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Research
ENIL - Best margins ever - Centrum
Posted On : 2012-02-02 11:59:20( TIMEZONE : IST )
ENIL posted results in line with expectations for Q3FY12 with 1% YoY de-growth in advertising revenues. Best ever margins of 41% on the back of 48% YoY decline in admin & other expenditure to Rs109mn followed by net credit of Rs33.9mn for Private Treaty provision boosted operating profit by 10% YoY to Rs310mn, while PAT grew by 46%YoY. We maintain BUY rating on the stock but lower our FY12/FY13 estimates on the back of lower ad growth.
Results in line with expectations: ENIL posted 2.4%YoY de-growth in revenue to Rs756mn on the back of slowdown in advertising revenues. Operating profit for the company was higher by 10% YoY to Rs310mn on the back of 465bps margin expansion to 41%. PAT was 45.8% YoY and 9.4% above our estimates to Rs182mn.
Ad revenue under pressure: Advertising revenue for the company was under pressure at 1% YoY de-growth. The revenue from the top 8 stations grew by 1% while that of remaining stations de-grew 5% YoY led by 8% drop in blended realizations on back of change in sectorial mix with FMCG and telecom showing significant slowdown. Blended utilization levels for the company grew to 69% from 64% in Q3FY11.In 9MFY12 the company posted 5.8% YoY growth in ad revenues and we expect this to grow by 2% in FY12 while we have modeled 12% growth for FY13E.
Other developments: In the events business the company posted revenues of Rs12mn with PAT of Rs1.1mn. ENIL has also entered into an agreement with Abu Dhabi Media Company and is expected to launch a radio station in UAE on February1, 2012 and believes that the UAE market ad market size is Rs5-6bn. Company expects the Phase-III auction to commence in Q1FY13.
Best margins ever: Company posted its best ever operating margins of 41%, up 465bps YoY on the back of low significant decline in other expenditure. Admin & other expenditure declined by 48% YoY to Rs109mn led by net credit of Rs33.9mn for Private Treaty provision compared to Rs36.9mn in Q3FY11. Employee expense for the quarter was up 23.4% YoY due to increase in headcount, annual increments and provision for incentives. Marketing cost for the company was up 26% on the back of expenses by Mirchi properties.
Estimates lowered; Maintain BUY: We have lowered our earning estimates for FY12/FY13 factoring in lower ad revenue growth while we have expanded margins for both FY12/FY13. The stock is currently trading at 21.2x FY12E and 17x FY13E standalone EPS of Rs10.8 and Rs13.5, respectively. We maintain BUY rating on the stock with a target price of Rs271 (valuing the stock at 20x FY13E EPS).
