2QFY2017 Result Update | Media
December 5, 2016
TV Today Network
BUY
CMP
`315
Performance Update
Target Price
`385
Y/E March (` cr)
2QFY17
2QFY16
% yoy
1QFY17
% qoq
Investment Period
12 Months
Net sales
132
126
5.1
137
(3.4)
Stock Info
EBITDA
37
38
(2.4)
37
0.4
Sector
Media
EBITDA margin (%)
27.9
30.1
(216bp)
26.9
105bp
Market Cap (` cr)
1,880
Adjusted PAT
23
24
(7.2)
22
1.0
Net Debt
(201)
Source: Company, Angel Research
Beta
1.3
52 Week High / Low
360 / 260
TV Today Network (TTNL) reported a subdued set of numbers for 2QFY2017 with
Avg. Daily Volume
3,084
its consolidated top-line growing by ~5% yoy. On the operating front, the
Face Value (`)
5
company reported margin contraction on account of higher selling &
BSE Sensex
26,231
administrative expenses, which resulted in the de-growth of net profit by ~7% yoy.
Nifty
8,087
Reuters Code
TVTO.BO
Top-line grew ~5% yoy: The consolidated top-line grew lower by ~5% yoy to
Bloomberg Code
TVTN.IN
~`132cr, due to lower corporate ad spends. Further, the sell-off of 4 radio
stations (Jodhpur, Amritsar, Patiala and Shimla) also impacted the top-line
Shareholding Pattern (%)
growth.
Promoters
57.4
PAT de-grew ~7% yoy: The company reported margin contraction by 216bp yoy
MF / Banks / Indian Fls
6.8
to 27.9% due to higher selling & administrative expenses (up 471bp yoy as a
FII / NRIs / OCBs
7.8
percentage of sales). The EBITDA de-grew by ~2% yoy to `37cr and resultantly
Indian Public / Others
28.0
the net profit also declined by 7% to `23cr.
Outlook and Valuation: We expect TTNL to report a net revenue CAGR of ~15%
Abs. (%)
3m 1yr 3yr
to ~`718cr and net profit to post a CAGR of ~15% to `124cr over FY2016-18E.
Sensex
(8.1)
0.4
25.5
The company has sustained its leadership position in the Hindi news genre for 14
TTNL
3.6
14.4
170.6
consecutive years; while in the English news genre, it currently holds the No. 2
position. Further, its exit from the radio business should boost profitability. The
Historical share price chart
company is debt free with `201cr of cash on its balance sheet. Hence, we
400
maintain our Buy recommendation on the stock with a target price of `385.
350
300
Key Financials
250
Y/E March (` cr)
FY2015
FY2016
FY2017E
FY2018E
200
150
Net sales
477
546
620
718
100
% chg
22.4
14.6
13.5
15.9
50
0
Adj. Net profit
81
94
107
124
% chg
32.1
16.4
13.7
15.3
EBITDA margin (%)
27.6
26.8
27.5
27.5
Source: Company, Angel Research
EPS (`)
13.6
15.8
18.0
20.7
P/E (x)
23.2
19.9
17.5
15.2
P/BV (x)
4.2
3.5
3.0
2.6
RoE (%)
18.0
17.7
17.1
16.8
RoCE (%)
22.3
21.7
21.8
21.9
Amarjeet S Maurya
EV/Sales (x)
3.7
3.1
2.6
2.2
022-40003600 Ext: 6831
EV/EBITDA (x)
13.3
11.5
9.6
7.9
[email protected]
Source: Company, Angel Research; Note: CMP as of December 2, 2016
Please refer to important disclosures at the end of this report
1
TV Today Network | 2QFY2017 Result Update
Exhibit 1: 4QFY2016 Performance
Y/E March (` cr)
2QFY17
2QFY16
% yoy
1QFY17
% qoq
1HFY17
1HFY16
% chg
Net Sales
132
126
5.1
137
(3.4)
267
250
7.0
Staff Costs
34
33
3.9
39
(11.0)
73
66
11.1
(% of Sales)
26.1
26.4
(32)
28.3
(223)
27.4
26.4
102
Selling & Adm. Expenses
31
24
31.6
31
(0.5)
62
62
0.6
(% of Sales)
23.4
18.7
471
22.7
68
23.2
24.7
(149)
Other Expenses
30
31
(4.3)
30
(1.2)
58
52
11.1
(% of Sales)
22.6
24.9
(223)
22.1
50
21.8
21.0
81
Total Expenditure
95
88
8.4
100
(4.8)
193
180
7.5
Operating Profit
37
38
(2.4)
37
