Universal Music Group’s move to acquire 30% of Excel Entertainment at a headline enterprise valuation of Rs. 2,400 crore, and Adar Poonawalla-led Serene Productions’ Rs. 1,000 crore investment for 50% of Dharma Productions and Dharmatic at an enterprise valuation of Rs. 2,000 crore, look similar on the surface: global and domestic capital backing Indian content IP. The financials, however, suggest these are two very different prices for two very different risk profiles, and the gap is large enough to invite a serious question. Did Serene buy Dharma Productions cheap, or did Universal pay a premium for Excel?
Start with FY2023-24. Excel reported revenue of Rs. 147.41 crore and a net profit of Rs. 8.19 crore, translating to a net margin of about 5.56%. Dharma, in the same year, operated at a different scale altogether: revenue of Rs. 520.20 crore, but net profit of only about Rs. 60 lakhs, effectively a break-even year with a margin of roughly 0.11%. On a one-year snapshot, Excel looks like a smaller but steadier machine, while Dharma looks like a much larger studio that had little left after costs, participations and amortisation did their work.
The problem is that one-year profits are a poor compass in film studios, because P&L recognition is inherently lumpy. That is exactly why the long-window view is the correct lens — and that’s where the valuation divergence becomes harder to ignore. Over the 11-year period from FY2013-14 to FY2023-24, Excel’s average annual revenue works out to Rs. 130.16 crore and average annual net profit to Rs. 7.29 crore, producing a blended net margin of 5.60%. Excel’s history reads like a textbook of volatility, yet when the noise is smoothed, the long-run earnings power settles into mid-single-digit margins.
Dharma’s 12-year record from FY2013-14 to FY2024-25 is bigger, more cyclical, and more revealing. Across the full period, Dharma’s average annual revenue is Rs. 385.65 crore and average annual net profit is Rs. 15.23 crore, implying a blended margin of 3.95%. The swings are dramatic, including a loss year early in the cycle. Yet the long-run profit pool is still meaningfully larger than Excel’s simply because Dharma plays at a very different scale. Importantly, FY2024-25 marks a repair year: revenue of Rs. 555.27 crore and net profit of Rs. 27.86 crore, pushing margins back to 5.02%. FY2023-24, then, looks less like a structural decline and more like a trough in a familiar cycle.
It is in this context that the influx of capital into Indian content businesses needs to be read less emotionally and more structurally. As Business Standard columnist Vanita Kohli Khandekar points out, “It’s good that capital is coming into the business. Obviously, film business needs capital. So, it’s a good thing.” However, she also cautions against reading headline numbers at face value, noting, “I don’t know what the nature of that Rs. 800 crores is… Even in the case of Dharma, the Rs. 1,000 crore is not going to come in one year. Every investment deal happens in tranches.” The implication is clear: valuation headlines often mask staggered capital deployment and performance-linked risk sharing.
Put the deal valuations against operating realities. On FY2023-24 sales, Excel at Rs. 2,400 crore is being priced at roughly 16.28x revenue, while Dharma at Rs. 2,000 crore is being priced at roughly 3.84x revenue. Even if one ignores one-year distortions and uses long-run average revenues, the gap remains stark: Excel sits around 18.44x its 11-year average sales, while Dharma sits around 5.19x its 12-year average sales. In plain terms, the market is paying three to four times more per rupee of revenue for Excel than for Dharma, despite Dharma’s materially larger scale and deeper through-the-cycle profit pool.
Profits sharpen the contrast further. On long-run average earnings, Excel’s valuation implies roughly 329x average earnings power, while Dharma implies roughly 131x. Either Excel is being underwritten as a high-growth, high-optionality IP platform, or Dharma is being discounted heavily for its volatility and recent margin shocks.
That strategic premium becomes easier to decode when one looks at who the buyer is. As Khandekar underlines, “Universal is a 12-billion-euro company. So, it’s a good father to have.” With China largely closed to global media expansion, “if you want to play the game of volume, then India is a market. But India is a tough market. It’s very difficult to make money in this market. So, you need a local player.” In that framing, Universal’s Excel bet is less about historical balance sheets and more about long-term music and IP monetisation in a film-led ecosystem.
She also points to why such alliances make sense structurally in India, arguing, “You can’t imagine a Universal and Warner Brothers allying globally. But you can imagine a Universal and Excel or Saregama and Bhansali allying… because 70% of music sold in this country is film music.” That reality explains why Excel’s premium may be tolerable to a global music giant looking for annuity-style revenues rather than studio-style volatility.
So, was Dharma undervalued or Excel overvalued? Strip away strategic overlays and judge the deals purely on financial multiples, and Dharma appears conservatively priced relative to its scale and normalised earnings power, while Excel appears richly priced against its historical numbers. The most charitable reading is that Universal is paying for future optionality in music and global distribution, not just past profits.
Remove that strategic lens, and the conclusion sharpens: Serene seems to have bought a larger, more cyclical studio at a sensible point in its recovery cycle, while Universal has paid a premium for Excel that only fully justifies itself if the partnership materially expands monetisation beyond what the last decade of financials alone would support.
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