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MOSL: Morning India (25/July/17) 1. Radio (Thematic) 2. HDFC Bank 3. Avenue Supermarts 4. Zee Ent. 5. Ambuja Cement 6. Indiabulls Hsg Fin

​MOrning India (25/July/17): 1. Radio (New Coverage: Thematic); 2. HDFC Bank; 3. Avenue Supermarts; 4. Zee Ent.; 5. Ambuja Cement; 6. Indiabulls Hsg Fin; 7. United Spirits; 8. Ashok Leyland

Today’s top research idea

THEMATIC | Radio: Well tuned to flourish

Over the past 18 months, the Indian radio industry has witnessed a 66% increase in the number of channels to reach 407, led by phase-III auctions and phase-II license renewals. This is likely to drive radio industry revenue CAGR of 16% over CY16-21E, ~1.4x of traditional media (ex-digital). Also, despite the evolution of the digital medium, radio remains a stable advertising medium globally, backed by its localized and interactive content.

Entertainment Network India Limited (ENIL)/Music Broadcast’s (MBL) with market shares of 30%/14% have strong execution capabilities. Inventory addition should help ENIL/MBL to record revenue growth of 16%/15% and EBITDA CAGR of 30%/20% over FY17-20. RoIC too will improve to 20%/25% by FY20, led by improving EBITDA margins and asset turns. Overall, their FCF yield should improve to ~5% by FY20.

We initiate coverage on ENIL with a Neutral rating and a TP of INR 928, assigning 20x on FY19E EBITDA of INR2.1b. We initiate coverage on MBL with Buy rating and a TP of INR 469, assigning 18x EV/EBITDA on FY19E EBITDA of INR1.3b.

Piping hot news

DoT, Finance Ministry to ease burden of debt-laden telecom sector

The Department of Telecommunications (DoT) and the finance ministry have broadly agreed on relief measures for the debt-laden telecom sector that may include nearly doubling the deferred payment period for spectrum bought in auctions and reducing the interest burden on companies.