2QFY2019 Result Update | Media
November 3, 2018
Music Broadcast
BUY
CMP
`329
Performance Update
Target Price
`475
Y/E March (` cr)
2QFY19
2QFY18
% yoy
1QFY19
% qoq
Investment Period
12 months
Net sales
80
76
5.7
76
5.9
EBITDA
27
24
9.7
26
1.9
Stock Info
EBITDA margin (%)
33.1
31.9
120bp
34.4
(129bp)
Sector
Media
Adjusted PAT
13
13
5.1
14
(0.9)
Market Cap (Rs cr)
1,839
Source: Company, Angel Research
Net Debt
(182)
Beta
0.9
For 2QFY2019, Music Broadcast (MBL) posted muted results both on top-line and
52 Week High / Low
458/282
bottom-line fronts. Revenues grew by ~5% yoy to `80cr on the back of equal
Avg. Daily Volume
2,655
contribution of volume and price hike. The company’s operating margins
Face Value (Rs)
10
improved by robust 120bps yoy. On the bottom-line front, MBL reported lower
BSE Sensex
34,089
Nifty
10,257
growth of ~5% yoy to`13cr on the back of higher taxes during the quarter.
Reuters Code
MUSI.NS
Top-line grew ~5%: MBL’s top-line grew by ~5% yoy to `80cr on the back of
Bloomberg Code
[email protected]
equal contribution of volume growth and price hike. During the quarter, revenue
Shareholding Pattern (%)
was impacted due to delayed festive seasons. Excluding base effect of last year,
Promoters
71.1
the company has reported ~16% revenue growth. Despite slowdown, MBL has
MF / Banks / Indian Fls
8.1
FII / NRIs / OCBs
3.5
taken a price increase of ~8% in top 12 markets. Going forward, we expect
Indian Public / Others
17.3
strong growth on top-line and bottom-line fronts owing to festive season and
election.
Abs. (%)
3m 1yr
3yr
Sensex
(9.8)
0.6
21.9
MBL
7.9
(13.0)
NA
Strong operating performance aids profitability: On the operating front, the
company reported better margins, up 120bps yoy at 33.1%. On the bottom-line
front, MBL reported growth of ~5% yoy to `13cr on the back of lower revenue
Historical share price chart
growth and higher taxes during the quarter.
500
Outlook and Valuation: We expect MBL to report net revenue CAGR of ~12% to
450
400
~`374cr over FY2018-20E mainly due to increase in advertising rates and
350
300
improvement in utilization of new radio stations. Further, on the bottom-line front,
250
we expect CAGR of ~18% to`72cr over the same period on the back of better
200
150
margins. Moreover, considering sustainable growth opportunities over the next 5-
100
50
7 years, most of the capex already through and strong parentage, we have a
0
positive outlook on the company. Thus, we maintain our Buy recommendation on
MBL with Target Price of `475.
Key Financials
Source: Company, Angel Research
Y/E March (` cr)
FY2017
FY2018
FY2019E
FY2020E
Net sales
271
298
334
374
% chg
20.4
9.9
12.0
12.0
36
52
61
72
Adj. Net profit
Research Analyst
% chg
30.3
45.4
18.6
16.9
Amarjeet S Maurya
EBITDA margin (%)
33.6
32.6
33.9
34.8
022-40003600 Ext: 6831
EPS (`)
6.2
9.1
10.7
12.6
[email protected]
P/E (x)
52.8
36.3
30.6
26.2
P/BV (x)
3.4
3.1
2.9
2.7
RoE (%)
6.5
8.6
9.4
10.1
RoCE (%)
10.1
10.9
12.7
14.0
EV/EBITDA (x)
17.6
16.6
14.2
12.4
Source: Company, Angel Research Note
Please refer to important disclosures at the end of this report
1
Music Broadcast Ltd| 2QFY2019 Result Update
Exhibit 1: 2QFY2019 Performance
Y/E March (` cr)
2QFY19
2QFY18
% yoy
1QFY19
% qoq
1HFY19
1HFY18
% chg
Net Sales
80
76
5.7
76
5.9
156
146
6.6
Staff Costs
18
17
4.5
18
(0.6)
36
34
4.8
(% of Sales)
22.3
22.6
23.8
23.0
23.4
Other Expenses
36
34
3.5
32
12.9
67
65
2.8
(% of Sales)
44.5
45.5
41.8
43.2
44.8
Total Expenditure
54
52
3.8
50
8.0
103
100
3.5
Operating Profit
27
24
9.7
26
1.9
53
46
13.4
OPM
33.1
31.9
34.4
33.8
31.7
Interest
1
4
(64.0)
1
-
3
8
(64.1)
Depreciation
7
7
0.4
7
(0.6)
13
13
2.8
Other Income
4
5
(27.9)
2
48.8
6
10
(37.7)
PBT (excl. Ext Items)
22
19
18.0
20
8.4
42
35
20.3
Ext (Income)/Expense
-
-
-
-
-
PBT (incl. Ext Items)
22
19
18.0
20
8.4
42
35
20.3
(% of Sales)
27.6
24.7
26.9
27.2
24.1
Provision for Taxation
9
6
45.5
7
26.8
16
12
32.8
(% of PBT)
39.4
32.0
33.7
36.7
33.2
Reported PAT
13
13
5.1
14
(0.9)
27
24
14.0
PATM
16.7
16.8
17.8
17.3
16.1
Minority Interest After NP
Reported PAT
13
13
5.1
14
(0.9)
27
24
14.0
Equity shares (cr)
6
6
6
6
6
FDEPS (Rs)
2.3
2.2
5.1
2.4
(0.9)
4.7
4.1
14.0
Source: Company, Angel Research
November 3, 2018
2
Music Broadcast Ltd| 2QFY2019 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 ~18% to`72cr over the same period on the back of better
margins. Moreover, 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 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.
