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ENIL: Radio numbers encouraging…
ENIL’s standalone numbers were in line with our expectation with
topline at | 74.57 crore, growing 17.7% YoY. On a consolidated basis,
the company reported a topline of | 142.9 crore against our expectation
of | 110 crore, partly due to inclusion of OOH business financials till
December 29, 2011 against our expectation of November 30, 2011.
Standalone EBITDA stood at | 28.2 crore while the margin was 36.4%,
against 33.2% in Q3FY10, aided by a variable royalty regime. ENIL
reported standalone PAT of | 24.9 crore that included | 12.4 crore from
sale of its stake in TIM to BCCL. However, on a consolidated level, the
company reported a net loss of | 5.2 crore due to a loss of | 17.9 crore
on account of sale of OOH business to BCCL (carrying cost was higher
in consolidated books, in line with stake sale to Goldman and Lehman).
Highlights for the quarter
Growth in radio revenues was encouraging, especially with smaller
cites gaining traction. Revenue from the radio business grew 17.7%
YoY to | 74.6 crore from | 63.3 crore in Q3FY10. The company
registered an average yield of over | 10,000 per 10 second slot
across the network. The EBITDA margin in the radio business
increased to 36.4% primarily due to a change in the royalty fee
structure. Also, margins in the 22 smaller stations increased to
27.0% from 20.4% in Q3FY10.
Valuation
We have valued the company on an SOTP basis, evaluating the radio
business on DCF and event business on EV/sales. Assuming revenue
CAGR of 8.6% over FY11E–FY20E and terminal growth of 4%, thereon,
we have arrived at a target price of | 244/share for the radio business. We
have valued the event business at 1x FY12 EV/sales to arrive at a
valuation of |10.3/share. The stock is currently trading at | 214. Our target
price implies an upside potential of 19%. We rate the stock as BUY.
Result Analysis
Radio revenue – on a strong trend
The radio segment exhibited an encouraging trend with revenue growing
17.7% YoY to | 74.6 crore from | 63.3 crore in Q3FY10. The 22 smaller
stations have witnessed growth of 11.0% YoY with capacity utilisation
increasing to 54.0% from 46.3% in Q3FY10. Top 10 stations reported
growth of 20.2% to | 56.0 crore. The company registered an average
yield of over | 10,000 per 10 second slot across the network. Inventory
utilisation for the quarter stood at 62.3% as compared to ~58% in
Q2FY11.
EBITDA and PAT margin
The standalone EBITDA margin was impressive at 36.4% with margins in
the smaller 22 stations improving to 27.0% from 20.4% in Q3FY10 on
revenue linked royalty fees.
The standalone PAT margin was at 32.1% as compared 16.9% in Q3FY10
and 8.0% in Q2FY11, primarily due to profit of | 12.4 crore on transfer of
the OOH business to BCCL.
Outlook & Valuations
Outlook
The company reported standalone results in line with our expectations.
ENIL has a cash reserve of | 94.0 crore and is best placed to participate in
the Phase III radio auction. The government has announced e-auction of
licenses in Phase III and extended the license period from the current 10
years to 15 years.
Valuation
SOTP based valuation of | 254/share
We have valued the company on an SOTP basis, evaluating the radio
business on DCF and event business on EV/sales.
Assuming revenue CAGR of 8.6% over FY11E–FY20E and terminal growth
of 4%, thereon, we have arrived at a target price of | 244/ share for the
radio business. We have valued the event business at 1x FY12 EV/sales to
arrive at a valuation of |10.3/share.
Our SOTP target price of | 254 discounts the FY12E EPS of | 8.4 by 25.5x.
The stock is currently trading at | 214. Our target price implies an upside
potential of 19%. We rate the stock as BUY.
Exhibit : DCF assumptions
| in Crore
WACC 12.8%
Revenue CAGR over FY11-20E 8.6%
Present Value of Cash Flow till FY20E 567.6
Terminal Growth 4.0%
Present Value of terminal cash flow 536.0
Total present value of the firm 1,103.6
Less: Current Debt 0.0
Total present value of the Equity (excluding current cash) 1,103.6
Number of Equity Shares outstanding 4.77
Per Share Value (excluding current cash) 231.5
Add Current Cash Per Share 12.3
DCF - Target price (|) 243.8
Source: Company, ICICIdirect.com Research
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
ENIL: Radio numbers encouraging…
ENIL’s standalone numbers were in line with our expectation with
topline at | 74.57 crore, growing 17.7% YoY. On a consolidated basis,
the company reported a topline of | 142.9 crore against our expectation
of | 110 crore, partly due to inclusion of OOH business financials till
December 29, 2011 against our expectation of November 30, 2011.
