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TV Today Network SELL
Maintained
From bad to worse Rs80
Reason for report: Q2FY11 results review
TV Today Network (TVTN) continued the poor performance in Q2FY11, in line with
peers. TV broadcasting business’ revenues were down 8% QoQ and 7% YoY with
EBIT loss at Rs41mn. Consolidated EBITDA turned red with losses of Rs79mn.
Radio business continued to post higher losses with revenues down QoQ at
meagre Rs6.8mn vis-à-vis Rs8.7mn in Q1FY11. We continue to remain negative on
news broadcasting players post Q2FY11 earnings – Zee News’ revenues fell 10%
QoQ whereas IBN18 News’ (CNN IBN + IBN7 + IBN Lokmat) were down 2.5% QoQ
with a revenue loss of Rs231mn. We maintain our target price at Rs75/share and
recommend exiting out, as the fundamentals of TV business will continue to
worsen and increasing investments in loss-making radio and print is reducing
cash on books. Maintain SELL.
Television broadcasting turns in losses. Revenues from television broadcasting
dropped 8% YoY and 7% QoQ to Rs596mn, resulting in an EBIT loss of Rs41mn.
Consolidated EBITDA also disappointed with losses at Rs79mn vis-à-vis our
estimate of profit of Rs87mn.
Radio revenues were at meagre Rs6.8mn in Q2FY11 as compared to Rs8.7mn in
Q1FY11. Radio EBIT losses widened to Rs64mn in Q2FY11 from Rs43mn in
Q1FY11.
Consolidated business reports losses. TVTN reported Rs76mn losses in
Q2FY11, much lower than our estimate of a profit of Rs45mn. This was mainly on
account of lower-than-expected revenues in TV broadcasting segment and higher
losses in radio business.
Lower cash levels. Total cash levels for the group have further reduced to
Rs620mn in Q2FY11 from Rs800mn in Q1FY11. Investments and loans and
advances include Rs277mn and Rs92mn respectively made in Mail Today
Newspapers as part of the strategic investment.
We revise our earnings downward post Q2FY11 results and maintain SELL on
TVTN with a target price of Rs75/share.
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