MOSL: ENTERTAINMENT NETWORK INDIA (Buy)-Tunes in well after four-quarter disturbance
Entertainment Network India: Tunes in well after four-quarter disturbance
(ENIL IN, Mkt Cap USD0.5b, CMP INR740, TP INR851, 15% Upside, Buy)
- Strong revenue growth drives EBITDA: ENIL impressed by delivering a strong performance in 1QFY19 after four weak quarters. EBITDA grew by a robust 65% YoY to INR284m, led by healthy 17% YoY standalone revenue growth to INR1,216m (in-line) and 400bp YoY margin expansion in the non-FCT business to 28%. Overall margin expanded ~690bp YoY to 23.3% (260bp beat). PAT more than doubled to INR92m (-21% QoQ). However, adj. for one-offs (provision write-back), PAT grew 3.3x to INR72m (19% beat).
- Old stations witness turnaround: Old stations recovered with a healthy 14% YoY revenue jump to INR999m, post the disappointment in FY18 when prices had increased and ad volumes subsequently declined (partly voluntarily). A low base and a revival in adspend across the government, durables and real estate categories supported growth. This drove a 62% YoY jump in EBITDA of old stations. The newly launched 17 batch-1 stations saw robust 70% YoY revenue growth, driving EBITDA of INR7m (v/s -INR44m in 1QFY18), partly offset by an INR9m loss on launch of some batch-2 stations.
- Concall highlights: (1) Entire 22% YoY growth in radio revenue was volume-led. (2) Old/new stations average utilization at 80%/30%. (3) Remaining 16 of 21 batch-2 stations to be launched by mid-3QFY19. (4) Expect ENIL to grow ahead of radio industry (10-12%) led by station expansion.
Entertainment Network (India) Limited is engaged in private frequency modulation (FM) radio broadcasting. The Company's principal revenue stream is advertising. The Company's advertising business includes the sale of air time in its Frequency Modulation (FM) radio broadcasting stations, activations and monetization of its media properties. The Company operates through Media and Entertainment segment. The Company operates in radio broadcasting under the brand Radio Mirchi, which is a radio station. The Company has operations in Jammu, Chandigarh, Srinagar, Ahmedabad, Hyderabad, Panaji, Bengaluru, Kolkata, Guwahati, Raipur, Kozhikode, Nashik, Kanpur, Visakhapatnam, Surat, Vijayawada, Nagpur, Shillong, Vadodara, Thiruvananthapuram, Rajkot, Patna, Coimbatore, Madurai, Kolhapur, Indore, Delhi, Jalandhar, Jabalpur, Shimla, Jodhpur, Patiala, Amritsar and Bengaluru, among others. Mirchi is also on television through properties, such as Mirchi Music Awards, Mirchi Top 20 and Spell Bee.
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