Standalone EBITDA stood at | 28.2 crore while the margin was 36.4%,
against 33.2% in Q3FY10, aided by a variable royalty regime. ENIL
reported standalone PAT of | 24.9 crore that included | 12.4 crore from
sale of its stake in TIM to BCCL. However, on a consolidated level, the
company reported a net loss of | 5.2 crore due to a loss of | 17.9 crore
on account of sale of OOH business to BCCL (carrying cost was higher
in consolidated books, in line with stake sale to Goldman and Lehman).
Highlights for the quarter
Growth in radio revenues was encouraging, especially with smaller
cites gaining traction. Revenue from the radio business grew 17.7%
YoY to | 74.6 crore from | 63.3 crore in Q3FY10. The company
registered an average yield of over | 10,000 per 10 second slot
across the network. The EBITDA margin in the radio business
increased to 36.4% primarily due to a change in the royalty fee
structure. Also, margins in the 22 smaller stations increased to
27.0% from 20.4% in Q3FY10.
Valuation
We have valued the company on an SOTP basis, evaluating the radio
business on DCF and event business on EV/sales. Assuming revenue
CAGR of 8.6% over FY11E–FY20E and terminal growth of 4%, thereon,
we have arrived at a target price of | 244/share for the radio business. We
have valued the event business at 1x FY12 EV/sales to arrive at a
valuation of |10.3/share. The stock is currently trading at | 214. Our target
price implies an upside potential of 19%. We rate the stock as BUY.
Result Analysis
Radio revenue – on a strong trend
The radio segment exhibited an encouraging trend with revenue growing
17.7% YoY to | 74.6 crore from | 63.3 crore in Q3FY10. The 22 smaller
stations have witnessed growth of 11.0% YoY with capacity utilisation
increasing to 54.0% from 46.3% in Q3FY10. Top 10 stations reported
growth of 20.2% to | 56.0 crore. The company registered an average
yield of over | 10,000 per 10 second slot across the network. Inventory
utilisation for the quarter stood at 62.3% as compared to ~58% in
Q2FY11.
EBITDA and PAT margin
The standalone EBITDA margin was impressive at 36.4% with margins in
the smaller 22 stations improving to 27.0% from 20.4% in Q3FY10 on
revenue linked royalty fees.
The standalone PAT margin was at 32.1% as compared 16.9% in Q3FY10
and 8.0% in Q2FY11, primarily due to profit of | 12.4 crore on transfer of
the OOH business to BCCL.
Outlook & Valuations
Outlook
The company reported standalone results in line with our expectations.
ENIL has a cash reserve of | 94.0 crore and is best placed to participate in
the Phase III radio auction. The government has announced e-auction of
licenses in Phase III and extended the license period from the current 10
years to 15 years.
Valuation
SOTP based valuation of | 254/share
We have valued the company on an SOTP basis, evaluating the radio
business on DCF and event business on EV/sales.
Assuming revenue CAGR of 8.6% over FY11E–FY20E and terminal growth
of 4%, thereon, we have arrived at a target price of | 244/ share for the
radio business. We have valued the event business at 1x FY12 EV/sales to
arrive at a valuation of |10.3/share.
Our SOTP target price of | 254 discounts the FY12E EPS of | 8.4 by 25.5x.
The stock is currently trading at | 214. Our target price implies an upside
potential of 19%. We rate the stock as BUY.
Exhibit : DCF assumptions
| in Crore
WACC 12.8%
Revenue CAGR over FY11-20E 8.6%
Present Value of Cash Flow till FY20E 567.6
Terminal Growth 4.0%
Present Value of terminal cash flow 536.0
Total present value of the firm 1,103.6
Less: Current Debt 0.0
Total present value of the Equity (excluding current cash) 1,103.6
Number of Equity Shares outstanding 4.77
Per Share Value (excluding current cash) 231.5
Add Current Cash Per Share 12.3
DCF - Target price (|) 243.8
Source: Company, ICICIdirect.com Research
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