Faster revenue recovery; viewership loss a concern…
TV Today reported a better-than-expected set of Q2FY21 numbers led by a faster recovery in revenues in broadcasting and digital segment. Operating revenue came in at | 176.7 crore, down 2% YoY with TV broadcasting revenue at | 143.6 crore (~1% YoY growth). Radio segment disappointed again with a straight seventh quarterly de-growth with revenues declining 65.7% YoY to | 1 crore as ad spend across sectors remained low. Digital revenue recovered fastest with healthy growth of 12.7% YoY and came in at | 31.2 crore. EBITDA was at | 41.2 crore, up 21.2% YoY owing to reduced admin expenses (suspension of a print daily) and employee costs. EBITDA margin came in at 23.3%, up 445 bps YoY. Subsequently, PAT was at | 27.7 crore, up 20.6% YoY due to a good operating performance.
Broadcasting revenues recover; ad pricing outlook key
The news segment, as a whole, continued to witness healthy viewership (albeit lower than Q1) as people resorted to TV to receive updates regarding localised lockdowns, film industry related events, etc. However, viewership growth was not reflected in revenues as ad pricing was under pressure, in our view. Broadcasting revenues, nevertheless, were ahead of our expectations. Going ahead, we bake in 5% decline in broadcasting revenues in FY21 and ~14% growth thereafter in FY22E to | 759 crore. On the radio front, revenues remained lower at | 1 crore as corporate/government ad spend remains low and likely to remain muted in H2FY21. We expect radio revenues to decline at ~12% CAGR over FY20-22E to | 11.6 crore.
Digital segment robust; slips in Hindi viewership top position
The digital platform saw a quick recovery compared to other segments and reported growth of 12.7% YoY. In terms of viewership, although Aaj Tak was industry leader with ~24% market share (taking into account top five cumulative ratings) in the Hindi segment, it lost its top position from midAugust onwards. Losing the top position could limit the growth, going forward. India Today, while maintaining its position among top five channels, is also losing market share (~10%) in the English segment to new entrants. During the current quarter, TV ratings for news channels published by BARC are suspended to review and augment measuring methods.
Valuation & Outlook
Aaj Tak has lost its leadership in the Hindi news segment while India Today market share is on the decline in the English segment. Considering the state elections in Bihar in Q3, news segment will maintain viewership. However, overall news viewership has dipped QoQ post initial phases of lockdown. Losing market leadership and absence of currency data during the quarter will affect ad volume/pricing in our view. We will wait till flagship channel gets traction and also monitor how viewership data by new standards plays out. We downgrade our rating from BUY to HOLD with a target price of | 240/share (at 8x FY22E earnings).
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