Media share price target

We continue to believe that the multiplex industry is the best placed media segment for growth driven by traction in content performance. Both PVR and Inox remain key beneficiaries of a flourishing multiplex business, which is one of the proxies on rising urban discretionary consumption spends. We value PVR at 14.5x FY21E EV/EBITDA (ex-Ind-AS 116) and arrive at a target price of | 2200 with a BUY rating. We value Inox at 10x FY21E (ex-Ind-AS 116) EV/EBITDA (~30% discount to target EV/EBITDA multiple of PVR) to...

Play on rising discretionary spend & emerging content diversity ........................... 4 Most preferred out of home leisure' activity ....................................................... 4 Rising content diversity to drive occupancy ....................................................... 5 Multiplexes enable wider screen releases & boost box office collections ........... 6 Multiplexes in a sweet spot structurally.................................................................. 7 Low penetration provides huge growth opportunity ............................................ 7 Healthy pipeline of retail space to boost mall ecosystem ................................... 8 Unviable single screen economics to aid growth................................................ 8...

Play on rising discretionary spend & emerging content diversity ........................... 4 Most preferred out of home leisure' activity ....................................................... 4 Rising content diversity to drive occupancy ....................................................... 5 Multiplexes enable wider screen releases & boost box office collections ........... 6 Multiplexes in a sweet spot structurally.................................................................. 7 Low penetration provides huge growth opportunity ............................................ 7 Healthy pipeline of retail space to boost mall ecosystem ................................... 8 Unviable single screen economics to aid growth................................................ 8...

Multiplexes have witnessed a strong catalyst in their growth both on the business front (like strong box office show and F&B; issues calming down) as well as government measures (cut in GST rate with effect from January, 2019 and corporate tax rate announced recently. We highlight that both PVR and Inox' effective tax rate was ~32-33%, implying ~750 bps benefit of the new tax rate on its implementation. In turn, this will boost earnings by ~15%+ while cash generation will also improve. The strong content performance has resulted in ~30% growth in box office collections (exregionals) so far in Q2FY20. We now incorporate the strong box office...

FY19 has been an eventful year for multiplexes 1) strong screen addition; 2) good box-office performance without the help of big star-cast movies; and 3) F&B; issue. Both PVR (PVRL) and Inox Leisure (INOL) have demonstrated strong execution capabilities. Further, based on the pipeline of screens both the companies target to add 80+ screens each in FY20E and FY21E. Q4FY19 has been a blockbuster year for NBOC. We have factored the same and increase our forecasts accordingly. We expect the nonticketing revenue to grow faster for both PVRL (standalone) and INOL at a CAGR of 15.9% and 18.7% respectively. We now forecast revenue/EBITDA to grow at 2-year CAGR of 15.2%/17.8% for INOL and 17%/16.5% for PVRL. We maintain BUY on both PVRL with new TP of Rs1,951 (vs. Rs1,921 earlier) based on EV/EBITDA of13x FY21E...

We continue to maintain that the multiplex industry is staring at strong growth in the medium term as some of the major issues of higher GST for tickets and public outcry on higher F&B; prices seems to be behind now. Moreover, content pipeline and recent performance signals strong growth ahead. Both PVR and Inox remain key beneficiaries of a flourishing multiplex business, which is one of the proxies on rising urban discretionary consumption spends. We value PVR at 12.5x FY21E EV/EBITDA and arrive at a target price of | 1910 with a BUY rating. We value 9.4x FY21E EV/EBITDA...

Initiate with a BUY on DBCL with a TP of Rs 282 (+41%) and JAGP with a TP of Rs 148 (+33%), both at a modest 12x FY21E EPS (35/25% discount to historic average). We have assumed a revenue CAGR of 5.5/6% for DBCL/JAGP over FY19-21E. Our EBITDA/earnings CAGR is 21.5/25% for DBCL and 16/21% for JAGP are led by a decline in NP prices. FY17-19 washout years: Indian print media had been caught up in the crossfire of demonetisation, GST, an economic slowdown, govt clampdown on classified ads and a steep rise in newsprint prices. Consequently, 9MFY19 EBITDA margin have declined by 400-600bps to 21-22% vs. the 5yr trailing avg of 26-27% (and peak margins of 30-32%).

Movie exhibitors should record another quarter with a strong set of numbers, driven by robust footfall growth with content performance surpassing expectations. Bollywood box office collections for QTD Q4FY19 are up 41% yoy despite a higher base from Q4FY18. So far during the quarter, 4 movies crossed the >Rs1bn mark in net box office collections (NBOC) compared with 2 in the prior-year quarter. March'19 has started on a strong note and the momentum is expected to continue with a strong content line-up....

Telecom: Stability, finally! Reiterate BUY on Bharti and Voda-Idea with revised TPs of Rs 396 and Rs 43 respectively (10x Dec-20E EV/EBITDA for India Wireless). We have increased our target multiple for Bharti from 9x to 10x (in-line with Voda-Idea and Jio) factoring in the likely improvement in industry outlook. Even if the tariff war prolongs, Bharti (with manageable debt, potentially monetisable assets) remains best-positioned. Idea remains vulnerable owing to high leverage and low profitability.Reiterate BUY on BHIN with TP of Rs 345. This is primarily on account of (1) Savings on DDT (~Rs 5bn) and earnings accretion from Indus acquisition (2) Recent price correction (3) Tenancy losses from the Voda-Idea merger are lower than expected, and (4) No re-pricing of tower rentals downwards by telcos despite the bad busines environment. This remains a key risk. Media: Broadcaster, Healthy performance Zee Entertainment (Broadcaster) - Maintain BUY with a revised TP of Rs 511 @ 25x Dec-20E EPS Dish TV (DTH operator) - Our revised TP is Rs 50 @ 7x Dec-20E EV/EBITDA (Rs 58 earlier). Reduction in our TP is to factor likely weak 3QFY19 Entertainment Network and Music Broadcast (Radio companies) - Reiterate BUY with revised TP of Rs 714 on ENIL and Rs 404 on MBL, both based on @ 25x Dec-20E P/FCFE

We believe that India's multiplex sector is all set to leverage the momentum in non-ticketing revenue and drive growth in earnings and improvement in RoE. India's demographics and low penetration of screens provide a huge growth opportunity for multiplex players. The top-3 players PVRL, INOL and Carnival cinemas (combined market share of 57%) are targeting to cross 1,000 screens each vs. industry size of 2,750 multiplex screens as of end-2017. PVRL and INOL have demonstrated strong capability to drive growth in non-ticketing revenue despite poor content in FY17/18. With an improved outlook...