0.4
74
70
5.7
OPM
27.9
30.1
(216bp)
26.9
105bp
27.6
27.9
Interest
0
0.06
33.3
0
-
0
0
45.5
Depreciation
7
7.7
(5.2)
7
(2.3)
15
16
(5.9)
Other Income
5
6
(19.0)
5
0.8
10
10
(0.9)
PBT (excl. Ext Items)
35
36
(4.7)
34
1.0
69
64
7.4
Ext (Income)/Expense
-
-
-
-
-
PBT (incl. Ext Items)
35
36
(4.7)
34
1.0
69
64
7.4
(% of Sales)
26.1
28.8
25.0
25.7
25.6
Provision for Taxation
12
12
12
24
22
10.2
(% of PBT)
34.5
32.7
34.5
34.5
33.7
Reported PAT
23
24
(7.2)
22
1.0
45
42
6.0
PATM
17.1
19.4
16.3
16.8
17.0
Minority Interest After NP
-
-
-
-
-
-
-
-
Extra-ordinary Items
-
-
-
-
-
-
-
-
Reported PAT
23
24
(7.2)
22
1.0
45
42
6.0
PATM
17.1
19.4
16.3
16.8
17.0
Source: Company, Angel Research
December 5, 2016
2
TV Today Network | 2QFY2017 Result Update
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 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 the No. 2 spot from No. 4 earlier. Its other channels like Dilli Aaj Tak
and Tez are also popular among viewers.
TTNL to benefit from TV industry (ad + subscription revenue)
growth of ~16% CAGR over CY14-19E
Going forward we expect the TV industry to report a 16% CAGR over CY2014-19E
on back of increased advertisement allocations by the 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 which incur significantly high
ad spends, are underperforming due to weak consumer buying sentiments in rural
areas (owing to two prior consecutive years of poor monsoon). However, we are
now seeing some improvement in TV ad spends in anticipation of an improvement
in the rural economy with the country having received optimal monsoons this year.
On this account TTNL will stand to benefit.
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.
December 5, 2016
3
TV Today Network | 2QFY2017 Result Update
Outlook and Valuation
We expect TTNL to report a net revenue CAGR of ~15% to ~`718cr and net profit
to post a CAGR of ~15% to `124cr over FY2016-18E. The company has sustained
its leadership position in the Hindi news genre for 14 consecutive years; while in
the English news genre, it currently holds the No. 2 position. Further, its exit from
the radio business should boost profitability. The company is debt free with `201cr
of cash on its balance sheet. Hence, we maintain our Buy recommendation on the
stock with a target price of `385.
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 could potentially hurt TTNL’s revenues.
3)
Any delay in digitalization could impact the company’s subscription revenue
growth.
December 5, 2016
4
TV Today Network | 2QFY2017 Result Update
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.
December 5, 2016
5
TV Today Network | 2QFY2017 Result Update
Profit & Loss Statement
Y/E March (` cr)
FY13
FY14
FY15
FY16
FY17E
FY18E
Total operating income
313
389
477
546
620
718
% chg
1.4
24.6
22.4
14.6
13.5
15.9
Total Expenditure
278
280
345
400
449
521
Employee Cost
93
93
117
142
163
191
Selling & Admin. Exp.
89
86
102
120
133
154
Others Expenses
96
101
126
138
153
176
EBITDA
35
109
132
146
170
197
% chg
33.4
216.0
20.5
11.1
16.5
15.9
(% of Net Sales)
11.1
28.1
27.6
26.8
27.5
27.5
Depreciation& Amort.
21
24
30
31
33
36
EBIT
14
85
102
116
137
161
% chg
14.1
528.0
19.5
13.9
18.4
17.8
(% of Net Sales)
4.3
21.8
21.3
21.2
22.1
22.5
Interest & other Charges
3
4
1
0
-
-
Other Income
7
12
23
32
23
23
(% of PBT)
42.0
12.6
18.5
21.6
14.4
12.5
Share in profit of Asso.