November 3, 2018
3
Music Broadcast Ltd| 2QFY2019 Result Update
Profit & Loss Statement
Y/E March (` cr)
FY2016
FY2017
FY2018
FY2019E
FY2020E
Total operating income
225
271
298
334
374
% chg
12.3
20.4
9.9
12.0
12.0
Total Expenditure
147
180
201
221
244
License fees
17
19
21
24
27
Personnel
51
65
69
76
85
Others Expenses
79
96
111
121
133
EBITDA
78
91
97
113
130
% chg
25.4
16.8
6.4
16.6
15.0
(% of Net Sales)
34.7
33.6
32.6
33.9
34.8
Depreciation& Amortisation
17
20
26
27
28
EBIT
61
72
71
86
102
% chg
31.8
16.5
(1.1)
21.9
17.9
(% of Net Sales)
27.2
26.4
23.7
25.8
27.2
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
91
107
% chg
17.9
2.7
31.9
21.6
16.9
Tax
14
20
24
30
35
PAT (reported)
27
36
52
61
72
% chg
(42.0)
30.3
45.4
18.6
16.9
(% of Net Sales)
12.1
13.1
17.3
18.3
19.2
Basic & Fully Diluted EPS (Rs)
4.8
6.2
9.1
10.7
12.6
% chg
(42.0)
30.3
45.4
18.6
16.9
November 3, 2018
4
Music Broadcast Ltd| 2QFY2019 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
592
649
Shareholders Funds
210
548
600
649
706
236
168
54
34
24
Total Loans
446
717
653
682
730
Total Liabilities
APPLICATION OF FUNDS
Net Block
230
312
297
328
305
Capital Work-in-Progress
66
0
0
0
0
15
27
156
156
156
Investments
Current Assets
113
385
208
212
286
Inventories
0
0
0
0
0
Sundry Debtors
22
33
22
27
31
Cash
16
280
76
75
133
0
0
0
0
0
Loans & Advances
Other Assets
21
23
22
27
30
Current liabilities
44
45
45
51
54
Net Current Assets
69
340
163
161
232
Other Non-Current Asset
66
38
37
37
37
Total Assets
446
717
653
682
730
November 3, 2018
5
Music Broadcast Ltd| 2QFY2019 Result Update
Consolidated Cashflow Statement
Y/E March (` cr)
FY2016 FY2017 FY2018 FY2019E FY2020E
Profit before tax
56
57
75
91
107
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)
(30)
(35)
Others
(26)
-
-
-
-
Cash Flow from Operations
66
97
67
95
92
(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)
8
58
Opening Cash balances
43
13
280
68
75
Closing Cash balances
13
280
68
75
133
November 3, 2018
6
Music Broadcast Ltd| 2QFY2019 Result Update
Key Ratio
Y/E March
FY2016
FY2017
FY2018
FY2019E FY2020E
Valuation Ratio (x)
P/E (on FDEPS)
68.8
52.8
36.3
30.6
26.2
P/CEPS
42.7
34.0
24.1
21.3
18.8
P/BV
8.9
3.4
3.1
2.9
2.7
Dividend yield (%)
0.0
0.0
0.0
0.7
0.8
EV/Sales
7.1
5.9
5.4
4.8
4.3
EV/EBITDA
20.6
17.6
16.6
14.2
12.4
EV / Total Assets
3.6
2.2
2.5
2.4
2.2
Per Share Data (Rs)
EPS (Basic)
4.8
6.2
9.1
10.7
12.6
EPS (fully diluted)
4.8
6.2
9.1
10.7
12.6
Cash EPS
7.7
9.7
13.7
15.5
17.5
DPS
0.0
0.0
0.0
2.1
2.5
Book Value
36.8
96.1
105.1
113.7
123.8
Returns (%)
ROCE
16.0
10.1
10.9
12.7
14.0
Angel ROIC (Pre-tax)
17.5
17.5
16.8
19.1
23.1
ROE
13.0
6.5
8.6
9.4
10.1
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
November 3, 2018
7
Music Broadcast Ltd| 2QFY2019 Result Update
Research Team Tel: 022 - 39357800
E-mail: [email protected]
Website: www.angelbroking.com
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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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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%)
November 3, 2018
8