Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Balaji Telefilms -Marginal positives
Although there were no huge surprises in the
performance of the company, we raise it from a SELL to
HOLD in view of the steep fall in the stock. We will
revisit our rating post 2 quarters if the company
exhibits a healthy performance.
Revenues flat: The revenues for Balaji were in line with
our estimates at Rs 395 mn (variance of 2.6%) growing
by a mere 0.6% YoY and 3.5% sequentially.
Programming hours on an uptick: The number of
programming hours (both sponsored and
commissioned) has been on an uptick increasing to 162
commissioned hours and 187 sponsored hours. The
company has also entered the regional commissioned
programs category with a Marathi show and has plans
to launch a Marathi and a Bengali show in the near
future.
Realizations stable: Realizations were stable at Rs
1.9mn/hr for commissioned programs (Hindi). We
expect these to reach Rs 2 mn/hr in FY12. There was a
slight dip in the realizations for sponsored shows but
we believe they will not dip further.
Other developments: The company is looking to sell
some of its business (Mobile, Internet & Education) and
enter the investment management business. Movie
business is still a small portion of the total and we
believe investment in the business will continue in the
coming quarters.
Upgrade to HOLD: Post the steep fall in the stock
price, we have upgraded the stock to a HOLD rating
with a target price of Rs38 (Rs 30 for Cash and Rs 8 for
the standalone entity at 14x FY12 core PAT).
Uptick in programming hours
Commissioned programming hours have shown a small uptick in last 3 quarters and we expect this
to continue going forward. Though the inherent risk in the business of high churn in the program
continues, we believe that the company needs minimum 6 programmes to maintain a fixed cost.
The company’s foray into regional commissioned programming has been successful and it is in the
process of launching 2 new serials in this category in Marathi and Bengali language in this quarter.
As for sponsored programming Balaji is on track with the programming hours increasing over the
past two quarters. Going forward we believe the company would look at increasing commissioned
programming hours by maintaining realisations rather than try to increase them.
...with stable realisations
Realisations too have stabilised in the commissioned category and we expect them to remain
stable going into FY12 at Rs2mn/hour. We do not expect any further increase as the company is set
to expand programming hours and not just look at higher realisations. In the regional
commissioned category realisations have been at Rs0.3mn/hour and we expect them to remain at
this level for FY12. Though realizations for sponsored programs have dipped slightly on a QoQ basis
from Rs0.35 mn/hr to Rs 0.31mn/hr during the quarter we do not expect this to go lower.
Other developments
The company is taking steps to procure shareholder's approval to : (1) initiate the process for sale of
the following three business divisions of: i) Mobile Division - engaged in providing differentiated
content in audio and video format, mobile-specific content to the telecom companies for mobile
value added service platform; ii) Internet Division - including online talent portal Hoonur.com; iii)
Education Division - represented by the brand ICE - Institute of Creative Excellence, an institute for
imparting media education to train aspirants into media professionals. (2) To get into the
investment management business
The movie business is expected to post revenues of ~Rs400mn with marginally positive operating
income for FY11. We believe the investment in new movies will continue to put pressure on the
operating income as the company has suggested that peak investment would be around Rs700mn
in the movies. Till it has a steady slate of 5-6 movies to be released every year income from this
business would not be substantial but would pose have high risk.
Valuations
We value the stock at Rs38/share valuing the cash at Rs30/share and the standalone business at Rs8
(14x FY12 core PAT excluding other income post tax). We upgrade the stock to Hold from SELL post
the steep fall in stock price. We believe that the risk in the business due to constant churn in
programming hours, not scaling up the movie business along with the new investment
management business make us wary of upgrading the stock to BUY. We will wait for 2 more
quarters for the company to demonstrate healthy performance before we upgrade to BUY.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Balaji Telefilms -Marginal positives
Although there were no huge surprises in the
performance of the company, we raise it from a SELL to
HOLD in view of the steep fall in the stock. We will
revisit our rating post 2 quarters if the company
exhibits a healthy performance.
Revenues flat: The revenues for Balaji were in line with
our estimates at Rs 395 mn (variance of 2.6%) growing
by a mere 0.6% YoY and 3.5% sequentially.
Programming hours on an uptick: The number of
programming hours (both sponsored and
commissioned) has been on an uptick increasing to 162
commissioned hours and 187 sponsored hours. The
company has also entered the regional commissioned
programs category with a Marathi show and has plans
to launch a Marathi and a Bengali show in the near
future.
Realizations stable: Realizations were stable at Rs
1.9mn/hr for commissioned programs (Hindi). We
expect these to reach Rs 2 mn/hr in FY12. There was a
slight dip in the realizations for sponsored shows but
we believe they will not dip further.
Other developments: The company is looking to sell
some of its business (Mobile, Internet & Education) and
enter the investment management business. Movie
business is still a small portion of the total and we
believe investment in the business will continue in the
coming quarters.
Upgrade to HOLD: Post the steep fall in the stock
price, we have upgraded the stock to a HOLD rating
with a target price of Rs38 (Rs 30 for Cash and Rs 8 for
the standalone entity at 14x FY12 core PAT).
Uptick in programming hours
Commissioned programming hours have shown a small uptick in last 3 quarters and we expect this
to continue going forward. Though the inherent risk in the business of high churn in the program
continues, we believe that the company needs minimum 6 programmes to maintain a fixed cost.
The company’s foray into regional commissioned programming has been successful and it is in the
process of launching 2 new serials in this category in Marathi and Bengali language in this quarter.
As for sponsored programming Balaji is on track with the programming hours increasing over the
past two quarters. Going forward we believe the company would look at increasing commissioned
programming hours by maintaining realisations rather than try to increase them.
...with stable realisations
Realisations too have stabilised in the commissioned category and we expect them to remain
stable going into FY12 at Rs2mn/hour. We do not expect any further increase as the company is set
to expand programming hours and not just look at higher realisations. In the regional
commissioned category realisations have been at Rs0.3mn/hour and we expect them to remain at
this level for FY12. Though realizations for sponsored programs have dipped slightly on a QoQ basis
from Rs0.35 mn/hr to Rs 0.31mn/hr during the quarter we do not expect this to go lower.
Other developments
The company is taking steps to procure shareholder's approval to : (1) initiate the process for sale of
the following three business divisions of: i) Mobile Division - engaged in providing differentiated
content in audio and video format, mobile-specific content to the telecom companies for mobile
value added service platform; ii) Internet Division - including online talent portal Hoonur.com; iii)
Education Division - represented by the brand ICE - Institute of Creative Excellence, an institute for
imparting media education to train aspirants into media professionals. (2) To get into the
investment management business
The movie business is expected to post revenues of ~Rs400mn with marginally positive operating
income for FY11. We believe the investment in new movies will continue to put pressure on the
operating income as the company has suggested that peak investment would be around Rs700mn
in the movies. Till it has a steady slate of 5-6 movies to be released every year income from this
business would not be substantial but would pose have high risk.
Valuations
We value the stock at Rs38/share valuing the cash at Rs30/share and the standalone business at Rs8
(14x FY12 core PAT excluding other income post tax). We upgrade the stock to Hold from SELL post
the steep fall in stock price. We believe that the risk in the business due to constant churn in
programming hours, not scaling up the movie business along with the new investment
management business make us wary of upgrading the stock to BUY. We will wait for 2 more
quarters for the company to demonstrate healthy performance before we upgrade to BUY.
No comments:
Post a Comment