Initiating Coverage | Media
August 4, 2016
TV Today Network
BUY
CMP
`297
Go with the market leader
Target Price
`363
TV Today Network (TTNL) is one of India's leading Hindi-English news television
Investment Period
12 Months
networks. The company's operating segments include television broadcasting and radio
broadcasting. The company operates four news channels, which include Aaj Tak, India
Today (earlier know as Headlines Today), Tez and Dilli Aaj Tak. It is also engaged in
Stock Info
publishing; its publications include India Today, Business Today etc. The company has
Sector
Media
hired well know anchors like Karan thapar and Rajdeep Sardesai in its team.
Market Cap (` cr)
1,787
Strong viewership ranking in Hindi and English news genre: TTNL enjoys a strong
Net Debt (` cr)
(201)
viewership ranking in the Hindi and English news channel categories. The company’s
Beta
1.3
Hindi news channel - Aaj Tak has maintained its market leadership position occupying
52 Week High / Low
351/186
the No.1 rank for several consecutive years in terms of viewership and continues to
dominate by being the channel of choice during unfolding of key national as well as
Avg. Daily Volume
12,948
international events. Further, TTNL’s English news channel - India Today has been
Face Value (`)
5
continuously gaining viewership ranking; it has now captured No. 2 ranking from No. 4
BSE Sensex
27,714
earlier. Its other channels like Dilli Aaj Tak and Tez are also popular among viewers.
Nifty
8,551
TTNL to benefit from TV industry (ad + subscription revenue) growth of ~16% CAGR
Reuters Code
TVTO.BO
over CY14-19E: Going forward we expect TV industry to report a 16% CAGR over
Bloomberg Code
TVTN.IN
CY2014-19E on back of increased advertisement allocations by corporates,
government and E-Commerce set ups, which are a significant new category. We also
expect an improvement in subscription revenue due to digitization of phase 3 & 4. Since
Shareholding Pattern (%)
the last 6-7 quarters, FMCG and automobile companies (incur significantly high ad
Promoters
57.4
spends) are underperforming due to weak consumer buying sentiments in rural areas
MF / Banks / Indian Fls
6.8
which is owing to two prior consecutive years of poor monsoon. However, we are now
FII / NRIs / OCBs
7.8
seeing some improvement in TV ad spends by these companies given the in-line current
year monsoons. On this account TTNL will stand to benefit.
Indian Public / Others
28.0
Complete exit from Radio business to improve profitability: TTNL had 7radio stations
which were continuously incurring losses year after year (in FY2016, the Radio business
Abs.(%)
3m
1yr
3yr
accrued an EBIT level loss of `13.5cr). Out of the 7 radio stations, TTNL has sold off 4
Sensex
9.8
(1.7)
44.4
(Jodhpur, Amritsar, Patiala and Shimla) for `4cr. The remaining 3 stations are in the
TTNL
(5.6)
37.3
352.7
process of getting sold off to ENIL but the sale will have to wait until concerns raised by
the MIB are resolved. Going forward, we expect them to be sold off and this would prop
up the company’s profitability.
3-year price chart
Outlook and Valuation: We expect TTNL to report a net revenue CAGR of ~16%
400
to ~`743cr and net profit CAGR of ~16% to `128cr over FY2016-18E. The
350
company has sustained its leadership position in Hindi news genre for14
300
consecutive years while in the English news genre it currently holds the No.2
250
position. Further, the exit from the radio business should boost profitability. The
200
company is debt free with `201cr of cash on its balance sheet. At the current
150
market price of `297, the stock trades at a PE of 16.2x and 13.9x its FY2017E
100
and FY2018E EPS of `18.4 and `21.4, respectively. We initiate coverage on the
50
0
stock with a Buy recommendation and target price of `363 based on 17x
FY2018E EPS, indicating an upside of ~22% from the current levels.
