MOSL: Morning India (22/December/17)-1. Britannia-2. Entertainment Network India-3. Sustainability
​MOrning India (22/December/17): 1. Britannia; 2. Entertainment Network India; 3. Sustainability
Today’s top research idea
Entertainment Network India – Ad recovery on the cards; Stock attractive after recent correction; upgrade to Buy
- ENIL's ad revenues should revive in November-December on (1) a low base of November-16, and (2) gradual recovery in ad market and 3.) New shows - Karan Johar show. This should offset the muted ad growth in October-17 due to an early festive season (in 2QFY18), subdued Gujarat election ad spends, and lingering GST impact.
- New stations (batch-1 of phase-3) contributing 11% of revenue, should break even by 4QFY18, with capacity utilization rising from 23% to 25-30% driving profitability
- ENIL is likely to spend ~INR3b in FY19 towards (a) acquisition of TV Today's frequencies, and (b) next batch of phase-3 auctions. Expect new (TV Today) stations to generate annual revenue of INR700m-800m in 2-3 years (currently ~INR300m), with EBITDA over 35% EBITDA margin.
- Over FY17-20, we estimate 15/29% revenue/EBITDA CAGR and value ENIL at 20x FY19E EV/EBITDA; maintain TP of INR910. Post the recent ~15% correction, the stock appears attractive. Upgrade to Buy.
Piping hot news
Reliance Infrastructure sells Mumbai power business to Adani Transmission for Rs18,800 crore
- Reliance Infrastructure Ltd (RInfra) on Thursday said it has signed a definitive binding agreement to sell its Mumbai power business to Adani Transmission Ltd for Rs18,800 crore. While initially the company will be paid Rs13,251 crore, about Rs5,000 crore will come into the company’s books after the successful resolution of certain regulatory issues, most likely in 2018-19, Reliance Infrastructure CEO Lalit Jalan told Mint. He added that the deal is likely to close by March 2018.
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