1QFY2020 Result Update | Media
July 30, 2019
Music Broadcast
BUY
CMP
`47
Performance Update
Target Price
`56
Y/E March (` cr)
1QFY20
1QFY19
% yoy
4QFY19
% qoq
Investment Period
12 month
Net sales
70
76
(7.8)
82
(14.8)
EBITDA
22
26
(14.2)
32
(30.0)
EBITDA margin (%)
Stock Info
32.1
34.4
(238bp)
39.0
(699bp)
Adjusted PAT
8
14
(37.6)
18
(54.1)
Sector
Media
Source: Company, Angel Research
Market Cap (` cr)
1279
For 1QFY2020, Music Broadcast Limited (MBL) posted below expectation results
Net Debt (` cr)
(235)
both on top-line and bottom-line fronts. MBL’s top-line registered a decline of ~8%
Beta
0.3
yoy to `70cr on the back of volume de-growth of 14%. Moreover, the company’s
52 Week High / Low
68/45
operating margins contracted by 238bps yoy. On the bottom-line front, MBL
Avg. Daily Volume
5,838
reported de-growth of ~38% yoy to `8cr on the back of lower sales and poor
operating performance.
Face Value (`)
10
BSE Sensex
37,767
Top-line de-grew ~8% yoy: MBL’s top-line de-grew by ~8% yoy to `70cr due to
volume de-growth of 14%. However, during the quarter the company has taken
Nifty
11,203
~4% hike in top 12 markets. New radio station’s volume remained flat during the
Reuters Code
-
quarter. Going forward, management expects that the company would be able to
Bloomberg Code
RADIOCIT.IN
recover the volume growth in upcoming festive season.
Subdued volumes and poor operating performance mar profitability: On the
Shareholding Pattern (%)
operating front, the company reported contraction in margins, down 238bps yoy
at 32.1%. Operating margin was impacted mainly due to lower sales and capacity
Promoters
73.7
utilization (National advertiser has postponed the advertisement campaign). On the
MF / Banks / Indian Fls
10.1
bottom-line front, MBL reported de-growth of ~38% yoy to `8cr.
FII / NRIs / OCBs
14.7
Outlook and Valuation: During the quarter, the company’s volume growth has
Indian Public / Others
1.6
remained subdued mainly due to overall slowdown in economy, which affected
overall ad spends. However, management expects that the company would be able
to recover the volume growth in upcoming festive season. Further, considering
sustainable growth opportunities over the next 5-7 years, most of the capex already
Abs. (%)
3m 1yr
3yr
through and strong parentage, we have a positive outlook on the company. Thus,
Sensex
(3.4)
0.5
34.3
we maintain our Buy recommendation on MBL with Target Price of `56
MBL
(20.9)
(22.8)
-
Key Financials
Y/E March (` cr)
FY2018
FY2019
FY2020E
FY2021E
Historical share price chart
Net sales
298
325
341
373
% chg
9.9
8.9
4.9
9.5
100
90
Adj. Net profit
52
62
58
65
80
70
% chg
45.4
19.2
(5.6)
12.5
60
50
EBITDA margin (%)
32.6
34.9
34.0
34.5
40
EPS (`)
1.8
2.2
2.1
2.3
30
20
P/E (x)
25.7
21.5
22.8
20.3
10
0
P/BV (x)
2.2
2.0
1.9
1.8
RoE (%)
8.6
9.5
8.4
8.7
RoCE (%)
10.9
12.9
11.8
12.4
EV/EBITDA (x)
11.0
9.4
9.2
7.7
Source: Company, Angel Research