Key financials
Y/E March (` cr)
FY2015
FY2016
FY2017E
FY2018E
Source: Company, Angel Research
Net sales
477
546
637
743
% chg
22.4
14.6
16.6
16.8
Net profit
81
94
110
128
% chg
32.1
16.4
16.3
16.3
EBITDA margin (%)
27.6
26.8
27.5
27.5
EPS (`)
13.6
15.8
18.4
21.4
P/E (x)
21.9
18.8
16.2
13.9
P/BV (x)
3.9
3.3
2.8
2.4
RoE (%)
18.0
17.7
17.4
17.2
RoCE (%)
22.3
21.7
22.5
22.7
Amarjeet S Maurya
EV/Sales (x)
3.4
2.9
2.4
1.9
022-39357800 Ext: 6831
EV/EBITDA (x)
12.4
10.7
8.7
7.1
Source: Company, Angel Research, Note: CMP as of August 4, 2016
Please refer to important disclosures at the end of this report
1
TV Today Network | Initiating Coverage
Key investment arguments
Strong viewership ranking in Hindi and English news genre
TTNL enjoys a strong viewership ranking in the Hindi and English news channel
categories. The company’s Hindi news channel - Aaj Tak has maintained its
market leadership position occupying the No.1 rank for several consecutive years
in terms of viewership and continues to dominate by being the channel of choice
during unfolding of key national as well as international events. Further, TTNL’s
English news channel - India Today has been continuously gaining viewership
ranking; it has now captured No. 2 ranking from No. 4 earlier. Its other channels
like Dilli Aaj Tak and Tez are also popular among viewers.
Exhibit 1: BARC Viewership ratings of top 5 Hindi news
Exhibit 2: BARC Viewership ratings of top 5 English
channels
news channels
90000
300
78,572
80000
74,606
243
250
70000
60000
200
53,592
52,640
49,121
50000
150
131
127
40000
100
83
30000
66
20000
50
10000
0
0
Times Now
India Today CNN News18 NDTV 24x7
News X
Aaj Tak
India TV
India News
ABP News News Nation
Television
Source: BARC India, Angel Research Note : rating between Saturday,16th
Source: BARC India, Angel Research Note : rating between Saturday,16th
July 2016 to Friday, 22nd July 2016
July 2016 to Friday, 22nd July 2016
TTNL to benefit from TV industry growth of ~16% CAGR over
CY14-19E.
Going forward we expect TV industry to report a 16% CAGR over CY2014-19E on
back of increased advertisement allocations by corporates, government and E-
Commerce set ups, which are a significant new category. We also expect an
improvement in subscription revenue due to digitization of phase 3 & 4. Since the
last 6-7 quarters, FMCG and automobile companies (incur significantly high ad
spends) are underperforming due to weak consumer buying sentiments in rural
areas which is owing to two prior consecutive years of poor monsoon. However,
we are now seeing some improvement in TV ad spends by these companies given
the in-line current year monsoons. On this account TTNL will stand to benefit.
August 4, 2016
2
TV Today Network | Initiating Coverage
Exhibit 3: TV industry market size
Exhibit 4: Ad share by genre
1200
2.8%
2.0%
1.4%
Hindi GECs
3.0%
1000
3.0%
Regional GECs
3.8%
800
Hindi News
4.3%
27.5%
Regional News
600
5.0%
Others
400
6.7%
Hindi Movie
15.9%
200
7.9%
English News
8.3%
0
8.4%
Sport
Kids
Source: FICCI KPMG, Angel Research
Source: FICCI KPMG, Angel Research
Complete exit from Radio business to improve profitability
TTNL had 7radio stations which were continuously incurring losses year after year
(in FY2016, the Radio business accrued an EBIT level loss of `13.5cr). Out of the
7 radio stations, TTNL has sold off 4 (Jodhpur, Amritsar, Patiala and Shimla) for
`4cr. The remaining 3 stations are in the process of getting sold off to ENIL but the
sale will have to wait until concerns raised by the MIB are resolved. Going forward,
we expect them to be sold off and this would prop up the company’s profitability.
