Reviews

Reviews

In this edition, we have reviewed Music Broadcast Ltd. and Indian Hotels Co. Ltd. We suggest our reader-investors to HOLD in Music Broadcast Ltd. and Indian Hotels Co. Ltd. 

We had previously recommended Indian Hotels Company Limited in Volume 34, Issue No. 9, dated April 1 – 14, 2019, under the ‘Choice Scrip’ segment based on the company’s healthy margin improvement and reduction in debt. The scrip was then recommended at Rs.150.95. The Indian Hotels Company (IHC) owns, operates and manages hotels, palaces and resorts, both in India as well as internationally.

On a consolidated quarterly front, the company reported net sales of Rs.1,372.72 crore in Q3FY20, increasing by 3.72 per cent from Rs.1,323.45 crore in Q3FY19. The company reported operating profit of Rs.461.91 crore in Q3FY20, up by 31.95 per cent from Rs.350.06 crore reported in Q3FY19. It reported a net profit of Rs.193.73 crore in Q3FY20 as compared to Rs.159.61 crore in Q3FY19, recording a gain of 21.38 per cent. On an annual basis, its net sales were Rs.4,512 crore in FY19, up by 9.95 per cent from Rs.4,103.55 crore in FY18. For FY19, the company reported an operating profit of Rs.913.11 crore, gaining by 24.73 per cent as compared to Rs.732.08crore in FY18.

Net profit recorded for FY19 was Rs.244.59 crore, rising significantly from Rs.63.23 crore in FY18.The ongoing corona virus outbreak has had a severe impact nonon hotel bookings and has led to a loss of business for hotels during the peak season time.

Most of the stocks in the hotel industry are beaten down and selling in such market conditions is not advisable.

Hence, we recommend a HOLD

We had previously recommended Music Broadcast Ltd. in Volume 34, Issue No. 8, dated March 18 – 31, 2019 in the ‘Low Scrip’ segment. The stock was then trading at Rs.48.43 and was recommended based on the company’s growth prospects and financial performance. Music Broadcast Limited, formerly known as Music Broadcast (P) Ltd., owns and operates Radio City 91.1 FM which is a frequency modulation (FM) radio brand and also Planetradiocity.com which is a music portal. Apart from ‘Radio City Fun Ka Antenna’, Planetradiocity.com has around 20 other web radio streams.

On the standalone financial front, the company posted net sales of Rs.69.64 crore in Q3FY20, down by 19.97 per cent from Rs.87.02 crore in Q3FY19. The PBDT was Rs.23.25 crore, indicating a fall of 26.63 per cent in Q3FY20 from Rs.31.69 crore posted in Q3FY19. In Q3FY20, the company gained a net profit of Rs.10.18 crore which is a fall by 37.85 per cent as compared to the net profit of Rs.16.38 crore gained in Q3FY19. On the annual front, new sales came in at Rs.324.71 crore in FY19 as against Rs.298.25 crore in FY18, a growth of 8.87 per cent. The PBDT in FY19 increased by 20.84 per cent to Rs.122.64 crore as compared Rs.101.49 crore posted in FY18. In FY19, the company gained net profit of Rs.61.62 crore, clocking a growth of 19.14 per cent from Rs.51.72 crore gained in FY18.

The company witnessed a weak quarterly performance as the central government category remained muted while non-government ad category failed to show any major improvement. Because of weak government spending, the radio category is expected to witness muted growth, but the Big FM acquisition may be able to provide some long-term benefits.

Thus, we recommend a HOLD.

(Closing price as of Apr 08, 2020)

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