1QFY2017 Result Update | Media
September 14, 2016
TV Today Network
BUY
CMP
`298
Performance Update
Target Price
`363
Y/E March (` cr)
1QFY17
1QFY17
% yoy
4QFY16
% qoq
Investment Period
12 Months
Net sales
137
127
7.7
142
(3.7)
Stock Info
EBITDA
37
30
22.8
25
47.2
Sector
Media
EBITDA margin (%)
26.9
23.6
330bp
17.6
928
Market Cap (Rs cr)
1,778
Adjusted PAT
22
18
23.9
15
47.9
Net Debt
(201)
Source: Company, Angel Research
Beta
1.3
52 Week High / Low
350 / 221
TV Today Network (TTNL) reported a good set of numbers for 1QFY2017 with its
Avg. Daily Volume
1,699
consolidated top-line growing by ~8% yoy for the quarter. On the operating
Face Value (Rs)
5
front, the company reported margin expansion on account of lower selling &
BSE Sensex
28,354
administrative expenses, which lead to the net profit growing by ~24% yoy for the
Nifty
8,716
quarter.
Reuters Code
TVTO.BO
Bloomberg Code
TVTN.IN
Top-line grew ~8% yoy: The consolidated top-line grew by ~8% yoy to ~`137cr
suggesting increased ad spends having borne results. However, the sell off of 4
radio stations (Jodhpur, Amritsar, Patiala and Shimla) proportionately impacted
Shareholding Pattern (%)
Promoters
57.4
top-line growth.
MF / Banks / Indian Fls
6.8
PAT grew ~24% yoy: The company reported margin expansion by 330bp yoy to
FII / NRIs / OCBs
7.8
26.9% aided by lower selling & administrative expenses (down 734bp yoy as a
Indian Public / Others
28.0
percentage of sales). The EBITDA grew by ~23% yoy to `37cr and the net profit
resultantly grew by 24% to `22cr.
Abs. (%)
3m 1yr 3yr
Outlook and Valuation: We expect TTNL to report a net revenue CAGR of ~16%
Sensex
7.6
12.0
44.0
to ~`743cr and net profit to post a ~16% CAGR to `128cr over FY2016-18E.
TTNL
0.9
31.3
297.8
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
Historical share price chart
position. Further, its exit from the radio business should boost profitability. The
400
company is debt free with `201cr of cash on its balance sheet. Hence, we
350
maintain our Buy recommendation on the stock with a target price of `363.
300
250
Key Financials
200
Y/E March (` cr)
FY2015
FY2016
FY2017E
FY2018E
150
100
Net sales
477
546
637
743
50
% chg
22.4
14.6
16.6
16.8
0
Adj. Net profit
81
94
110
128
% chg
32.1
16.4
16.3
16.3
EBITDA margin (%)
27.6
26.8
27.5
27.5
Source: Company, Angel Research
EPS (`)
13.6
15.8
18.4
21.4
P/E (x)
21.9
18.9
16.2
13.9
P/BV (x)
4.0
3.3
2.8
2.4
RoE (%)
18.0
17.7
17.4
17.2
RoCE (%)
22.3
21.7
22.5
22.7
Amarjeet S Maurya
EV/Sales (x)
3.5
2.9
2.4
2.0
022-40003600 Ext: 6831
EV/EBITDA (x)
12.5
10.8
8.7
7.1
[email protected]
Source: Company, Angel Research; Note: CMP as of September 12, 2016
Please refer to important disclosures at the end of this report
1
TV Today Network | 1QFY2017 Result Update
Exhibit 1: 4QFY2016 Performance
Y/E March (` cr)
1QFY17
1QFY17
% yoy
4QFY16
% qoq
FY2016
FY2015
% chg
Net Sales
137
127
7.7
142
(3.7)
546
477
14.6
Staff Costs
39
33
18.6
38
0.6
142
117
21.5
(% of Sales)
28.3
25.7
259
27.1
121
26.0
24.5
148
Selling & Adm. Expenses
31
38
(18.6)
33
(5.4)
120
102
17.5
(% of Sales)
22.7
30.1
(734)
23.2
(42)
21.9
21.4
54
Other Expenses
30
26
15.3
46
(33.8)
138
126
9.4
(% of Sales)
22.1
20.7
145
32.2
(1,007)
25.3
26.5
(119)
Total Expenditure
100
97
3.1
117
(14.5)
400
345
15.9
Operating Profit
37
30
22.8
25
47.2
146
132
11.1
OPM
26.9
23.6
17.6
26.8
27.6
Interest
0
0
60.0
0
33.3
0
1
(87.2)
Depreciation
7
8
(6.5)
8
(3.1)