Exhibit 5: Historical Radio business financial performance
FY2010
FY2011
FY2012
FY2013
FY2014
FY2015
FY2016
Revenue
4.4
4.2
8.1
10.0
15.4
15.5
9.0
EBIT
(22.1)
(21.9)
(18.6)
(13.2)
(11.2)
(9.3)
(13.5)
Source: Company, Angel Research
August 4, 2016
3
TV Today Network | Initiating Coverage
Outlook and Valuation
We expect TTNL to report a net revenue CAGR of ~16% to ~`743cr and net profit
CAGR of ~16% to `128cr over FY2016-18E. The company has sustained its
leadership position in Hindi news genre for14 consecutive years while in the
English news genre it currently holds the No.2 position. Further, the exit from the
radio business should boost profitability. The company is debt free with `201cr of
cash on its balance sheet. At the current market price of `297, the stock trades at a
PE of 16.2x and 13.9x its FY2017E and FY2018E EPS of `18.4 and `21.4,
respectively. We initiate coverage on the stock with a Buy recommendation and
target price of `363 based on 17x FY2018E EPS, indicating an upside of ~22%
from the current levels.
Exhibit 6: One year forward PE Chart
Exhibit 7: Forward PE trading at below 10 yr Avg PE
10.0 X
15.0 X
20.0 X
25.0 X
30.0 X
60
700
50
600
40
500
30
400
20
300
10
200
100
0
0
one year forward PE
10 years Avg PE
Source: Company, Angel Research
Source: Company, Angel Research
The downside risks to our estimates include
1) loss of leadership in viewership could affect the company’s advertisement
revenue.
2) overall slowdown in the Indian economy could lead to a cut in ad spend
allocations by corporates which would be negative for TTNL.
3) any delay in digitalization could impact the company’s subscription
revenue growth.
August 4, 2016
4
TV Today Network | Initiating Coverage
Company Background
TV Today Network (TTNL) is one of India's leading Hindi-English news television
networks. The company's operating segments include television broadcasting and
radio broadcasting. The company operates four news channels, which include Aaj
Tak, India Today (earlier know as Headlines Today), Tez and Dilli Aaj Tak. It is also
engaged in publishing; its publications include India Today, Business Today etc.
The company has hired well know anchors like Karan thapar and Rajdeep
Sardesai in its team. Living Media India Ltd is the holding company for TTNL.
August 4, 2016
5
TV Today Network | Initiating Coverage
Financial performance
Over the last four year period, the company has reported a strong ~15% CAGR in
top-line due to strong advertising revenue growth (~16% CAGR growth). Going
forward, we expect the company to continue to report healthy top-line growth on
back of strong growth in advertisement revenue and also subscription revenue with
digitalization of phase 3 & 4. On the operating front, we expect margin to improve
owing to the recent price hike initiated in the ad segment. Benefits would also be
availed on account of the base effect as a one-time expense of ~16cr towards re-
branding of the English new channel was incurred last year. On the bottom-line
front, we expect
16% CAGR on the back of strong revenue growth and
improvement in operating performance. The company is debt free with `201cr
cash on its balance sheet.
Exhibit 8: Historical net sales trend
Exhibit 9: Historical operating profit trend
800
743
30
250
35
28.1
27.6
27.5
27.5
700
637
26.8
30
24.6
25
22.4
200
600
546
25
20
146
204
500
477
150
132
175
389
20
109
400
15
313
16.6
16.8
11.1
15
100
300
14.6
10
10
200
50
35
5
5
100
