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Muted quarter

TV Today Network (TVTN IN) posted a subdued Q3 as TV and media operations declined by double-digits, led by a slowdown in overall ad demand and lower ad volumes from the government. EBITDA margin loss was led by lower benefits from operating leverage, hit by higher production and employee cost. TVTN closed its Radio business, which had been contributing to EBIT losses. With major election events behind, we cut EPS estimates by 29.2%/16.2% for FY26E/27E to arrive at a pared SoTPTP of INR 200. TVTN has fallen 11% in three months and is trading at ~5% TTM dividend yield. Maintain Accumulate.

TV segment – Muted show:

Revenue from television and other media operations declined by 10.2% YoY to INR 2.3bn, and as per our assessment, core TV may have declined 12.9% YoY. The drop was due to waning base of general elections last year and overall slowdown in ad spend environment in the TV industry (ad revenue for Sun TV/Zee Enterprises down 6.4%/8.4% YoY in Q3). Expect sluggish Q4 and Q1FY26 on election base last year. TVTN’s niche is news channels (Aaj Tak, India Today, GNT etc.). With key events behind – general/state elections in the Hindi belt, except Bihar (CY25 end) – expect a muted 1% YoY revenue CAGR for the segment. Expect core-TV to remain flat (FY25E). We estimate the digital segment to have grown at a steady pace in Q3.

Elevated costs pared EBITDA margin:

EBITDA margin was below estimates at 4.6% in Q3 (from 15.7% last year). The margin drop (YoY) was led by: a) a 128bps YoY loss in gross margin led by a surge in production costs and b) higher-than-anticipated employee cost and other expenses (42.3% of sales in Q3 as against 34.8% a year ago). lower benefits of operating leverage, sticky production cost may weigh down margins.

Price chart

Source: Bloomberg

Radio segment closed; focus on core:

In January, the board approved the closure of the Radio business due to its evolved nature and increased focus on TV broadcasting business. The segment’s salience to total revenue was just 1.7% (FY24). However, it contributed to a loss of INR 195mn to TVTN’s net worth. The radio segment posted a muted 2.2% revenue CAGR in FY20-24. Through 9MFY25, EBIT losses from the Radio segment at INR 116mn dragged down system EBIT by ~13%. Expect incremental loss savings to be offset by abating drag from lower margin (on low operating leverage). We cut revenue estimates for the Radio segment to nil for FY26/27E.

Maintain Accumulate; TP pared to INR 200:

Q3 was below estimated on subdued TV segment. With a cloudy outlook for TV broadcasting and factoring in closure of the Radio segment, we cut revenue estimates by 3.2/6.3% for FY26E/27E. On lower operating leverage benefits impacting margins, we cut EPS estimates by 10.5/11.4% in FY26E/27E (including incremental radio loss savings). As we roll over to FY27E, we arrive at a pared TP of INR 200 (from INR 230). We value TVTN’s core TV segment at 10x P/E FY27E, digital segment at 2x price/sales and cash at INR 107 per share. TVTN has fallen 11% in three months and is trading at ~5% TTM dividend yield. Maintain Accumulate.

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