MOSL: ENTERTAINMENT NETWORK (Buy)-Muted quarter-Earnings growth on the cusp of recovery
Entertainment Network: Muted quarter; Earnings growth on the cusp of recovery
(ENIL IN, Mkt Cap USD0.5b, CMP INR679, TP INR820, 21% Upside, Buy)
- Weak revenues drag EBITDA lower: Revenue declined 1.5% YoY (+18% QoQ) to INR1,484m (2% beat), which management attributed to a client-specific issue (now resolved) and the preponement of the festive season to 2QFY18 (~INR120m). Excluding this one-off impact, revenue growth was 4.6% YoY. EBITDA fell 6.6% YoY to INR356m (5% miss) due to weak revenues, with the margin down 130bp YoY to 24% (170bp miss). PAT declined 20% YoY (+119% QoQ) to INR131m (8% miss) due to lower EBITDA and a 9% YoY increase in depreciation from newer stations.
- New stations take the center stage: The 32 legacy stations recorded an 11% decline in revenue, pulling down legacy station EBITDA by 28%. This was offset by more than doubling of revenue at new stations to INR214m (contributing 15% of revenue; turned EBITDA breakeven at INR11m).
- EBITDA margin ready for uptick: Management’s aggressive stance on capping ad inventory (leading to volume decline) has continued to outweigh the benefits of yield improvement at legacy stations. We cut EBITDA by 10%/5% for FY19/20E, expecting revenue/EBITDA CAGR of 21%/44% over FY18-20. However, given the low revenue base in old circles, waning impact of GST, and an improvement in new stations, incremental revenue growth should drive steep operating leverage. With the expiry of the lock-in period for phase-III licenses in Mar-18, TV Today’s three stations remain a latent opportunity.
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.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.