TV Today Network Ltd. share price target

BUY TV Today Networks Ltd between Rs. 303 - 275 for the Sequential Targets Rs. 345 - 388

TV Today Network (TTNL) reported a good set of numbers for 1QFY2017 with its consolidated top-line growing by ~8% yoy for the quarter. On the operating front, the company reported margin expansion on account of lower selling & administrative expenses, which lead to the net profit growing by ~24% yoy for the quarter.

Outlook and Valuation: We expect TTNL to report a net revenue CAGR of ~16% to ~`743cr and net profit to post a ~16% CAGR to `128cr over FY2016-18E. The company has sustained its leadership position in the Hindi news genre for14 consecutive years while in the English news genre it currently holds the No.2 position. Further, its exit from the radio business should boost profitability. The company is debt free with `201cr of cash on its balance sheet. Hence, maintain our Buy recommendation on the stock with a target price of `363.

TV Today had entered into DD’s Free Dish platform for an outlay of | 6.0 crore. Such an entry will help the company garner better rural viewership share and, negotiate better terms with advertisers. However, it has led to renegotiations on subscription deals culminating into a quarterly impact of ~| 3.0 crore. The subscription revenue estimates have been curtailed accordingly to | 21.5 crore in FY17E and FY18E, respectively.

Valuation : TV Today has been able to take a hike in ad yields owing to its leadership position in the Hindi news genre. In addition, there has been incremental revenue flow from the English Channel India Today, which has been able to improve its ranking in the English news genre. Expecting TV Today to post 23.5% CAGR in EBITDA with 13.0% CAGR in revenue in FY16-18E. EBITDA margins are expected to expand to 32.1% by FY18E with the complete exit from radio business being an upside risk. They value the stock at a 15x FY18E EPS of | 24.2, arriving at a target price of | 363, maintaining BUY.

TV Today Network Ltd. is a part of India Today group and operates a network of TV News channels. The company is one of the leading news broadcasters with four news channels - Aaj Tak, India Today, Dilli Aaj Tak and Tez. Aaj Tak, the flagship channel of TV Today Network, has been able to maintain its dominant position in Hindi news genre, while India today has consistently increased its market share in English news genre.

Revenues came in at | 142.2 crore, up 24.1% YoY, much higher than our expectations of | 128.0 crore. Most of the growth came in as a result of the ad rate increase the company was able to take due to its...