EUR 120.00 For Business Accounts Only

MOSL: ENTERTAINMENT NETWORK INDIA (Buy)-Banking on multiple growth avenues

Entertainment Network India: Banking on multiple growth avenues

(ENIL IN, Mkt Cap USD0.4b, CMP INR552, TP INR720, 30% Upside, Buy)

 

• Stellar revenue growth: ENIL saw a stellar 3QFY19, with revenues growing 36% YoY to INR2b, backed by healthy mix of growth in old and new stations, shift in the festive season to 3Q, and contribution from mega-international artist concerts (healthy F&B revenue). Yet, EBITDA grew 14% YoY (in-line) to INR404m, with a 400bp margin contraction to 20.1% due to losses incurred from mega concerts. Ex-international concerts, revenue grew 20% YoY with a strong 37% YoY growth in EBITDA. PAT at INR160m grew 22% YoY (in-line). For 9MFY19, revenue /EBITDA/PAT grew 18%/18%/55% YoY. 
• Concall highlights: (1) Expect FY20 EBITDA margins to be upwards of 25%. (2) Expect the US radio business to turn profitable in next 18-20 months. (3) The company is following up with MIB for approval on the acquisition of TV Today radio stations. A decision is expected in the next 3-4 weeks.
• Healthy outlook: We largely maintain our estimates; expect strong 41% EBITDA CAGR (on a low base) over FY19-21, primarily on the back of healthy 17% revenue CAGR. Higher utilization at Batch 1/2 stations, coupled with yield improvement and an uptick in the non-FCT revenue should drive growth. However, this would partly be offset by initial losses at Batch 2 and the US stations. Potential gains from the acquisition of three TV Today radio stations (pending approvals) could provide further upside.