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No major election benefit seen in Q4 performance…

TV Today reported a muted set of numbers for Q4FY21 numbers Operating revenue came in at | 214.3 crore, up 2.9%YoY with TV broadcasting revenue at | 176.5 crore (4.4% YoY growth), lower than our expectation of 10% YoY growth. Radio segment disappointed again with a straight ninth quarterly de-growth with revenues down 33.5% YoY to | 2.4 crore on further erosion in advertising pricing. Digital revenue recovered, reporting healthy growth of 19.3% YoY and came in at | 35.4 crore. EBITDA was at | 49.7 crore, up 6% YoY. EBITDA margin came in at 23.2%, up 74 bps YoY. The company reported PAT of | 36.2 crore, growth of 30.2% YoY despite muted operating performance due to lower tax rate transition.

Broadcasting revenues fails to garner election tailwind

Broadcasting revenues grew lower than our expectations despite elections in four states and one union territory in April, May 2021. We were baking in some benefits of the same in Q4, which clearly did not play out. Also, production cost for one show with one of the leading OTT platform was front loaded. Adjusted for that, margins were on expected line of 26.1%. Going ahead, we bake in 13.1%, 10.5% TV broadcasting revenue growth in FY22E, FY23E, respectively, largely on depressed base with some benefits coming in from UP elections. TV ratings for news channels continued to remain suspended. Hence, viewership share as well leadership continued to be grey area. We expect operating leverage to play out and bake in 27.5%, 28% EBITDA margins for FY22E, FY23E, respectively. We will watch increase in competitive intensity in the Hindi news space with expected channel launch from the Times group soon.

Digital segment remains robust; radio weak again

The digital segment grew a robust 20%, 12% YoY in Q4FY21, FY21, respectively. The company indicated further addition of digital properties in FY22 that would provide further tailwind to their growth. We expect digital revenues to maintain healthy growth rate at 18.3% CAGR in FY21-23E. We bake in 42% CAGR revenue growth in radio business where revenues are expected to double in FY23 vs. FY21, largely on a depressed base.

Valuation & Outlook

When currency data for viewership was suspended by BARC, Aaj Tak and India Today were among top five channels in respective segment by end of Q2FY21. We will track the possible changes in viewership measurement and also monitor how viewership data by new standards plays out. We maintain our HOLD recommendation with a revised target price of | 335/share (at 10x FY23E earnings, earlier TP: | 280). We roll over our valuations to FY23E earnings. We also highlight that absence of TV ratings for a longer term can be a challenge for news genre ad monetisation.

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