MOSL: MUSIC BROADCAST (Buy)-Breakeven at new stations to drive earnings
​Music Broadcast: Breakeven at new stations to drive earnings
(RADIOCIT IN, Mkt Cap USD0.3b, CMP INR378, TP INR469, 24% Upside, Buy)
- We recently hosted Music Broadcast’s (MBL) management at our ‘Mid-cap Conference’.
- Local advertisers – one of the key drivers of growth – continue to feel the heat of GST. Momentum in real estate and government ads too remains weak. However, national FMCG advertisers have started increasing ad spend, which provides some comfort. We estimate FY18 revenue/EBITDA growth at 12%/7%.
- Management expects the newer stations to breakeven by H1FY19. This should help MBL record healthy EBITDA growth of 35% in FY19. Over the longer term, management expects to outpace industry growth by 1-2%, continuing its trend of doubling revenues in five years.
- With the healthy cash balance of INR1.5b and the expiry of the phase-III lock-in period, management is scouting for acquisitions, particularly in the untapped markets. We consider the existing sales alliances in Kolkata and Gwalior as low-hanging fruits.
- Post the auction of all 800 channels of Phase-III, the radio sector’s reach is expected to touch ~60% (from ~30% now).
- Top-8 stations contribute ~40-45% EBITDA margin, with ~80% utilization levels. However, overall utilization at legacy stations stands at ~70%, implying healthy growth potential.
Music Broadcast Limited, formerly known as Music Broadcast Pvt Ltd, owns and operates Radio City 91.1FM, which is a frequency modulation (FM) radio brand, and PlanetRadioCity.com, which is a music portal. Apart from Radio City Fun Ka Antenna, PlanetRadiocity.com has around 20 other Web radio streams, which include Radio City Indipop, Radio City Freedom, Radio City Smaran, Radio City Hindi, Radio City Tamil, Radio City Malayalam, Radio City International, Radio City Love, Radio City Classics, Radio City Dance, Radio City Fusion, Radio City Kannada, Radio City Rock, Radio City Electronica, Radio City Ghazal, Radio City Ishq, Radio City Metal, Radio City Faith, Radio City Wellness and Radio City Sufi. The PlanetRadioCity.com Website also features, news, videos, access to Radio City radio jockeys (RJs), Shows, Radio City properties and scoops on celebrities at Radio City. The Company has operations in around 20 cities in India.
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.
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