TV18 Broadcast - Diwali Pick 2012 - GEPL Capital

- Focus on improving distribution

- Rights Issue to reduce debt

- Positive view going forward

- Losses would be washed-out

The ongoing stress on its profitability is expected to conclude once subscription revenues of the company become substantial, as being recurring in nature, it tends to lend high stability to the overall profitability of the broadcasters in difficult ad spend environment. We value the company on EV/Sales basis as we believe that media is still the sunrise sector in the Indian markets. Using FY2014 sales estimate post the rights issue completion and the ETV acquisition.

Since the company operates in 2 major segments, Media Operations and Film Production & Distribution, we value the company on an SOTP basis to arrive at the target price of Rs.37 per share indicating a potential upside of 30%.

Source : Equity Bulls

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