For 2QFY2020, Music Broadcast Limited (MBL) posted below expectation results both on top-line and bottom-line fronts. MBL’s top-line registered a decline of ~22% yoy to `63cr on the back of lower ad spends. Moreover, the company’s operating margins contracted by 354bps yoy. On the bottom-line front, MBL reported growth of ~38% yoy to `19cr on the back of tax reversal.

Outlook and Valuation: Management expects that the company would be able to recover the volume growth in coming financial year. Further, considering sustainable growth opportunities over the next 5-7 years, most of the capex is already through and given the companys strong parentage, we have a positive outlook on MBL. However, during the quarter, the company’s volume growth has remained subdued mainly due to overall slowdown in economy, which affected overall ad spends. Thus, we maintain our Hold recommendation on MBL.

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