Is Amagi’s IPO a long-term bet for high risk investors? – News Air Insight

ET Intelligence Group: Amagi Media Labs, which offers software as a service (SaaS) in the streaming and content monetisation segments to global media companies, plans to raise ₹816 crore through a fresh issue to fund cloud infrastructure and inorganic growth. It will also raise upto ₹973 crore through an offer for sale. The promoter group’s stake will fall to 14.9% after the IPO from 16.7%. The company has a strong focus on platform development with research and development (R&D) costs forming around 24% of the total expenses, in line with global technology product companies. After reporting net loss in each of the three years to FY25, it turned profitable in the first six months of FY26 but operating cash flow (OCF) was negative. The company operates in an ever changing technology sector, and it is therefore exposed to the risk of obsolescence. Given these factors, investors with high risk appetite may consider the IPO with a long term view.

Business

The Bengaluru headquartered company focuses on three areas: cloud modernisation where it helps legacy TV network stations to transition to cloud-based systems; streaming unification where it helps content providers to navigate through fragmented over-the-top (OTT) distribution; and monetisation where it helps in enhancing revenue through advertising and expanded content distribution. It works with marquee global clients such as Fox, Network18, and Lionsgate in content provision, distributors such as Rakuten and Roku, and advertising distributors such as OnCore and The Trade Desk. America and Europe contributed 73% and 17% to FY25 revenue.

Financials
Revenue from operations increased by 30.7% annually to ₹1,162.6 crore between FY23 and FY25. In the six months to September 2025, revenue was ₹704.8 crore. After reducing the extent of net loss to ₹69 crore in FY25 from ₹321 crore in FY23, the company turned profitable in the first half of FY26, reporting a net profit of ₹6.5 crore. The operating margin before depreciation and amortisation (Ebitda margin) was 8.3% compared with 2% in FY25. It had reported Ebitda loss in the two previous years. The company posted a positive operating cash flow (OCF) of ₹33.6 crore in FY25 after reporting a cash outflow in the prior two years. However, OCF turned negative in the first six months of FY26.

Valuation

Due to net losses, price-earnings (P/E) multiple would not make sense. Its price-sales multiple (P/E) after annualising net sales for the first half of FY26 and post-IPO equity works out to be 5.5. There are no listed direct peers in India.