Published on 10/08/2018 3:22:17 PM | Source: ICICI Securities Ltd

Hold TV Today Network Ltd For Target Rs.435.00 - ICICI Sec

In-line growth; margin expands

Reason for report: Q1FY19 result review and earnings revision

TV Today Network (TVTN) reported 10.5% YoY top-line growth in Q1FY19 to Rs1,819mn (I-Sec: Rs1,842mn). TV ad growth stood at ~15% YoY, while total revenue grew 10.5% owing to relatively lower number of events during the quarter. TV18 reported 14% YoY growth in revenue from standalone operations (national and business news channels); while ZMCL reported 35% ad growth in Q1FY19. EBITDA grew 33% YoY to Rs636mn (I-Sec: Rs566mn) with margin expanding 590bps to 34.9%. We tweak our estimates marginally, resulting in upward earnings revision by 2.5%/1.3% for FY19E/FY20E. We maintain HOLD on TVTN with a revised TP of Rs435 (Rs430 earlier).

Maintains leadership in Hindi general news:

TVTN maintained its leadership position in the Hindi general news market in Q1FY19. TVTN’s flagship channel Aaj Tak’s viewership share declined 90bps in Q1FY19 to 17% as Zee News’ viewership surpassed Aaj Tak for few weeks. In Q2FY19-TD, Aaj Tak has gained back share to 18.7%. Network share of TVTN in Hindi general news viewership increased from 22.9% in Q4FY18 to 23.5% in Q2FY19-TD, as share of its second Hindi general news channel Tez remained flat at 5%.

Weak performance of India Today TV:

TVTN’s English general news channel India Today TV’s viewership share declined 390bps QoQ to 10% in Q1FY19. In Q2FY19- TD, share further declined to 8.8%, though it maintained its 3rd rank.

EBITDA margin expands 590bps YoY:

EBITDA increased 33% YoY to Rs636mn in Q1FY19, with margin improving 590bps YoY to 34.9% (I-Sec: 30.7%). Margin expansion came on the back of 3% decline in transmission & production cost and 9% decline in admin expenses, mitigating impact of higher employee cost. EBIT margin for TV business improved 720bps YoY to 36%. Despite strong EBITDA growth, PAT grew 36.4% only owing to higher tax outgo (12ppt increase in effective tax rate).

Weak growth in radio business:

In Q1FY19, radio revenue declined 15.4% YoY to Rs58mn. However, EBIT losses narrowed to Rs10mn against Rs24mn in Q1FY18. TVTN has entered into an agreement to sell its radio business to ENIL in a slump sale. Revenue from digital business increased 25% YoY to Rs172mn and EBIT stood at Rs13mn.

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