Recommendation from Media & Entertainment Sector
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.
Network 18 And Media Investments : Entertainingly Profitable
HERE IS WHY
✓Market leader in multiple genres S
✓Strong brand portfolio
✓Improving financial health
Network 18 and Media Investments is the second-largest digital media publisher in India with diversified but synergistic interests in the television sector with its bouquet of 56 channels in India and 20 international channels, besides filmed entertainment, digital content, magazines, digital commerce and allied businesses. Network 18 and Media is promoted by Independent Media Trust of which Reliance Industries is the sole beneficiary. One in two Indians daily spends on an average half an hour watching Network 18 TV channels. The company has a vast presence in the entertainment industry with Money Control in digital content, News 18 and First Post in news and opinion.
It has Voot and Voot Select in OTT (over-the-top) platforms, Book My Show in ticketing, Forbes and Overdrive in publications apart from its main TV broadcasting business. The company reported net sales of Rs 4,705 crore in FY21 compared to Rs 5,357 crore in FY20. That is de-growth of nearly 12.2 per cent. The pandemic affected revenues coming from advertisement in H1FY21. The EBIDTA stood at Rs 840 crore in FY21 as against Rs 652 crore in the previous year.
That is a growth of over 28.8 per cent. Its operating margins have shot up in the last couple of years. These stood at 16.9 per cent in FY21 as against 11.5 per cent in the previous year.
The company has significant minority interest in its books. PAT after adjusting for minority interest stood at Rs 32 crore while in the previous year it had faced net losses of Rs (237) crore. The profitability was attributable to significant reduction in debt and interest cost. A strong cash balance was witnessed with a multi-fold jump that can be seen in the cash flows from operating activities increasing from Rs 78 crore in FY20 to Rs 1,346 crore in FY21. Net sales for the quarter ended September 2021 came in strong at Rs 1,387 crore which grew by 14.23 per cent sequentially and 31 per cent on YoY basis.
The EBITDA (exclusive of other income) was Rs 252 crore which saw an increase of 34 per cent QoQ and 52 per cent YoY. The net profit attributable to owners was at Rs 32 crore, again a jump of almost four times sequentially. The ROE stood at 6.08 per cent while the ROCE was strong at 20.55 per cent. The stock is trading near the PE multiple of 56.7. The company’s subsidiary TV 18 Broadcast manages its primary business of broadcasting. It runs the largest news network in India, spanning business news, sports, general news, etc. Its TV entertainment viewership share as of FY21 stood at 10.2 per cent. It has about 8.9 per cent viewership share of news genre on TV.
The company has built successful alliance with globally reputed media players like Viacom, CNBC, CNN, A+E Networks and Forbes. It has channels available in various languages. The brand portfolio consists of some relatively young TV channels such as Colors, Colors Cineplex and it also offers global entertainment flavours through populars channels like MTV, Nick and CNBC with a local twist. It has emerged as a market leader in multiple genres. Voot has become the second-largest broadcaster-OTT in India, which is currently a buzzing media platform. Money Control is the leader in its genre by page views. It ranks on the top when it comes to kids’ entertainment, English entertainment and business news channel. Considering its sheer presence in the entertainment industry and other factors, we recommend our reader-investors to BUY the scrip.