Source: Company, Angel Research Note
Please refer to important disclosures at the end of this report
1
Music Broadcast Ltd| 1QFY2020 Result Update
Exhibit 1: 1QFY2020 Performance
Y/E March (` cr)
1QFY20
1QFY19
% yoy
4QFY19
% qoq
FY19
FY18
% chg
Net Sales
70
76
(7.8)
82
(14.8)
325
298
8.9
Staff Costs
16
18
(10.2)
16
(1.1)
69
69
0.1
(% of Sales)
23.2
23.8
20.0
21.2
23.1
Other Expenses
31
32
(1.2)
34
(6.9)
143
132
7.8
(% of Sales)
44.8
41.8
41.0
43.9
44.3
Total Expenditure
47
50
(4.5)
50
(5.0)
212
201
5.2
Operating Profit
22
26
(14.2)
32
(30.0)
113
97
16.6
OPM
32.1
34.4
39.0
34.9
32.6
Interest
3
1
86.2
2
69.1
5.6
15.0
(62.3)
Depreciation
9
7
27.4
7
24.3
27
26
3.2
Other Income
3
2
36.0
5
(28.6)
15.1
19.4
(22.1)
PBT (excl. Ext Items)
15
20
(28.8)
28
(48.5)
96
75
27.0
Ext (Income)/Expense
-
-
-
-
-
PBT (incl. Ext Items)
15
20
(28.8)
28
(48.5)
96
75
27.0
(% of Sales)
20.8
26.9
34.4
29.4
25.2
Provision for Taxation
6
7
(11.5)
10
(38.1)
34
24
44.3
(% of PBT)
41.9
33.7
34.8
35.5
31.2
Reported PAT
8
14
(37.6)
18
(54.1)
62
52
19.1
PATM
12.1
17.8
22.4
19.0
17.3
Minority Interest After NP
Reported PAT
8
14
(37.6)
18
(54.1)
62
52
19.1
Equity shares (cr)
6
6
6
6
6
FDEPS (Rs)
1.5
2.4
(37.6)
3.2
(54.1)
10.8
9.1
19.1
Source: Company, Angel Research
July 30, 2019
2
Music Broadcast Ltd| 1QFY2020 Result Update
Outlook and Valuation: During the quarter, the company’s volume growth has
remained subdued mainly due to overall slowdown in economy, which affected
overall ad spends. However, management expects that the company would be able
to recover the volume growth in upcoming festive season. Further, 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.
July 30, 2019
3
Music Broadcast Ltd| 1QFY2020 Result Update
Profit & Loss Statement
Y/E March (` cr)
FY2017
FY2018
FY2019
FY2020E
FY2021E
Total operating income
271
298
325
341
373
% chg
20.4
9.9
8.9
4.9
9.5
Total Expenditure
180
201
212
225
244
License fees
19
21
0
0
0
Personnel
65
69
69
75
82
Others Expenses
96
111
143
150
162
EBITDA
91
97
113
116
129
% chg
16.8
6.4
16.6
2.3
11.1
(% of Net Sales)
33.6
32.6
34.9
34.0
34.5
Depreciation& Amortisation
20
26
27
32
34
EBIT
72
71
86
84
95
% chg
16.5
(1.1)
21.6
(2.6)
13.0
(% of Net Sales)
26.4
23.7
26.5
24.6
25.4
Interest & other Charges
19
15
6
10
10
Other Income
4
19
15
13
13
(% of PBT)
8
26
16
15
13
Extraordinary Items
1
-
-
-
-
Share in profit of Associates
Recurring PBT
57
75
96
87
98
% chg
2.7
31.9
27.1
(9.1)
12.5
Tax
20
24
34
29
32
PAT (reported)
36
52
62
58
65
% chg
30.3
45.4
19.2
(5.6)
12.5
(% of Net Sales)
13.1
17.3
19.0
17.1
17.5
Basic & Fully Diluted EPS (`)
1.3
1.8
2.2
2.1
2.3
% chg
30.3
45.4
19.2
(5.6)
12.5
July 30, 2019
4
Music Broadcast Ltd| 1QFY2020 Result Update
Balance Sheet
Y/E March (` cr)
FY2017
FY2018
FY2019
FY2020E FY2021E
SOURCES OF FUNDS
Equity Share Capital
57
57
57
57
57
Reserves& Surplus
491
543
592
639
691
548
600
649
696
748
Shareholders Funds
