Technology

TV Today Network (TTNL) is one of Indias leading Hindi-English news television
networks. The companys 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.
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 occupying
the No.1 rank 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 No. 2 ranking 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 TV industry to report a 16% CAGR over
CY2014-19E on back of increased advertisement allocations by 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 (incur significantly high ad
spends) are underperforming due to weak consumer buying sentiments in rural areas
which is owing to two prior consecutive years of poor monsoon. However, we are now
seeing some improvement in TV ad spends by these companies given the in-line current
year monsoons. 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 Rs4cr. 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.
Outlook and Valuation: We expect TTNL to report a net revenue CAGR of ~16%
to ~Rs743cr and net profit CAGR of ~16% to Rs128cr 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 Rs201cr of cash on its balance sheet. At the current
market price of Rs297, the stock trades at a PE of 16.2x and 13.9x its FY2017E
and FY2018E EPS of Rs18.4 and Rs21.4, respectively. We initiate coverage on the
stock with a Buy recommendation and target price of Rs363 based on 17x
FY2018E EPS, indicating an upside of ~22% from the current levels.

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