31
30
1.8
Other Income
5
6
(15.0)
9
(45.2)
32
23
39.9
PBT (excl. Ext Items)
34
28
23.3
26
30.3
147
123
19.9
Ext (Income)/Expense
-
-
-
-
-
PBT (incl. Ext Items)
34
28
23.3
26
30.3
147
123
19.9
(% of Sales)
25.0
21.8
18.5
27.0
25.8
Provision for Taxation
12
10
11
53
42
26.7
(% of PBT)
34.5
34.8
42.3
36.0
34.1
Reported PAT
22
18
23.9
15
47.9
94
81
16.4
PATM
16.3
14.2
10.6
17.3
17.0
Minority Interest After NP
-
-
-
-
-
-
-
-
Extra-ordinary Items
Reported PAT
22
18
23.9
15
47.9
94
81
16.4
PATM
16.3
14.2
10.6
17.3
17.0
Source: Company, Angel Research
September 14, 2016
2
TV Today Network | 1QFY2017 Result Update
Investment Arguments
Strong viewership ranking in Hindi and English news genre
TTNL enjoys a strong viewership ranking in the Hindi and English news channel
categories. The company’s Hindi news channel - Aaj Tak has maintained its
market leadership position for several consecutive years in terms of viewership and
continues to dominate by being the channel of choice during unfolding of key
national as well as international events. Further, TTNL’s English news channel -
India Today has been continuously gaining viewership ranking; it has now
captured the No. 2 spot from No. 4 earlier. Its other channels like Dilli Aaj Tak
and Tez are also popular among viewers.
TTNL to benefit from TV industry (ad + subscription revenue)
growth of ~16% CAGR over CY14-19E
Going forward we expect the TV industry to report a 16% CAGR over CY2014-19E
on back of increased advertisement allocations by the corporates, government,
and E-Commerce set ups, which are a significant new category. We also expect an
improvement in subscription revenue due to digitization of phase 3 & 4. Since the
last 6-7 quarters, FMCG and automobile companies which incur significantly high
ad spends, are underperforming due to weak consumer buying sentiments in rural
areas (owing to two prior consecutive years of poor monsoon). However, we are
now seeing some improvement in TV ad spends in anticipation of an improvement
in the rural economy with the country having received optimal monsoons this year.
On this account TTNL will stand to benefit.
Complete exit from Radio business to improve profitability
TTNL had 7radio stations which were continuously incurring losses year after year
(in FY2016, the Radio business accrued an EBIT level loss of `13.5cr). Out of the 7
radio stations, TTNL has sold off 4 (Jodhpur, Amritsar, Patiala and Shimla) for
`4cr. The remaining 3 stations are in the process of getting sold off to ENIL but the
sale will have to wait until concerns raised by the MIB are resolved. Going forward,
we expect them to be sold off and this would prop up the company’s profitability.
September 14, 2016
3
TV Today Network | 1QFY2017 Result Update
Outlook and Valuation
We expect TTNL to report a net revenue CAGR of ~16% to ~`743cr and net profit
CAGR of ~16% to `128cr over FY2016-18E. The company has sustained its
leadership position in Hindi news genre for14 consecutive years while in the
English news genre it currently holds the No.2 position. Further, the exit from the
radio business should boost profitability. The company is debt free with `201cr of
cash on its balance sheet. Hence, we maintain our Buy recommendation on the
stock with a target price of `363.
Downside risks to our estimates include
1)
Loss of leadership in viewership could affect the company’s advertisement
revenue.