1.4
0
0
0
0
FY2013
FY2014
FY2015
FY2016
FY2017E FY2018E
FY2013
FY2014
FY2015
FY2016
FY2017E FY2018E
Operating Profit
Margin (%)
Net sales
yoy growth (%)
Source: Company, Angel Research
Source: Company, Angel Research
Exhibit 10: Historical net profit trend
Exhibit 11: Historical ROE & ROCE trend
361.1
140
128
380
25
22.3
22.5
22.7
21.5
21.7
120
110
330
20
94
280
100
81
230
15
18.0
17.7
80
17.4
17.2
61
180
16.2
60
130
10
40
32.1
80
26.4
16.4
16.3
16.3
3.5
5
20
30
12
3.8
0
-20
0
FY2013
FY2014
FY2015
FY2016
FY2017E FY2018E
FY2013
FY2014
FY2015
FY2016
FY2017E FY2018E
PAT
yoy growth (%)
ROE (%)
ROCE (%)
Source: Company, Angel Research
Source: Company, Angel Research
August 4, 2016
6
TV Today Network | Initiating Coverage
Consolidated Profit & Loss Statement
Y/E March (` cr)
FY13
FY14
FY15
FY16
FY17E
FY18E
Total operating income
313
389
477
546
637
743
% chg
1.4
24.6
22.4
14.6
16.6
16.8
Total Expenditure
278
280
345
400
462
539
Employee Cost
93
93
117
142
167
198
Selling & Administrative Expenses
89
86
102
120
137
159
Others Expenses
96
101
126
138
157
182
EBITDA
35
109
132
146
175
204
% chg
33.4
216.0
20.5
11.1
19.6
16.8
(% of Net Sales)
11.1
28.1
27.6
26.8
27.5
27.5
Depreciation& Amortisation
21
24
30
31
33
36
EBIT
14
85
102
116
142
168
% chg
14.1
528.0
19.5
13.9
22.4
18.9
(% of Net Sales)
4.3
21.8
21.3
21.2
22.3
22.7
Interest & other Charges
3
4
1
0
-
-
Other Income
7
12
23
32
22
22
(% of PBT)
42.0
12.6
18.5
21.6
13.4
11.6
Share in profit of Associates
-
-
-
-
-
-
Recurring PBT
18
93
123
147
164
190
% chg
7.1
430.0
31.8
19.9
11.1
16.3
Prior Period & Extraord. Exp./(Inc.)
-
-
-
-
-
-
PBT (reported)
18
93
123
147
164
190
Tax
5
32
42
53
54
63
(% of PBT)
30.6
34.2
34.1
36.0
33.0
33.0
PAT (reported)
12
61
81
94
110
128
Add: Share of earnings of asso.
-
-
-
-
-
-
ADJ. PAT
12
61
81
94
110
128
% chg
26.4
361.1
32.1
16.4
16.3
16.3
(% of Net Sales)
3.9
15.7
17.0
17.3
17.2
17.2
Basic EPS (`)
2.2
10.3
13.6
15.8
18.4
21.4
Fully Diluted EPS (`)
2.2
10.3
13.6
15.8
18.4
21.4
% chg
26.4
361.1
32.1
16.4
16.3
16.3
August 4, 2016
7
TV Today Network | Initiating Coverage
Consolidated Balance Sheet
Y/E March (` cr)
FY13
FY14
FY15
FY16
FY17E
FY18E
SOURCES OF FUNDS
Equity Share Capital
30
30
30
30
30
30
Reserves& Surplus
295
349
420
503
600
712
Shareholders Funds
325
379
450
533
629
742
Total Loans
60
17
7
-
-
-
Deferred Tax Liability
-
3
5
5
5
5
Total Liabilities
385
399
462
538
635
747
APPLICATION OF FUNDS
Gross Block
383
394
438
460
495
535
Less: Acc. Depreciation
161
179
203
233
266
303
Net Block
222
215
235
227
228
232
Capital Work-in-Progress
10
2
3
3
3
3
Investments
46
46
46
40
50
65
Current Assets
191
220
283
372
463
574
Sundry Debtors
94
110
141
157
187
220
Cash
31
57
95
161
203
262
Loans & Advances
56
47
41
48
64
82
Other Assets
10
6
6
7
10
11
Current liabilities
99
102
126
125
131
149
Net Current Assets
91
118
157
247
332
426
Deferred Tax Asset
17
18
21
21
21
21
Mis. Exp. not written off
-
-
-
-
-
-
Total Assets
385
399
462
538
635
747
August 4, 2016
8
TV Today Network | Initiating Coverage
Consolidated Cashflow Statement
Y/E March (` cr)
FY13
FY14
FY15
FY16
FY17E FY18E
Profit before tax
18
93
123
147
164
190
Depreciation
21
22
24
31
33
36
Change in Working Capital
3
(8)
(27)
(24)
(43)
(35)
Interest / Dividend (Net)
2
(1)
(6)
0
-
-
Direct taxes paid
(6)
(32)
(42)
(53)
(54)
(63)
Others
1
6
7
-
-
-
Cash Flow from Operations
39
81
78
101
100
128
(Inc.)/ Dec. in Fixed Assets
(15)
(3)
(49)
(11)
(55)
(70)
