Entertainment Network (India) Ltd. share price target

BUY with revised TP of Rs 850 at 30x (earlier Rs 827) FY20E FCFE per share. ENILs 1QFY19 Revenue/EBITDA/PAT were better than expected with a growth of 16.5/70/104% YoY. This was owing to low base of 1QFY18 on account of GST and issue with government as a client. Led by low base, upcoming festive season, forthcoming elections, improvement in utilization in new stations and price increase in established stations, we expect ENIL to register healthy revenue and earnings CAGR of 14% and 38% respectively, from FY18-21E.

EBITDA grew by a robust 65% YoY to INR284m, led by healthy 17% YoY standalone revenue growth to INR1,216m (in-line) and 400bp YoY margin expansion in the non- FCT business to 28%. Overall margin expanded ~690bp YoY to 23.3% (260bp beat). for one-offs (provision write-back), PAT grew 3.3x to INR72m (19% beat). Old stations recovered with a healthy 14% YoY revenue jump to INR999m, post the disappointment in FY18 when prices had increased and ad volumes subsequently declined (partly voluntarily). This drove a 62% YoY jump in EBITDA of old stations. The newly launched 17 batch-1 stations saw robust 70% YoY revenue growth, driving EBITDA of INR7m (v/s -INR44m in 1QFY18), partly offset by an INR9m loss on launch of some batch-2 stations. (1) Entire 22% YoY growth in radio revenue was volume- led. (2) Old/new stations average utilization at 80%/30%. (3) Remaining 16 of 21 batch-2 stations to be launched by mid-3QFY19.

Revenues came in at | 159.4 crore (de-growth of 3.5% YoY), slightly below our estimates of | 163.6 crore, largely an after-effect of lower government ads due to tourism based ad campaign in Q3FY18, which had led to government ad pullback till February, 2018. However, the company's commentary suggests it has been resolved and a strong recovery could be witnessed, going ahead EBITDA came in at | 35.4 crore, in line with expectations of | 35.3 as...

BUY with TP of Rs 827 at 30x FY20E FCFE per share. ENIL is best poised to capture the recovery with its strong radio footprint. Currently only 35 of its 76 stations contribute to profitability. ENILs 4QFY18 was in-line but muted. Revenue declined 3.7% YoY owing to high base and cut in ad volumes. EBITDA was flat YoY while APAT was up 13% (RPAT -15% due to higher tax).

Yet, EBITDA of INR352m was flat YoY (-1% QoQ; 2% miss), as a steep 22% YoY fall in other expenses offset the impact of revenue decline. PAT declined 15% YoY to INR117m (13% miss) due to one-offs in taxes. PAT declined 41% YoY to INR324m (5% miss). 3) New stations are expected to reach 35% EBITDA margin by FY20 and contribute 20% of overall revenue. Inventory capping in FY18 led to a steep 18%/10% volume/revenue decline in legacy stations. We believe that it would take long for ENIL to recoup the downfall, despite a 7-10% yield improvement (at legacy stations, which constitute 80-85% of overall revenue), and thus, cut our overall revenue/EBITDA estimate by 4% for FY19 and 9%/20% for FY20. We expect 18% revenue CAGR over FY18-20, primarily led by higher utilization at new stations (Phase III- Batch 1) and support from relatively small Phase III- Batch 2 stations (post launch in FY19).

EBITDA margin declined 131bps YoY to 24% (DCMe: 25.2%) on back of higher marketing cost and better profitability in non-radio business. PAT during the quarter declined 19.9% to ` 132mn (DCMe: ` 160mn) on back of lower margins and higher tax rate (35%). Non-radio revenue (Contri. 28%) improved 16% YoY while Radio business declined 9% YoY as inventory fell 13.4% YoY and pricing grew 8.6%YoY. Non-radio business is expected to deliver healthy margins on back of new products being added in the segment....

Ad revenue was muted in October 2017 due to an early festive season (in 2QFY18), subdued Gujarat election ad spends, and lingering GST impact. However, we see a revival in November-December 2017 on (1) a low base of November 2016, and (2) the just-launched Karan Johar show. New stations (batch-1 of phase-3), which contribute 11 % of revenue, should break even by 4QFY18, with capacity utilization rising from 23 % to 25-30 %. ENIL is likely to spend INR3b in FY19 towards (a) the acquisition of TV Today's Delhi, Mumbai and Kolkata frequencies, and (b) the next batch of phase-3 auctions. We expect new stations from TV Today to generate annual revenue of INR700m-800m in 2-3 years, up from the current INR300m. We expect 14 % revenue growth in 3Q. For FY18, we estimate 4 % revenue growth; breakeven of new station should drive 15 % EBITDA growth. Over FY17-20, we estimate 15 % revenue CAGR and 29 % EBITDA CAGR.

Revenues came in at | 125.7 crore (de-growth of 3% YoY), as GST led advertisement pullback impacted ad growth during the quarter. Ad volumes were down 16% YoY owing to management's strategy of cutting back on inventory to improve yields (up 8.5% YoY) EBITDA came in at | 28.4 crore, higher than expectations of | 25.9 crore owing to lower than anticipated marketing expenses. Margins,...

Revenue during the quarter declined 3% YoY to ` 1,257mn (DCMe: ` 1,322mn) on back of decline in advertisement spend by all advertisers post implementation of GST till August 2017. EBITDA margin improved 474bps YoY to 22.6% (DCMe: 20.8%) on back of lower marketing cost and better profitability in non-radio business. PAT during the quarter declined 24.3% to ` 61mn (DCMe: ` 96mn) on back of higher tax rate (55%). Current tax includes ` 27.81mn pertaining to earlier years, excluding the same PAT grew...

PAT impacted by new station cost: Revenue declined 3% YoY to INR1.3b (inline) due to the impact of GST, demonetization-led weak ad market, and inability to drive volumes at steep price hikes. EBITDA rose 23% YoY to INR284m (7% beat), led by a 44% YoY plunge in marketing expenses (the base quarter had a new station launch-related peak ad cost), partly offset by a 20% YoY rise in employee cost (related to new stations). PAT declined 24.5% YoY to INR60m (9% miss) on higher depreciation and lower interest income related to new stations launch. Steep price hikes fail to drive growth at legacy stations: ENIL's intentional...