2)
Overall slowdown in the Indian economy could lead to a cut in ad spend
allocations by corporates which could potentially hurt TTNL’s revenues.
3)
Any delay in digitalization could impact the company’s subscription revenue
growth.
September 14, 2016
4
TV Today Network | 1QFY2017 Result Update
Company Background
TV Today Network (TTNL) is one of India's leading Hindi-English news television
networks. The company's operating segments include television broadcasting and
radio broadcasting. The company operates four news channels, which include Aaj
Tak, India Today (earlier know as Headlines Today), Tez and Dilli Aaj Tak. It is also
engaged in publishing; its publications include India Today, Business Today etc.
The company has hired well know anchors like Karan Thapar and Rajdeep
Sardesai in its team. Living Media India Ltd is the holding company for TTNL.
September 14, 2016
5
TV Today Network | 1QFY2017 Result Update
Profit & Loss Statement
Y/E March (` cr)
FY13
FY14
FY15
FY16
FY17E
FY18E
Total operating income
313
389
477
546
637
743
% chg
1.4
24.6
22.4
14.6
16.6
16.8
Total Expenditure
278
280
345
400
462
539
Employee Cost
93
93
117
142
167
198
Selling & Admin. Exp.
89
86
102
120
137
159
Others Expenses
96
101
126
138
157
182
EBITDA
35
109
132
146
175
204
% chg
33.4
216.0
20.5
11.1
19.6
16.8
(% of Net Sales)
11.1
28.1
27.6
26.8
27.5
27.5
Depreciation& Amort.
21
24
30
31
33
36
EBIT
14
85
102
116
142
168
% chg
14.1
528.0
19.5
13.9
22.4
18.9
(% of Net Sales)
4.3
21.8
21.3
21.2
22.3
22.7
Interest & other Charges
3
4
1
0
-
-
Other Income
7
12
23
32
22
22
(% of PBT)
42.0
12.6
18.5
21.6
13.4
11.6
Share in profit of Asso.
-
-
-
-
-
-
Recurring PBT
18
93
123
147
164
190
% chg
7.1
430.0
31.8
19.9
11.1
16.3
Prior Period & Extra. Exp./(Inc.)
-
-
-
-
-
-
PBT (reported)
18
93
123
147
164
190
Tax
5
32
42
53
54
63
(% of PBT)
30.6
34.2
34.1
36.0
33.0
33.0
PAT (reported)
12
61
81
94
110
128
Add: Share of earnings of asso.
-
-
-
-
-
-
ADJ. PAT
12
61
81
94
110
128
% chg
26.4
361.1
32.1
16.4
16.3
16.3
(% of Net Sales)
3.9
15.7
17.0
17.3
17.2
17.2
Basic EPS (`)
2.2
10.3
13.6
15.8
18.4
21.4
Fully Diluted EPS (`)
2.2
10.3
13.6
15.8
18.4
21.4
% chg
26.4
361.1
32.1
16.4
16.3
16.3
September 14, 2016
6
TV Today Network | 1QFY2017 Result Update
Balance Sheet
Y/E March (` cr)
FY13
FY14
FY15
FY16
FY17E FY18E
SOURCES OF FUNDS
Equity Share Capital
30
30
30
30
30
30
Reserves& Surplus
295
349
420
503
600
712
Shareholders Funds
325
379
450
533
629
742
Total Loans
60
17
7
-
-
-
Deferred Tax Liability
-
3
5
5
5
5
Total Liabilities
385
399
462
538
635
747
APPLICATION OF FUNDS
Gross Block
383
394
438
460
495
535
Less: Acc. Depreciation
161
179
203
233
266
303
Net Block
222
215
235
227
228
232
Capital Work-in-Progress
10
2
3
3
3
3
Investments
46
46
46
40
50
65
Current Assets
191
220
283
372
463
574
Sundry Debtors
94
110
141
157
187
220
Cash
31
57
95
161
203
262
Loans & Advances
56
47
41
48
64
82
Other Assets
10
6
6
7
10
11
Current liabilities
