B e t t e r u t i l i s a t i o n ; c h a l l e n g i n g t i m e s a h e a d . . .
Entertainment Network Ltd (ENIL) reported its Q2FY12 numbers, which
were in line with our expectations on the topline front. The consolidated
topline for the company stood at | 70.1 crore against our expectation of |
74.6 crore. YoY comparisons are not prudent for consolidated numbers
as the company has hived off its outdoor business. The standalone
topline stood at | 69.2 crore, growing 10.1% YoY on the back of 11.9% ad
revenue growth, which can be attributed to higher utilisation. The
blended capacity utilisation stood at 65.3% against 58.0% in Q2FY11.
ENIL reported standalone EBITDA of | 18.4 crore with an EBITDA margin
of 26.5%. The consolidated EBITDA margin stood at 24.8%. The company
reported standalone PAT of | 9.0 crore growing 80.2% YoY. The
consolidated profit stood at | 8.3 crore.
Highlights of the quarter
Ad revenue growth in this quarter was better than the previous quarter in
spite of it being a seasonally weak quarter. The radio business exhibited a
growth of 11.9% YoY in Q2FY12 in a challenging environment. The
blended utilisation level showed an increase from 58.0% in Q2FY11 to ~
65.3% in this quarter. The EBITDA margin in the radio business improved
152 bps to 26.5% from 25.0% in Q2FY11, in spite of higher marketing
expenses in this quarter, due to higher capacity utilisation.
V a l u a t i o n
We have valued the stock on an SOTP basis, evaluating the radio
business on DCF and event business on EV/sales. Assuming revenue
CAGR of 12.7% over FY11E-FY20E and terminal growth of 4%, thereon,
we have arrived at a target price of | 288/share for the radio business. We
have valued the event business at 1.0x FY13 EV/sales to arrive at a
valuation of | 2.2/share. The stock is currently trading at | 254. Our target
price implies an upside potential of 15%. We maintain our BUY rating.
Entertainment Network Ltd (ENIL) reported its Q2FY12 numbers, which
were in line with our expectations on the topline front. The consolidated
topline for the company stood at | 70.1 crore against our expectation of |
74.6 crore. YoY comparisons are not prudent for consolidated numbers
as the company has hived off its outdoor business. The standalone
topline stood at | 69.2 crore, growing 10.1% YoY on the back of 11.9% ad
revenue growth, which can be attributed to higher utilisation. The
blended capacity utilisation stood at 65.3% against 58.0% in Q2FY11.
ENIL reported standalone EBITDA of | 18.4 crore with an EBITDA margin
of 26.5%. The consolidated EBITDA margin stood at 24.8%. The company
reported standalone PAT of | 9.0 crore growing 80.2% YoY. The
consolidated profit stood at | 8.3 crore.
Highlights of the quarter
Ad revenue growth in this quarter was better than the previous quarter in
spite of it being a seasonally weak quarter. The radio business exhibited a
growth of 11.9% YoY in Q2FY12 in a challenging environment. The
blended utilisation level showed an increase from 58.0% in Q2FY11 to ~
65.3% in this quarter. The EBITDA margin in the radio business improved
152 bps to 26.5% from 25.0% in Q2FY11, in spite of higher marketing
expenses in this quarter, due to higher capacity utilisation.
V a l u a t i o n
We have valued the stock on an SOTP basis, evaluating the radio
business on DCF and event business on EV/sales. Assuming revenue
CAGR of 12.7% over FY11E-FY20E and terminal growth of 4%, thereon,
we have arrived at a target price of | 288/share for the radio business. We
have valued the event business at 1.0x FY13 EV/sales to arrive at a
valuation of | 2.2/share. The stock is currently trading at | 254. Our target
price implies an upside potential of 15%. We maintain our BUY rating.
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