Total Loans
155
54
19
19
19
Total Liabilities
703
653
668
715
767
APPLICATION OF FUNDS
Net Block
312
297
290
275
260
Capital Work-in-Progress
0
0
0
0
0
27
156
172
172
172
Investments
Current Assets
372
208
229
266
350
Inventories
0
0
0
0
0
Sundry Debtors
58
22
27
28
31
Cash
268
76
79
104
175
Loans & Advances
0
0
0
0
0
Other Assets
23
22
22
22
22
Current liabilities
83
45
107
71
74
Net Current Assets
290
163
121
195
350
Other Non-Current Asset
73
37
37
37
37
Total Assets
703
653
668
715
767
July 30, 2019
5
Music Broadcast Ltd| 1QFY2020 Result Update
Consolidated Cashflow Statement
Y/E March (` cr)
FY2017 FY2018 FY2019 FY2020E FY2021E
Profit before tax
57
75
96
87
98
Depreciation
20
26
27
32
34
Change in Working Capital
(7)
(40)
44
(48)
(11)
Interest / Dividend (Net)
17
3
6
10
10
Direct taxes paid
(9)
(16)
(34)
(29)
(32)
Others
1
(7)
-
-
-
Cash Flow from Operations
79
40
139
52
99
(Inc.)/ Dec. in Fixed Assets
(27)
(6)
(5)
(5)
(5)
(Inc.)/ Dec. in Investments
(183)
9
(16)
-
-
Cash Flow from Investing
(211)
3
(21)
(5)
(5)
Issue of Equity
(38)
-
-
-
-
Inc./(Dec.) in loans
(133)
(100)
(34)
-
-
Others
376
(16)
(18)
(22)
(23)
Cash Flow from Financing
205
(116)
(52)
(22)
(23)
Inc./(Dec.) in Cash
73
(72)
66
25
71
Opening Cash balances
13
86
13
79
104
Closing Cash balances
86
13
79
104
175
July 30, 2019
6
Music Broadcast Ltd| 1QFY2020 Result Update
Key Ratio
Y/E March
FY2017
FY2018
FY2019
FY2020E FY2021E
Valuation Ratio (x)
P/E (on FDEPS)
37.3
25.7
21.5
22.8
20.3
P/CEPS
24.0
17.0
15.0
14.7
13.3
P/BV
2.4
2.2
2.0
1.9
1.8
Dividend yield (%)
0.0
0.0
0.9
0.9
1.0
EV/Sales
3.9
3.6
3.3
3.1
2.7
EV/EBITDA
11.7
11.0
9.4
9.2
7.7
EV / Total Assets
1.5
1.6
1.7
1.6
1.2
Per Share Data (Rs)
EPS (Basic)
1.3
1.8
2.2
2.1
2.3
EPS (fully diluted)
1.3
1.8
2.2
2.1
2.3
Cash EPS
2.0
2.8
3.1
3.2
3.5
DPS
0.0
0.0
0.4
0.4
0.5
Book Value
19.4
21.2
23.0
24.6
26.5
Returns (%)
ROCE
10.3
10.9
12.9
11.8
12.4
Angel ROIC (Pre-tax)
17.5
16.8
20.6
19.1
22.5
ROE
6.5
8.6
9.5
8.4
8.7
Turnover ratios (x)
Inventory / Sales (days)
-
-
-
-
-
Receivables (days)
110
135
144
150
150
Payables (days)
78
27
30
30
30
Working capital cycle (ex-cash) (days)
32
108
114
120
120
July 30, 2019
7
Music Broadcast Ltd| 1QFY2020 Result Update
Research Team Tel: 022 - 39357800
E-mail: [email protected]
Website: www.angelbroking.com
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Manager and Investment Adviser with SEBI. It also has registration with AMFI as a Mutual Fund Distributor. Angel Broking Limited is a
registered entity with SEBI for Research Analyst in terms of SEBI (Research Analyst) Regulations, 2014 vide registration number
INH000000164. Angel or its associates has not been debarred/ suspended by SEBI or any other regulatory authority for 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 make
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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 30, 2019
8