99
102
126
125
131
149
Net Current Assets
91
118
157
247
332
426
Deferred Tax Asset
17
18
21
21
21
21
Mis. Exp. not written off
-
-
-
-
-
-
Total Assets
385
399
462
538
635
747
September 14, 2016
7
TV Today Network | 1QFY2017 Result Update
Cashflow Statement
Y/E March (` cr)
FY13
FY14
FY15
FY16
FY17E FY18E
Profit before tax
18
93
123
147
164
190
Depreciation
21
22
24
31
33
36
Change in Working Capital
3
(8)
(27)
(24)
(43)
(35)
Interest / Dividend (Net)
2
(1)
(6)
0
-
-
Direct taxes paid
(6)
(32)
(42)
(53)
(54)
(63)
Others
1
6
7
-
-
-
Cash Flow from Operations
39
81
78
101
100
128
(Inc.)/ Dec. in Fixed Assets
(15)
(3)
(49)
(11)
(55)
(70)
(Inc.)/ Dec. in Investments
-
-
-
5
(10)
(15)
Cash Flow from Investing
(15)
(3)
(49)
(17)
(45)
(55)
Issue of Equity
-
0
1
-
-
-
Inc./(Dec.) in loans
4
(43)
(11)
(7)
-
-
Dividend Paid (Incl. Tax)
(5)
(4)
(6)
(11)
(13)
(15)
Interest / Dividend (Net)
(6)
(4)
24
(0)
-
-
Cash Flow from Financing
(7)
(52)
9
(18)
(13)
(15)
Inc./(Dec.) in Cash
17
26
37
67
42
58
Opening Cash balances
14
31
57
95
161
203
Closing Cash balances
31
57
95
161
203
262
September 14, 2016
8
TV Today Network | 1QFY2017 Result Update
Key Ratios
Y/E March
FY13
FY14
FY15
FY16
FY17E FY18E
Valuation Ratio (x)
P/E (on FDEPS)
133.7
29.0
21.9
18.9
16.2
13.9
P/CEPS
53.5
20.8
16.0
14.2
12.4
10.9
P/BV
5.5
4.7
4.0
3.3
2.8
2.4
Dividend yield (%)
0.3
0.3
0.5
0.6
0.7
0.9
EV/Sales
5.6
4.3
3.5
2.9
2.4
2.0
EV/EBITDA
50.9
15.5
12.5
10.8
8.7
7.1
EV / Total Assets
3.6
3.4
2.8
2.4
2.0
1.6
Per Share Data (`)
EPS (Basic)
2.2
10.3
13.6
15.8
18.4
21.4
EPS (fully diluted)
2.2
10.3
13.6
15.8
18.4
21.4
Cash EPS
5.6
14.3
18.6
20.9
24.0
27.4
DPS
0.7
1.0
1.5
1.9
2.2
2.6
Book Value
54.3
63.5
75.4
89.3
105.5
124.3
Returns (%)
ROCE
3.5
21.5
22.3
21.7
22.5
22.7
Angel ROIC (Pre-tax)
4.4
29.0
32.1
34.9
37.7
40.6
ROE
3.8
16.2
18.0
17.7
17.4
17.2
Turnover ratios (x)
Asset Turnover (Gross Block)
0.8
1.0
1.1
1.2
1.3
1.4
Inventory / Sales (days)
-
-
-
-
-
-
Receivables (days)
110
103
108
105
107
108
Payables (days)
66
48
52
58
52
50
WC cycle (ex-cash) (days)
43
55
56
47
55
58
September 14, 2016
9
TV Today Network | 1QFY2017 Result Update
Research Team Tel: 022 - 39357800
E-mail: [email protected]
Website: www.angelbroking.com
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offering of securities of the company covered by Analyst during the past twelve months.
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Disclosure of Interest Statement
TV Today Network
1. Financial interest of research analyst or Angel or his Associate or his relative
No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives
No
3. Served as an officer, director or employee of the company covered under Research
No
4. Broking relationship with company covered under Research
No
Ratings (Based on expected returns
Buy (> 15%)
Accumulate (5% to 15%)
Neutral (-5 to 5%)
over 12 months investment period):
Reduce (-5% to -15%)
Sell (< -15)
September 14, 2016
10