1QFY2019 Result Update | Media
July 26, 2018
Music Broadcast
BUY
CMP
`307
Performance Update
Target Price
`475
Y/E March (` cr)
1QFY19
1QFY18
% yoy
4QFY18
% qoq
Investment Period
12 months
Net sales
76
70
7.6
76
(0.3)
EBITDA
26
22
17.5
27
(4.8)
Stock Info
EBITDA margin (%)
34.4
31.5
290bp
36.0
(160bp)
Sector
Media
Adjusted PAT
14
11
24.5
16
(17.0)
Market Cap (Rs cr)
1,758
Source: Company, Angel Research
Net Debt
(182)
For 1QFY2019, Music Broadcast (MBL) posted mixed bag results. Top-line
Beta
0.9
52 Week High / Low
458/282
reported modest growth, however on the bottom-line front, the company
Avg. Daily Volume
2,265
registered healthy growth. Revenues grew by ~8% yoy. The company’s operating
Face Value (Rs)
10
margins improved by robust 290bps yoy. On the bottom-line front, MBL reported
BSE Sensex
37,003
growth of ~25% yoy to `14cr on the back of strong operating performance.
Nifty
11,171
Top-line grew ~8%: MBL’s top-line grew by ~8% yoy to `76cr on the back of
Reuters Code
MUSI.NS
~4% yoy volume growth (slight improvement in utilization of new stations) and
Bloomberg Code
[email protected]
~4% average price hike (taken price hike of ~8% in top 12 radio stations).
Strong operating performance aids profitability: On the operating front, the
Shareholding Pattern (%)
company reported better margins, up 290bps yoy at 34.4%. On the bottom-line
Promoters
71.4
MF / Banks / Indian Fls
8.1
front, MBL reported growth of ~25% yoy to `14cr on the back of strong operating
FII / NRIs / OCBs
4.0
performance and volume growth.
Indian Public / Others
16.5
Outlook and Valuation: We expect MBL to report net revenue CAGR of ~12% to
Abs. (%)
3m 1yr
3yr
~`374cr over FY2018-20E mainly due to increase in advertising rates and
Sensex
6.8
14.4
33.7
improvement in utilization of new radio stations. Further, on the bottom-line front,
MBL
(20.9)
(16.3)
NA
we expect CAGR of ~19% to `73cr over the same period on the back of better
margins. Considering sustainable growth opportunities over the next 5-7 years,
Historical share price chart
most of the capex already through and strong parentage, we have a positive
outlook on the company. Thus, we maintain our Buy recommendation on MBL
500
with Target Price of `475.
450
400
Key Financials
Y/E March (` cr)
FY2017
FY2018
FY2019E
FY2020E
350
Net sales
271
298
334
374
300
% chg
20
10
12
12
250
Adj. Net profit
36
52
63
73
% chg
30
45
22
16
EBITDA margin (%)
34
33
35
35
Source: Company, Angel Research
EPS (`)
6
9
11
13
P/E (x)
49
34
28
24
P/BV (x)
3
3
3
2
RoE (%)
6
9
10
10
Research Analyst
RoCE (%)
10
11
13
14
Amarjeet S Maurya
EV/EBITDA (x)
16
15
13
11
022-40003600 Ext: 6831
Source: Company, Angel Research Note
[email protected]
Please refer to important disclosures at the end of this report
1
Music Broadcast Ltd| 1QFY2019 Result Update
Exhibit 1: 1QFY2019 Performance
Y/E March (` cr)
1QFY19
1QFY18
% yoy
4QFY18
% qoq
FY2018
FY2017
% chg
Net Sales
76
70
7.6
76
(0.3)
298
271
9.9
Staff Costs
18
17
5.1
17
5.6
69
65
5.9
(% of Sales)
23.8
24.4
22.5
23.1
24.0
Other Expenses
32
31
2.0
32
0.3
132
115
14.9
(% of Sales)
41.8
44.1
41.5
44.3
42.4
Total Expenditure
50
48
3.1
49
2.2
201
180
11.7
Operating Profit
26
22
17.5
27
(4.8)
97
91
6.4
OPM
34.4
31.5
36.0
32.6
33.6
Interest
1
4
(64.2)
3
(59.1)
15
19
(21.2)
Depreciation
7
6
5.3
7
1.0
26
20
33.5
Other Income
2
5
(48.2)
5
(55.2)
19
4
336.5
PBT (excl. Ext Items)
20
17
22.8
22.7
(10.4)
75
57
32.0
Ext (Income)/Expense
-
-
-
-
-
PBT (incl. Ext Items)
20
17
22.8
23