(Inc.)/ Dec. in Investments
-
-
-
5
(10)
(15)
Cash Flow from Investing
(15)
(3)
(49)
(17)
(45)
(55)
Issue of Equity
-
0
1
-
-
-
Inc./(Dec.) in loans
4
(43)
(11)
(7)
-
-
Dividend Paid (Incl. Tax)
(5)
(4)
(6)
(11)
(13)
(15)
Interest / Dividend (Net)
(6)
(4)
24
(0)
-
-
Cash Flow from Financing
(7)
(52)
9
(18)
(13)
(15)
Inc./(Dec.) in Cash
17
26
37
67
42
58
Opening Cash balances
14
31
57
95
161
203
Closing Cash balances
31
57
95
161
203
262
August 4, 2016
9
TV Today Network | Initiating Coverage
Key ratios
Y/E March
FY13
FY14
FY15
FY16
FY17E FY18E
Valuation Ratio (x)
P/E (on FDEPS)
133.2
28.9
21.9
18.8
16.2
13.9
P/CEPS
53.3
20.7
16.0
14.2
12.4
10.8
P/BV
5.5
4.7
3.9
3.3
2.8
2.4
Dividend yield (%)
0.3
0.3
0.5
0.6
0.7
0.9
EV/Sales
5.6
4.3
3.4
2.9
2.4
1.9
EV/EBITDA
50.8
15.4
12.4
10.7
8.7
7.1
EV / Total Assets
3.6
3.4
2.8
2.4
2.0
1.6
Per Share Data (`)
EPS (Basic)
2.2
10.3
13.6
15.8
18.4
21.4
EPS (fully diluted)
2.2
10.3
13.6
15.8
18.4
21.4
Cash EPS
5.6
14.3
18.6
20.9
24.0
27.4
DPS
0.7
1.0
1.5
1.9
2.2
2.6
Book Value
54.3
63.5
75.4
89.3
105.5
124.3
Returns (%)
ROCE
3.5
21.5
22.3
21.7
22.5
22.7
Angel ROIC (Pre-tax)
4.4
29.0
32.1
34.9
37.7
40.6
ROE
3.8
16.2
18.0
17.7
17.4
17.2
Turnover ratios (x)
Asset Turnover (Gross Block)
0.8
1.0
1.1
1.2
1.3
1.4
Inventory / Sales (days)
-
-
-
-
-
-
Receivables (days)
110
103
108
105
107
108
Payables (days)
66
48
52
58
52
50
WC cycle (ex-cash) (days)
43
55
56
47
55
58
August 4, 2016
10
TV Today Network | Initiating Coverage
Research Team Tel: 022 - 39357800
DISCLAIMER
Angel Broking Private Limited (hereinafter referred to as “Angel”) is a registered Member of National Stock Exchange of India Limited,
Bombay Stock Exchange Limited and Metropolitan Stock Exchange Limited. It is also registered as a Depository Participant with CDSL
and Portfolio Manager with SEBI. It also has registration with AMFI as a Mutual Fund Distributor. Angel Broking Private Limited is a
registered entity with SEBI for Research Analyst in terms of SEBI (Research Analyst) Regulations, 2014 vide registration number
INH000000164. Angel or its associates has not been debarred/ suspended by SEBI or any other regulatory authority for accessing
/dealing in securities Market. Angel or its associates/analyst has not received any compensation / managed or co-managed public
offering of securities of the company covered by Analyst during the past twelve months.
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment
decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should
make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the
companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine
the merits and risks of such an investment.
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contrary view, if any.
The information in this document has been printed on the basis of publicly available information, internal data and other reliable
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Disclosure of Interest Statement
TV Today Network
1. Financial interest of research analyst or Angel or his Associate or his relative
No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives
No
3. Served as an officer, director or employee of the company covered under Research
No
4. Broking relationship with company covered under Research
No
Ratings (Based on expected returns
Buy (> 15%)
Accumulate (5% to 15%)
Neutral (-5 to 5%)
over 12 months investment period):
Reduce (-5% to -15%)
Sell (< -15)
August 4, 2016
11
