity shares of Rs. 5 each (worth Rs. 1788.62 cr. at the upper cap). The IPO consists of fresh equity issue worth Rs. 816 cr. (approx. 22603878 equity shares at the upper cap), and an Offer for Sale (OFS) of 26942343 equity shares (worth Rs. 972.62 cr. at the upper cap). The company has announced a price band of Rs. 343 – Rs. 361 per equity shares of Rs. 5 each. The issue opens for subscription on January 13, 2026, and will close on January 16, 2026. The minimum application to be made is for 41 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE and NSE. The issue constitutes 22.90% of the post-IPO paid-up equity capital. From the net proceeds of the fresh equity issue, the company will utilize Rs. 550.06 cr. for expenses towards technology and cloud infrastructure, and the rest for funding inorganic growth and general corporate purposes.

The company has reserved not less than 75% for QIBs, not more than 15% for HNIs and not more than 10% for Retail investors.

The five Book Running Lead Managers (BRLMs) to this issue are Kotak Mahindra Capital co. Ltd., Citigroup Global Markets India Pvt. Ltd., Goldman Sachs (India) Securities Pvt. Ltd., IIFL Capital Services Ltd., and Avendus Capital Pvt. Ltd., while MUFG Intime India Pvt. Ltd., is the registrar to the issue. Spark Institutional Equities Pvt. Ltd. land Kotak Securities Ltd. are syndicate members.

After issuing initial equity shares at par, the company has issued/converted further equity shares in the price range of Rs. 616.13 – Rs. 1083.36 per share (based on FV of Rs. 5), between October 2009, and November 2025. It has also issued bonus shares in the ratio of 35 for 1 in October 2024. The average cost of acquisition of shares by the promoters/selling shareholders is Rs. 0.88, Rs. 0.89, Rs. 21.44, Rs. 21.45, Rs. 26.72, Rs. 38.13, Rs. 39.76, Rs. 108.11, Rs. 108.24, 112.14, and Rs. 172.16 per share.

Post-IPO, its current paid-up equity capital of Rs. 96.87 cr. will stand enhanced to Rs. 108.17 cr. Based on the upper cap of the IPO price band, the company is looking for a market cap of Rs. 7809.84 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has (on a consolidated basis) posted a total income/net profit/ -(loss), of Rs. 724.72 cr. / Rs. – (321.27) cr. (FY23), Rs. 942.24 cr. / Rs. – (245.00) cr. (FY24), and Rs. 1223.31 cr. / Rs. – (68.71) cr. (FY25). For H1 of FY26 ended on September 30, 2025, it earned a net profit of Rs. 6.47 cr. on a total income of Rs. 733.93 cr. Thus, it marked reduction in losses from FY23 to FY25 and turned the corner for H1 of FY26. However, it has huge carried forward losses.

For the last three fiscals, the company has posted an average negative EPS of Rs. – (8.78) and an average negative RoNW of – (31.49) %. The issue is priced at a P/BV of 8.61 based on its NAV of Rs. 41.93 as of September 30, 2025, and at a P/BV of 4.90 based on its post-IPO NAV of Rs. 73.63 per share (at the upper cap).

If we attribute FY26 annualized earnings to its post-IPO fully diluted paid-up equity capital, then the asking price is at negative P/E of 601.67.  Based on FY25 earnings, the P/E stands negative. Thus, the issue appears aggressively priced. 

The company has (on consolidated basis) posted PAT margins of – (44.33) % (FY23), - ()26.00) % (FY24), - (5.62) % (FY25), 0.88% (H1-FY26), but its RoCE margin data is missing from the offer documents.

DIVIDEND POLICY:
The company has not declared any dividends for the referred periods of the offer document. It has already adopted a dividend policy in July 2025, based on its financial performance and future prospects.

COMPARISON WITH LISTED PEERS:
As per the offer document, the company has no listed peers to compare with.

MERCHANT BANKER’S TRACK RECORD:
The five BRLMs associated with this offer have handled 98 public issues in the past three years, out of which 23 issues closed below the issue price on listing date.