(10.4)
75
57
32.0
(% of Sales)
26.9
23.6
29.9
25.2
21.0
Provision for Taxation
7
6
19.5
6
6.2
24
20
15.5
(% of PBT)
33.7
34.6
28.4
31.2
35.7
Reported PAT
14
11
24.5
16
(17.0)
52
37
41.1
PATM
17.8
15.4
21.4
17.3
13.5
Minority Interest After NP
Reported PAT
14
11
24.5
16
(17.0)
52
37
41.1
Equity shares (cr)
6
6
6
6
6
FDEPS (Rs)
2.4
1.9
24.5
2.9
(17.0)
9.1
6.4
41.1
Source: Company, Angel Research
July 26, 2018
2
Music Broadcast Ltd| 1QFY2019 Result Update
Outlook and Valuation
We expect MBL to report net revenue CAGR of ~12% to ~`374cr over FY2018-
20E mainly due to increase in advertising rates and improvement in utilization of
new radio stations. Further, on the bottom-line front, we expect CAGR of ~19% to
`73cr over the same period on the back of better margins. Considering
sustainable growth opportunities over the next 5-7 years, most of the capex
already through and strong parentage, we have a positive outlook on the
company. Thus, we maintain our Buy recommendation on MBL with Target Price of
`475.
Downside risks to our estimates
Slowdown in Indian economy would impact overall ad spends: A slowdown in the
economy could affect the spending from the clients, which in turn would affect the
company’s overall earnings.
Increase in content price: Inability to effectively source music content from third
party music production entities/associations can increase the input costs for the
company, and hence, may result in the dip in margins.
Reduction in listenership numbers: Rising acceptance of data and continuous
reduction in the cost of data could lead to shift of listenership to digital
platform/mobile applications (Hungama, Saavn, Gaana) and options to download
could risk the listenership in Metros and key towns initially.
Company Background
Music Broadcast Limited (MBL) owns and operates FM radio stations under the
brand names Radio City and Radio Mantra. The company has 39 radio stations
and operates its radio stations in 37 Indian cities. Radio City is present in 12 out of
the top 15 cities in India by population. Radio City has been ranked Number One
in Mumbai, Bengaluru and Delhi in terms of number of listeners and has a total
number of 49.60mn listeners across all 23 cities (according to AZ Research). Music
Broadcast Limited operates as a subsidiary of Jagran Prakashan Limited. It also
operates 40 Web radio stations that offer Internet radio with live RJ hosted shows
through Planet Radio City in 8 languages. In addition, Music Broadcast Limited
operates 'Planet Radio City' mobile app that plays various stations such as 'Radio
City Freedom', 'Radio City Electronica', 'Radio City Metal', and 'Radio City Smaran'
in various languages on mobile and other smart devices.
July 26, 2018
3
Music Broadcast Ltd| 1QFY2019 Result Update
Profit & Loss Statement
Y/E March (` cr)
FY2016
FY2017
FY2018
FY2019E
FY2020E
Total operating income
225
271
298
334
374
% chg
12
20
10
12
12
Total Expenditure
147
180
201
218
242
License fees
17
19
21
24
27
Personnel
51
65
69
76
85
Others Expenses
79
96
111
119
131
EBITDA
78
91
97
116
132
% chg
25
17
6
19
14
(% of Net Sales)
35
34
33
35
35
Depreciation& Amortisation
17
20
26
27
28
EBIT
61
72
71
89
104
% chg
32
17
(1)
25
17
(% of Net Sales)
27
26
24
27
28
Interest & other Charges
21
19
15
5
5
Other Income
15
4
19
10
10
(% of PBT)
27
8
26
11
9
Extraordinary Items
0
1
-
-
-
Share in profit of Associates
Recurring PBT
56
57
75
94
109
% chg
18
3
32
25
16
Tax
14
20
24
31
36
PAT (reported)
27
36
