Target: ₹450
CMP: ₹335.95
Amagi Media Labs is a cloud-based SaaS platform that allows content owners to create, manage and broadcast channels over the internet without physical infrastructure alongside targeted ad insertion. A three-sided marketplace moat, strong net retention ratio of about 126.9 per cent in FY25, steady revenue growth of about 30.7 per cent over FY23-25 and improving operating leverage (adj. EBITDA margin at about 10.5 per cent in 9MFY26 vs. 20.7 per cent in FY23) make it a structurally compelling long-term compounding story.
We expect its revenue to clock about 20.6 per cent CAGR over FY26-28, led by existing and new clients. Opex (as % of revenue) stood at about 59 per cent in 9MFY26 (vs about 67.3 per cent/85.5 per cent in FY25/23). This is the signature inflection of scaling a SaaS business crossing the leverage threshold, every incremental rupee of revenue now flows disproportionately to the bottom line. We thus expect the adjusted margin to expand from about 8.9 per cent in FY26 to about 19.2 per cent by FY28.
While it trades at 25.9x FY28 earnings, which is at the midpoint of US vertical SaaS companies, its 20.6 per cent FY26-28E revenue CAGR is at the higher end of US vertical SaaS peers. We initiate coverage with a Buy rating and TP of ₹450.
Key Risks: Geographic concentration (73 per cent from the US); client concentration (14.1 per cent from 1 client); Negative impact from AI evolution; higher-than-expected revenue pressure in the cable and broadcasting industry.