Recommendation from Media & Entertainment
This section gives a recommendation of a stock having stock price below Rs 100 with sound fundamentals and expected to give handsome returns over a one-year time horizon.
TV 18 BROADCAST LIMITED : PROJECTING A PROFITABLE FUTURE
HERE IS WHY
β Good financial improvement
β Good growth prospects
β Focus on cost reduction
TV18 Broadcast Limited is an Indian entity belonging to the Network 18 Group based in Mumbai. It owns and operates various channels of the NBC Universal Group for Indian viewers such as CNBC TV18, CNBC Awaaz and CNBC-TV18 Prime HD as well as Warner Media – CNN News18. TV18 owns and operates the broadest network of channels – 56 in India spanning news and entertainment. The company also caters to the Indian diasporas globally through 16 international channels. One in every two Indians is a consumer of TV18 broadcast content. The group has 10.5 per cent share of news viewership and 9.5 per cent entertainment viewership share.
The Government of India has supported the industry’s growth by taking various initiatives such as digitising the cable distribution sector to attract greater institutional funding, increasing FDI limit from 74 per cent to 100 per cent in cable and DTH satellite platforms, and granting industry status to the film industry for easy access to institutional finance. The company reported net sales of Rs 1,360.95 crore in December 2020, down by 4.52 per cent from Rs 1,425.37 crore in December 2019. Its PBIDT was Rs 320.70 crore in December 2020, up by 14.38 per cent from Rs 280.37 crore in December 2019. Advertisement revenue recovery and cost efficiency drove its entertainment PBIDT margin to 24.33 per cent, its highest ever.
It reported net profit of Rs 361.14 crore in December 2020 against net profit of Rs 189.79 crore in December 2019 – an increase of 90.28 per cent. The company reported PBIDT of Rs 703.41 crore in FY20, an increase of 124.35 per cent. It had reported PBIDT of Rs 313.53 crore in FY19. The company reported PAT of Rs 377.52 crore in FY20, an increase of 116.12 per cent. It had reported PAT of Rs 174.68 crore in FY19. The company has reported cash from operating activities of Rs 152.81 crore in FY20 as against negative cash from operating activities of Rs 125.7 crore reported in FY19.
The entertainment industry has fully recovered from the impact of the pandemic, led by programming returning to normalcy and high-impact content driving advertising yields up during the festive season. The resumption of original programming has also driven TV consumption and monetisation back to normalcy, even as digital adoption grows in tandem. The benefits of cost controls taken by the company over the past year are now visible as both the verticals are at much improved profitability levels. Digital consumption of media continues to gain traction and currency, both through direct-to-customer offerings and telco bundling.
In telco bundling subscribers are offered a free trial to a digital service for a period of time, as long as they remain subscribed to a telco plan. The company’s domestic subscription revenue has remained strong. Improved distribution tie-ups for TV and digital continue will drive subscription growth. The digital media has gained momentum led by network content core, interactivity and distribution thrust. A strong focus on vernacular content curation and expansion of its digital outreach to the widest possible audience will play a major role in the long term. The company has also reduced its debt. By virtue of these factors, we recommend our reader-investors to BUY this stock.