52
63
73
% chg
(42)
30
45
22
16
(% of Net Sales)
12
13
17
19
19
Basic & Fully Diluted EPS (Rs)
4.8
6.2
9.1
11.0
12.8
% chg
(42)
30
45
22
16
July 26, 2018
4
Music Broadcast Ltd| 1QFY2019 Result Update
Balance Sheet
Y/E March (` cr)
FY2016
FY2017
FY2018
FY2019E FY2020E
SOURCES OF FUNDS
Equity Share Capital
42
57
57
57
57
Reserves& Surplus
168
491
543
593
651
Shareholders Funds
210
548
600
650
708
Total Loans
236
168
54
34
24
Total Liabilities
446
717
653
684
732
APPLICATION OF FUNDS
Net Block
230
312
297
328
305
Capital Work-in-Progress
66
0
0
0
0
Investments
15
27
156
156
156
Current Assets
113
385
208
213
288
Inventories
0
0
0
0
0
Sundry Debtors
22
33
22
27
31
Cash
16
280
76
77
135
Loans & Advances
0
0
0
0
0
Other Assets
21
23
22
27
30
Current liabilities
44
45
45
51
54
Net Current Assets
69
340
163
162
234
Other Non-Current Asset
66
38
37
37
37
Total Assets
446
717
653
684
732
July 26, 2018
5
Music Broadcast Ltd| 1QFY2019 Result Update
Consolidated Cashflow Statement
Y/E March (` cr)
FY2016 FY2017 FY2018 FY2019E FY2020E
Profit before tax
56
57
75
94
109
Depreciation
17
20
26
27
28
Change in Working Capital
11
21
(26)
2
(13)
Interest / Dividend (Net)
19
19
15
5
5
Direct taxes paid
(11)
(20)
(24)
(31)
(36)
Others
(26)
-
-
-
-
Cash Flow from Operations
66
97
67
96
93
(Inc.)/ Dec. in Fixed Assets
(286)
(35)
(20)
(50)
(5)
(Inc.)/ Dec. in Investments
217
(12)
(129)
-
-
Cash Flow from Investing
(69)
(47)
(149)
(50)
(5)
Issue of Equity
-
303
(2)
-
-
Inc./(Dec.) in loans
83
(123)
-
(20)
(10)
Others
(111)
38
(128)
(17)
(19)
Cash Flow from Financing
(28)
218
(130)
(37)
(29)
Inc./(Dec.) in Cash
(31)
268
(212)
9
59
Opening Cash balances
43
13
280
68
77
Closing Cash balances
13
280
68
77
135
July 26, 2018
6
Music Broadcast Ltd| 1QFY2019 Result Update
Key Ratio
Y/E March
FY2016
FY2017
FY2018E FY2019E FY2020E
Valuation Ratio (x)
P/E (on FDEPS)
64.2
49.3
33.9
27.9
24.0
P/CEPS
39.8
31.7
22.5
19.5
17.3
P/BV
8.3
3.2
2.9
2.7
2.5
Dividend yield (%)
0.0
0.0
0.0
0.7
0.8
EV/Sales
6.6
5.5
5.0
4.4
4.0
EV/EBITDA
18.9
16.2
15.2
12.8
11.2
EV / Total Assets
3.3
2.1
2.3
2.2
2.0
Per Share Data (Rs)
EPS (Basic)
4.8
6.2
9.1
11.0
12.8
EPS (fully diluted)
4.8
6.2
9.1
11.0
12.8
Cash EPS
7.7
9.7
13.7
15.7
17.8
DPS
0.0
0.0
0.0
2.2
2.6
Book Value
36.8
96.1
105.1
113.9
124.2
Returns (%)
ROCE
16.0
10.1
10.9
13.0
14.2
Angel ROIC (Pre-tax)
17.5
17.5
16.8
19.7
23.5
ROE
13.0
6.5
8.6
9.7
10.3
Turnover ratios (x)
Inventory / Sales (days)
-
-
-
-
-
Receivables (days)
123
110
135
120
120
Payables (days)
36
44
27
30
30
Working capital cycle (ex-cash) (days)
87
66
108
90
90
July 26, 2018
7
Music Broadcast Ltd| 1QFY2019 Result Update
Research Team Tel: 022 - 39357800
E-mail: [email protected]
Website: www.angelbroking.com
DISCLAIMER
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accessing /dealing in securities Market. Angel or its associates/analyst has not received any compensation / managed or co-managed
public offering of securities of the company covered by Analyst during the past twelve months.
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decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should
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contrary view, if any
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Disclosure of Interest Statement
Music Broadcast
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 (Returns):
Buy (> 15%)
Accumulate (5% to 15%)
Neutral (-5 to 5%)
Reduce (-5% to -15%)
Sell (< -15%)
July 26, 2018
8