Recommendation From Broadcasting & Cable TV Sectors

 section gives a recommendation of a stock having stock margin padding price below Rs 100 with sound fundamentals and expected to give handsome returns over a one-year time horizon

TV18 Broadcast 

GETTING THE CONTENT RIGHT TO DRIVE GROWTH 

HERE IS WHY
Very positive quarterly performance
Attractive valuations
Promising growth prospects 

TV18 is on an expansionary mode and has quickly become one of the leading media companies in India. TV18 has one of the widest range of channels (49) in the industry. The company's focus in increasing its regional footprints and strengthening its digital presence seems to be paying off well. The upcoming election period augurs well for TV 18. 

The media industry in India is on a growth trajectory and has witnessed rapid transformation in the recent past. The changing demographics along with evolution of content sensibilities is pushing the growth for the media industry. For any media company, the content is key. The innovative content that appeals to maximum people and delivered in the cutting-edge formats is the key for future growth for TV18, as for any other media company. For its growth, TV18 is relying on its thought leadership, incisive content, widening reach, strategic collaborations, network synergy and brand power.



TV18 intends and is well-poised to tap the growing regional markets. The demand for vernacular content increases even as the advertising markets get deeper. TV18 Broadcast Limited is a subsidiary of Network 18 Media & Investments Limited. 

Despite not being the market leader in the Hindi news market, TV18 has managed to maintain industry level operating margins, which we believe is due to its ability to strike wholesome deals. With the Panorama division having stabilised across several other markets, we anticipate content syndication benefits to accrue for TV18 from a medium term perspective. TV18 continues to invest heavily in anchors, which is way higher than its competitors, which could be the key drivers of its medium to long term growth. Digital proliferation could lead to additional monetisation. 

On the financial front, the company’s net sales have jumped 25 per cent to Rs 233.82 crore in Q2FY19 as against Rs 186.42 crore in the same quarter of the previous year. The PBIDT has witnessed a growth of 9.89 per cent to Rs 31.2 crore in Q2FY19 as against Rs 28.37 crore in the same quarter of the previous year. The profit after tax (PAT) is however down by 36 per cent in Q2FY19 and stood at Rs 11.72 crore versus Rs 18.58 crore in Q2FY18. 

On the annual front, the company’s net sales has increased by 10 per cent and came in at Rs 735.45 crore in FY18, while in FY17 it was Rs 666.81 crore. The PBIDT of the company has also gone up 16 per cent and came in at Rs 186.38 crore in FY18 as against Rs 159.08 crore in the previous fiscal. However, the PAT has gone down marginally by 4 per cent and came in at Rs 96.37 crore in FY18, while in the previous fiscal it was Rs 101.46 crore. 

On the valuation front, the company’s return on equity (RoE) stood at 2.57 per cent and the return on capital employed (RoCE) was 4.14 per cent. The company is available at a PE multiple of 74.57x on its TTM earnings, as against the industry PE of 23.89x. Owing to the improvement in the company's profitability going into FY19 and improving traction in revenues and operating leverage, we recommend investors to BUY this stock.

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