IBN18 Q2FY11 results quick take – Good numbers - no surprise - Elara Capital

IBN18 Q2FY11 results are in line with our expectation, with moderate EBITDA profits and marginal loss. Results include numbers from business news channels of TV18. Please find below key highlights;

- IBN18 general news channels posted 29% jump in revenues on a YoY basis. The segment continues to bleed as the new channels are still in investment mode. However, the recent impressive ratings gain for both CNN-IBN (became and remained number one general English news channel) and IBN7 ( became number three Hindi general news channel) during the quarter signals strong recovery in profitability in Q3FY11E. We maintain our EBITDA loss expectation of INR105mn for FY11E.

- Viacom18 performed in line with revenue growth of 36% and PAT of INR140mn. Revenue growth during the quarter was subdued due to mild subscription revenue growth, as the company is still in process of setting up distribution infrastructure under Sun18, which would start contributing meaningfully from Q3FY11E onwards. We maintain our estimates for FY11E for now (pending concall tomorrow).

- Business news channels continued to stage smart revival in profitability with EBITDA of INR200mn, as against INR11mn in Q2FY10, as the company reaps benefits of cost cutting exercise done in Q3FY10. Revenue growth for the quarter was modest at 5%, due to presence of union budget in Q2FY10, however a fall of 25% in operating expenditure from last led to company posting a PAT of INR70mn, as against loss of INR331mn. The segment remains on track for meeting our EBITDA expectation of INR819mn for FY11E.

Valuation

IBN18 performance so far has been on expected lines, thus giving no reasons to upgrade target price. The stock is near our recommended target price or INR121, indicating limited upside from here. We will take a call on our recommendation post the management concall tomorrow.

Source : Equity Bulls

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