-
-
-
-
-
-
Recurring PBT
18
93
123
147
160
184
% chg
7.1
430.0
31.8
19.9
8.6
15.3
Prior Period & Extra. Exp./(Inc.)
-
-
-
-
-
-
PBT (reported)
18
93
123
147
160
184
Tax
5
32
42
53
53
61
(% of PBT)
30.6
34.2
34.1
36.0
33.0
33.0
PAT (reported)
12
61
81
94
107
124
Add: Share of earnings of asso.
-
-
-
-
-
-
ADJ. PAT
12
61
81
94
107
124
% chg
26.4
361.1
32.1
16.4
13.7
15.3
(% of Net Sales)
3.9
15.7
17.0
17.3
17.3
17.2
Basic EPS (`)
2.2
10.3
13.6
15.8
18.0
20.7
Fully Diluted EPS (`)
2.2
10.3
13.6
15.8
18.0
20.7
% chg
26.4
361.1
32.1
16.4
13.7
15.3
December 5, 2016
6
TV Today Network | 2QFY2017 Result Update
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
598
706
Shareholders Funds
325
379
450
533
627
736
Total Loans
60
17
7
-
-
-
Deferred Tax Liability
-
3
5
5
5
5
Total Liabilities
385
399
462
538
633
741
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
458
564
Sundry Debtors
94
110
141
157
182
212
Cash
31
57
95
161
199
255
Loans & Advances
56
47
41
48
68
86
Other Assets
10
6
6
7
9
11
Current liabilities
99
102
126
125
128
144
Net Current Assets
91
118
157
247
330
420
Deferred Tax Asset
17
18
21
21
21
21
Mis. Exp. not written off
-
-
-
-
-
-
Total Assets
385
399
462
538
633
741
December 5, 2016
7
TV Today Network | 2QFY2017 Result Update
Cashflow Statement
Y/E March (` cr)
FY13
FY14
FY15
FY16
FY17E FY18E
Profit before tax
18
93
123
147
160
184
Depreciation
21
22
24
31
33
36
Change in Working Capital
3
(8)
(27)
(24)
(45)
(34)
Interest / Dividend (Net)
2
(1)
(6)
0
-
-
Direct taxes paid
(6)
(32)
(42)
(53)
(53)
(61)
Others
1
6
7
-
-
-
Cash Flow from Operations
39
81
78
101
96
126
(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
38
56
Opening Cash balances
14
31
57
95
161
199
Closing Cash balances
31
57
95
161
199
255
December 5, 2016
8
TV Today Network | 2QFY2017 Result Update
Key Ratios
Y/E March
FY13
FY14
FY15
FY16
FY17E FY18E
Valuation Ratio (x)
P/E (on FDEPS)
141.3
30.6
23.2
19.9
17.5
15.2
P/CEPS
56.5
22.0
16.9
15.0
13.4
11.8
P/BV
5.8
5.0
4.2
3.5
3.0
2.6
Dividend yield (%)
0.2
0.3
0.5
0.6
0.7
0.8
EV/Sales
6.0
4.6
3.7
3.1
2.6
2.2
EV/EBITDA
53.9
16.4
13.3
11.5
9.6
7.9
EV / Total Assets
3.8
3.6
3.0
2.5
2.1
1.8
Per Share Data (`)
EPS (Basic)
2.2
10.3
13.6
15.8
18.0
20.7
EPS (fully diluted)
2.2
10.3
13.6
15.8
18.0
20.7
Cash EPS
5.6
14.3
18.6
20.9
23.6
26.7
DPS
0.7
1.0
1.5
1.9
2.2
2.5
Book Value
54.3
63.5
75.4
89.3
105.1
123.4
Returns (%)
ROCE
3.5
21.5
22.3
21.7
21.8
21.9
Angel ROIC (Pre-tax)
4.4
29.0
32.1
34.9
36.2
38.8
ROE
3.8
16.2
18.0
17.7
17.1
16.8
Turnover ratios (x)
Asset Turnover (Gross Block)
0.8
1.0
1.1
1.2
1.3
1.3
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
December 5, 2016
9
TV Today Network | 2QFY2017 Result Update
Research Team Tel: 022 - 39357800
E-mail: [email protected]
Website: www.angelbroking.com
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offering of securities of the company covered by Analyst during the past twelve months.
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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)
December 5, 2016
10