Amagi Media IPO: Brokerages See Growth Potential in Cloud-Native SaaS Platform

Leading research houses recommend ‘Subscribe’ rating, citing compelling market opportunity and improving financials

Amagi Media Labs’ Rs 1,789-crore initial public offering (IPO), currently open for subscription, has received some positive recommendations from leading brokerages which highlights its position in the rapidly growing media technology space and its recent turn to profitability.

The Bengaluru-based software-as-a-service (SaaS) company, which provides cloud-native technology to global media companies, has received ‘Subscribe’ ratings from prominent research houses including Anand Rathi, BP Equities, and Nirmal Bang Securities. The issue, which opened on January 13, will close on January 16.

Strong Value Proposition

“At the upper price band, the company is valued at 6.7x FY25 P/S, translating into a post-issue market capitalisation of Rs 78,098 million,” said Anand Rathi in its report. “It has turned profitable in H1 FY26 and, supported by strong operating leverage, is well positioned to deliver full-year profitability in FY26.”

The brokerage emphasised that continued investments in R&D to enhance scalability, automation, and user experience reinforce Amagi’s positioning as the “industry cloud” for video in the media and entertainment space. “In light of these factors, the IPO appears fully priced and is recommended as ‘Subscribe – Long Term,'” Anand Rathi added.

BP Equities echoed this sentiment, noting that “Amagi is a prominent SaaS player in the Media and Entertainment Industry offering cloud technology to content providers.” The firm highlighted that the company reduces costs for clients by approximately 30-50%, driving rapid industry adoption despite current cloud penetration of only 10%.

Nirmal Bang Securities stated: “Company is instrumental in reducing costs for their clients by almost 30-50% and thus the industry is fast adopting the new technology. The stickiness of the customers along with cross sell and upscale opportunities leaves immense scope for the company to continue its revenue CAGR growth of 30% in the coming years as well.”

Massive Market Opportunity

A key for investors is the enormous addressable market. According to industry reports cited by brokerages, the global media and entertainment industry is expected to grow at a CAGR of 3.7% from CY24 to CY29, reaching Rs 301.3 trillion (US$3.6 trillion).

“The serviceable addressable market spans three key areas—cloud modernization, streaming unification, and monetization and marketplace solutions—estimated at approximately US$5.1 billion as of December 31, 2024,” noted Anand Rathi in its report.

Particularly compelling is the low cloud penetration in media operations—currently just 10%—which is expected to reach 30-40% over the next 4-5 years. “The penetration is still low at only 10%. This substantial growth runway, combined with Amagi’s integrated platform, positions the company to capitalize on the industry’s digital transformation,” said Nirmal Bang Securities.

BP Equities added: “The OTT market (on-demand and FAST) is expected to experience a market growth of approximately 10% globally over Calendar Year 2024-2029P. Technology spending in the broadcasting and streaming industry has steadily risen from approximately 8% of revenue in Calendar Year 2019 to approximately 10% in Calendar Year 2024 and is estimated to reach approximately 11% by Calendar Year 2029P.”

Sticky Customer Base Drives Growth

Brokerages highlighted Amagi’s customer retention and expansion metrics as a key strength. The company serves over 400 content providers, 350 distributors, and 75 advertisers across 40+ countries, including marquee names like Vevo, Lionsgate Studios, DAZN, Roku, and The Trade Desk.

“The company has maintained long-term and growing relationships with content providers, distributors, and advertisers, with the average tenure of relationships with its ten largest customers being 4.00 years,” Anand Rathi noted. More impressively, Amagi has observed zero customer churn among its top ten customers over the past three years.

The company’s net revenue retention (NRR) rate of 127% in both H1FY26 and FY25 demonstrates strong upselling and cross-selling capabilities—a critical metric for SaaS businesses.

BP Equities emphasized this point: “As of September 30, 2025, they served a diverse, global customer base comprising over 400 content providers, more than 350 distributors, and over 75 advertisers. According to the 1Lattice Report, as of the same date, they worked with more than 45% of the top 50 listed media and entertainment companies by revenue.”

Improving Financial Profile

After years of losses, the company posted a profit of Rs 6.5 crore in H1FY26, with adjusted EBITDA margins improving from negative 21.8% in FY23 to positive 5.8% in H1FY26.

“The company has delivered strong and consistent growth, with revenue from operations recording a 30.7% CAGR between FY23 and FY25 and rising 34.6% YoY to Rs 704.8 crores in H1FY26,” said BP Equities. The brokerage noted that gross margins expanded from 64.7% in FY23 to 69.3% in FY25, supported by a software-led delivery model.

Nirmal Bang Securities highlighted: “It has turned PAT positive in H1FY26 and we believe it can thrive well in the growing demand environment. Issue is priced at 5x its FY26A EV/Sales and we recommend ‘Subscribe’ to the issue.”

Anand Rathi added: “Profitability metrics continue to improve, with gross margins expanding from 64.7% in FY23 to 69.3% in FY25 and remaining stable at approximately 69.6% in H1FY26, supported by a software-led delivery model.”

Navigating Growth Challenges

The company has a history of losses, with negative cash flows in earlier years—a common challenge for high-growth SaaS companies investing heavily in platform development and market expansion.

Geographic concentration presents another consideration. During H1FY26, the Americas contributed 73.2% of revenue while Europe accounted for 17.3%, creating dependency on these mature markets. Any economic downturn or regulatory changes in these regions could impact performance.

The company’s reliance on third-party cloud infrastructure operated by external providers also introduces operational risk. Service disruptions or performance issues at these cloud providers could affect platform availability and customer satisfaction.

Additionally, the ability to cross-sell and upsell—while demonstrated through strong NRR—requires continuous innovation and customer success management. The technical complexity of cloud distribution and video streaming means the company must constantly invest in R&D to maintain its competitive edge.

Competition is intensifying as the market grows, with both established players and new entrants vying for market share. Privacy and security concerns for content owners remain critical, requiring robust governance frameworks.

However, brokerages believe these challenges are manageable given Amagi’s strong customer relationships, technological capabilities, and the tailwinds from industry digitalization.

Valuation Perspective

At the upper price band of Rs 361, Amagi Media Labs is valued at a P/S multiple of 0.3x based on FY25 sales—a valuation that all three brokerages deemed justified given the company’s scalable business model and industry growth potential.

“Given the company’s scalable business model and industry growth potential, we believe the valuation is justified. Thus, we recommend a ‘Subscribe’ rating for this issue with a medium to long-term investment horizon,” noted BP Equities.

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