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Entertainment Network (India)
Limited Overweight
ENIL.NS, ENIL IN
Strong volumes drive earnings in seasonally weak Q1
ENIL reported strong Q1 earnings driven by higher volumes and better
pricing. Management expects further improvements in subsequent quarters as
demand picks up post a seasonally weak 1Q. Remain OW with Mar-12 PT of
Rs335.
Strong 1Q performance: ENIL reported strong performance in Q1 driven
by better inventory utilisation and pricing. Inventory utilisation in Tier I
cities improved marginally, though Tier II cities fared much better on
volumes. Pricing (+3%), on the other hand, was driven primarily by hikes in
Tier I cities. Management expects this trend to continue with Tier II cities
driving volumes, while Tier I cities are likely to see better pricing on tight
inventory.
Phase III time line. Management noted that Phase III guidelines are
expected in the next six months (by end of CY2011) with the bidding
process to take another 1-2 months (end FY12). Management expects
another 6-8 months to ramp up the operations in Tier III cities and noted
that the impact of Phase III should be visible only by Q4FY13. We are not
yet factoring Phase III scenario into our estimates and await final regulatory
guidelines on the same.
Q1FY12 results highlights. Revenues increased 8% YoY driven by
volumes (+5% YoY) and pricing (+3% YoY). EBITDA margins improved
470bps YoY driven by lower royalties and marketing expenses. Net profits
increased 124% YoY, buoyed by higher non-operating income (on
investments made from higher cash balance) and lower tax rates.
Well-positioned to benefit from Phase III, remain OW. We believe that
ENIL with its leading position in the private FM radio industry, strong brand
and solid balance sheet is well-positioned to benefit from the roll-out of
Phase III licenses and other regulatory changes (networking, multiple
stations, etc). Remain OW with Mar-12 PT of Rs335 based on 22x FY13E
P/E. Key risks include aggressive bid for Phase III licences, rise in
competitive intensity, entry into non-core segments and adverse legislation.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Entertainment Network (India)
Limited Overweight
ENIL.NS, ENIL IN
Strong volumes drive earnings in seasonally weak Q1
ENIL reported strong Q1 earnings driven by higher volumes and better
pricing. Management expects further improvements in subsequent quarters as
demand picks up post a seasonally weak 1Q. Remain OW with Mar-12 PT of
Rs335.
Strong 1Q performance: ENIL reported strong performance in Q1 driven
by better inventory utilisation and pricing. Inventory utilisation in Tier I
cities improved marginally, though Tier II cities fared much better on
volumes. Pricing (+3%), on the other hand, was driven primarily by hikes in
Tier I cities. Management expects this trend to continue with Tier II cities
driving volumes, while Tier I cities are likely to see better pricing on tight
inventory.
Phase III time line. Management noted that Phase III guidelines are
expected in the next six months (by end of CY2011) with the bidding
process to take another 1-2 months (end FY12). Management expects
another 6-8 months to ramp up the operations in Tier III cities and noted
that the impact of Phase III should be visible only by Q4FY13. We are not
yet factoring Phase III scenario into our estimates and await final regulatory
guidelines on the same.
Q1FY12 results highlights. Revenues increased 8% YoY driven by
volumes (+5% YoY) and pricing (+3% YoY). EBITDA margins improved
470bps YoY driven by lower royalties and marketing expenses. Net profits
increased 124% YoY, buoyed by higher non-operating income (on
investments made from higher cash balance) and lower tax rates.
Well-positioned to benefit from Phase III, remain OW. We believe that
ENIL with its leading position in the private FM radio industry, strong brand
and solid balance sheet is well-positioned to benefit from the roll-out of
Phase III licenses and other regulatory changes (networking, multiple
stations, etc). Remain OW with Mar-12 PT of Rs335 based on 22x FY13E
P/E. Key risks include aggressive bid for Phase III licences, rise in
competitive intensity, entry into non-core segments and adverse legislation.
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