MOSL: MUSIC BROADCAST (Buy)-Stellar performance-robust outlook

Music Broadcast: Stellar performance; robust outlook

(RADIOCIT IN, Mkt Cap USD0.3b, CMP INR342, TP INR469, 37% Upside, Buy)

• Ad revival drives earnings: Revenue grew 14% YoY (flat QoQ) to INR759m, in line with our expectation, led by (1) volume growth at new (Phase III) stations, and (2) volume and yield growth at legacy stations. This coupled with 3% decline in opex (including write-backs) led to 65% YoY (17% QoQ) jump in EBITDA to INR274m, an 8% beat. EBITDA margin expanded 11pp YoY to 36%, a 270bp beat, as the new stations turned EBITDA breakeven. PAT grew 2.6x YoY (37% QoQ) to INR163m, a 34% beat, driven by the surge in EBITDA and net finance income of INR20m (v/s net finance cost of INR42m in 4QFY17). For FY18, revenue grew 10% to INR2,983m (in-line) while EBITDA grew 6% to INR971m (2% beat) and PAT grew 41% to INR517m (9% beat).
• ConCall highlights: (1) In FY19, EBITDA margin should be higher than 33% (FY18); (2) 8-10% yield improvement likely in FY19; (3) After empanelment on DAVP list, revenue from Phase III stations should grow; (4) EBITDA margin for Friends 91.9 FM should increase to 30% (from current 20%), driven by increase in national advertisers’ share (through network efficiencies) and growth in listenership (led by content integration).