Amagi Media Labs IPO — 10 Key Things To Know Before You Subscribe: Read DRChoksey's Report

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DRChoksey Report

1. Amagi Media Labs IPO opened for subscription today, January 13 and the offer closes on Jan. 16.

2. A cloud-native software-as-a-service (SaaS) company has fixed the price band in the range of Rs 343 to Rs 361 per equity share.

3. Amagi Media Labs IPO is a book-built issue of Rs 1,789-crore comprising of a fresh issue of 2.26 crore shares, aggregating to Rs 816 crore, and an offer-for-sale (OFS) component of 2.69 crore shares, worth Rs 972.62 crore.

4. Investors can place bids starting from a minimum of 41 shares and in multiples thereafter.

5. Kotak Mahindra Capital, Citigroup Global Markets India, Goldman Sachs (India) Securities, IIFL Capital Services, and Avendus Capital are the book-running lead managers to the issue while MUFG Intime India Pvt. Ltd. is the registrar to the offer.

6. Objects of the Issue

The net proceeds are proposed to be utilised primarily towards technology and cloud infrastructure, and towards funding inorganic growth through unidentified acquisitions and general corporate purposes. These objects align with a growth and capability-building strategy that aims to strengthen platform scalability and extend product breadth.

• Expenses towards technology and cloud infrastructure: 550.1-crore.

• Funding inorganic growth through unidentified acquisitions and general corporate purposes: balance of Net Proceeds, subject to the cap that cumulative usage for inorganic growth and general corporate purposes shall not exceed 35% of gross proceeds.

7. Sectoral Risks

Key sectoral risks include rapid technology evolution in cloud media workflows, customer concentration in large media groups, and sensitivity to cloud infrastructure pricing and availability.

Additionally, cyclicality in ad spending and changes in streaming platform economics can impact monetization volumes and customer budgets, affecting revenue and margin outcomes.

8. Peer comparison

There are no listed peers in India or abroad in the broadcasting and streaming ecosystem that directly compare with the company’s end-to-end platform, limiting direct peer-multiple benchmarking.

As a result, valuation assessment relies more on business quality indicators such as revenue growth, gross margin stability, net revenue retention and the path to sustainable adjusted Ebitda margin expansion.

Given the combination of strong topline growth and improving profitability profile, the valuation risk-reward appears lucrative.

9. Red Flags

Key red flags to monitor

• High sensitivity to cloud infrastructure costs (communication cost is a large expense component).

• Technology disruption and competitive moves by larger platform or cloud providers may compress pricing and increase customer churn risk.

10. Outlook

Amagi’s long-term demand backdrop remains favorable as global broadcasting and streaming consumption continues to shift toward connected TV, FAST channels and cloud-based media workflows, which benefits cloud-native vendors with end-to-end capability across playout, distribution and ad monetization.

Profitability has improved as losses narrowed. The reported adjusted operating profit margin improved from (20.6%) in FY23 to 2.02% in FY25, as company moved from an operational loss to a small operational profit as it achieved scale.

Revenue has historically increased at a two-year CAGR of approx. 30%. The tech-driven model of the company expected to facilitate similar revenue growth rate in the medium term.

The company is valued at approximately 7x FY25 price/sales. Considering increasing technology penetration, expanding gross margins and visibility of future revenue, accordingly, we recommend long-term investors to Subscribe to the IPO.

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