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ENIL - Impressive performance... - ICICIdirect.com
Posted On : 2013-08-18 19:45:52( TIMEZONE : IST )
Entertainment Network India (ENIL) reported its Q1FY14 results, which were way above our expectation on account of strong volume based advertisement growth. The company reported a standalone topline of Rs. 85.2 crore, growing 21.7% YoY, vs. our expectation of Rs. 81.6 crore. The EBITDA margin came in at 35.0%, expanding 584 bps YoY, while the absolute EBTIDA was at Rs. 29.9 crore. The company reported PAT of Rs. 20.1 crore vs. our expectation of Rs. 14.7 crore. ENIL indicated that the radio industry has partly benefited from recent ad rate hikes by television broadcasters on the back of partial implementation of Trai ad inventory cap. However, such a high ad growth may be unsustainable in subsequent quarters. We maintain BUY with a target price of Rs. 282.
Radio benefits from rate hikes, confusion due to television ratings...
The management indicated the radio industry benefited from ad rate hikes taken by broadcasters to mitigate partial implementation of Trai ad inventory hike of 12 minutes/hour. Also, confusion regarding new TAM ratings post digitisation led several media buyers to partly shift their budget to radio advertising. Moreover, search for a cheaper advertisement platform in the backdrop of general slowdown also benefited radio. While it may be difficult to sustain such growth rates in future, management is confident of bettering other media platforms. We factor in 12.6%, 12.4% revenue growth for FY14E, FY15E, respectively.
Phase III auction to get delayed...
The management indicated that the Phase III auction of radio frequencies would be delayed due to industry association's protest to reduce high reserve price, in line with developments in the 2G spectrum auction.
Maintain BUY...
The radio industry, in general, would benefit from price hikes in other mediums and would present itself as a cheaper advertisement alternative in the backdrop of the general economic slowdown. We maintain our target price of Rs. 282 and rate the stock as BUY.
