TV Today Network Ltd - Research Report

 

Private Client Research

Rating

Buy

Sector

TV Broadcasting & Software Production

Company

TV Today Network Ltd

Reco Price
Rs. 256.00
Price Target (1.5 - 2 Years)
Rs. 512.00
Upside
100.00%

Date

March 23, 2017
Sensex
29332.16
CNX Nifty
9086.30

Exchange

Code

NSE
TVTODAY
BSE
532515

Strong viewership for Aaj Tak and a high TRP from India Today will drive their future growth.

Radio business posts sub-par performance, airtime sales agreement a positive:
Tv Today Network Ltd. recently sold four of its radio stations in Jodhpur, Patiala, Shimla and Amritsar for a total consideration of Rs. 4 crores to ENIL. However, due to litigation, MIB denied approval for the remaining 3 stations in Delhi, Mumbai and Kolkata. However, the airtime sales agreement with ENIL could bring in some revival to the radio segment. With this agreement, TV Today will benefit from the relatively wider network of ENIL, in terms of airtime sales, which will boost its revenues from the radio business. Radio business for TV Today has been an underperformer with sub-par growth, with the segment posting losses of Rs. 13.5 crores for FY16. These losses won’t continue for the current year.

Strong viewership ranking in Hindi and English news genre:
Aaj Tak has been able to consistently maintain its dominant position, with a ~25-30% viewership market share. It has continued to maintain its numero uno position in the Hindi news genre as shown by the BARC data in H1FY17. English news channel, India Today, also continues to show traction post several renowned journalists such as Karan Thapar and Rajdeep Sardesai coming on board. India Today’s ad revenues have been growing at a stellar pace and now form ~20% of broadcasting ad revenues.

Subscription revenue to decline temporarily as Aaj Tak forays in the DD Free Dish platform:
TV Today had entered DD’s Free Dish platform for an outlay of Rs. 6.0 crores. Such an entry will help the company garner better rural viewership share and, negotiate better terms with advertisers. However, it has led to renegotiations on subscription deals culminating into a quarterly impact of Rs. 3.0 crores. However, this impact is a temporary blip in the business, and with an increase in viewership ahead, the company would be able to better negotiate the rates with advertisers, thereby increasing its profits in the future.

Rich cash flow for FY17 & FY18:
The company is expected to generate free a cash flow of Rs. 280 crores cumulatively in FY17E and FY18E. This would take its cash content in the balance sheet to Rs. 450 crores, thereby putting it in better position to reward shareholders.

Stock Data

CMP (Rs)
269.40
Face value (Rs)
5
52 Week Range (Rs)
360.00 - 249.10
Market cap (Rs Crores)
1609.75
Price To Book Value (x)
3.03
P/E Ratio (x)
18.21
EV/EBIDTA (x)
8.13

One Year indexed Stock Performance

TV Today Network LtdSensex
TV Today Network Ltd
Return (%)
1m
6m
12m
36m
Absolute
1.76
-13.78
-13.67
147.38
Sensex
1.52
2.32
15.77
32.99

Shareholders

(in %)
31-Dec
Promoter
57.42
Public
42.58
Others
0.00
Total
100

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Industry

The Indian media & entertainment sector is expected to grow at a Compound Annual Growth Rate (CAGR) of 14.3% to touch Rs. 2.26 trillion ($ 33.9 Billion) by 2020, while revenues from advertising is expected to grow at 15.9% to Rs. 99,400 crores ($ 14.91 Billion). India is one of the highest spending and fastest growing advertising market globally. Television segment, which continues to hold highest share of spending, is expected to grow by 12.3% in 2016 and 11% in 2017, led by increased spending by packaged consumer goods brands and e-commerce companies.

Profile

TV Today Network (TTNL) is one of India's leading Hindi-English news television networks. The company's operating segments include television broadcasting and radio broadcasting. The company operates four news channels, which include Aaj Tak, India Today (earlier know as Headlines Today), Tez and Dilli Aaj Tak. It is also engaged in publishing, its publications include India Today, Business Today, etc. The company has hired well know anchors like Karan Thapar and Rajdeep Sardesai in its team. Living Media India Ltd is the holding company for TTNL.

Profit & Loss Statement:- (Consolidated)
(Rs Crores)
Particulars
Mar 15
Mar 16
Mar 17
Mar 18E
Mar 19E
Income:-
  • Net Sales
  • Growth (%)
  • Total Expenditure
  • EBITDA
  • % Margin
  • Other Income
  • Operating Profit
  • Interest
  • PBDT
  • Depreciation
  • Profit Before Taxation & Exceptional Items
  • Exceptional Income / Expenses
  • Tax
  • Profit After Tax
  • Share of Associates
  • Consolidated Net Profit
  • Adjusted EPS
  • 476.56
  • -
  • 344.89
  • 131.67
  • 27.63
  • 22.71
  • 154.38
  • 1.48
  • 152.90
  • 30.02
  • 122.88
  • 0.00
  • 41.85
  • 81.03
  • 0.00
  • 81.03
  • 13.58
  • 546.01
  • 14.57
  • 405.01
  • 141.00
  • 25.82
  • 37.11
  • 178.11
  • 0.19
  • 177.92
  • 30.57
  • 147.35
  • 0.00
  • 53.02
  • 94.33
  • 0.00
  • 94.33
  • 15.81
  • 586.96
  • 7.50
  • 422.61
  • 164.35
  • 28.00
  • 42
  • 206.35
  • 1
  • 205.35
  • 31
  • 174.35
  • 0.00
  • 62.77
  • 111.58
  • 0.00
  • 111.58
  • 18.70
  • 657.40
  • 12.00
  • 470.04
  • 187.36
  • 28.50
  • 55
  • 242.36
  • 1
  • 241.36
  • 31.5
  • 209.86
  • 0.00
  • 75.55
  • 134.31
  • 0.00
  • 134.31
  • 22.51
  • 756.01
  • 15.00
  • 536.76
  • 219.24
  • 29.00
  • 67
  • 286.24
  • 1
  • 285.24
  • 33
  • 252.24
  • 0.00
  • 90.81
  • 161.43
  • 0.00
  • 161.43
  • 27.06
Source: Stockaxis Research, Company Data

Valuation

At a CMP of Rs. 256, the company is trading at a valuation of 9.44x of its FY18E earnings. The company has sustained its leadership position in the Hindi news genre for 14 consecutive years; while in the English news genre, it currently holds the second position. With investments and better TRP, company stands in a better position to negotiate the ad rates and this would be the margin accretive for the company.

We recommend to 'BUY' TV Today Network Ltd with a target price of Rs 512.

 

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