Accumulate Television Eighteen: Edelweiss

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Accumulate Television Eighteen: Edelweiss

Edelweiss Research has maintained accumulate rating on Television Eighteen. The company reported better-than-expected PAT of Rs 199 million for the quarter.

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Edelweiss Research has maintained accumulate rating on Television Eighteen . The company reported better-than-expected PAT of Rs 199 million for the quarter.

Edelweiss Research report on Television Eighteen:

TV 18 reported better-than-expected revenues of INR 804 mn in Q4FY07, a growth of 50.2% Y-o-Y and 24.1% Q-o-Q. Revenues from news operations of CNBC and Awaaz grew 47.8% Y-o-Y while revenues from its web business grew 74.7% Y-o-Y. For the full year FY07, revenues grew 60.1% to INR 2.4 bn. This robust growth in topline is on account of higher ad rates on CNBC, contribution from Awaaz and more than doubling of revenues from internet ventures. While EBITDA margins have remained stable for the news operations, higher investments into its internet ventures have resulted in an overall decline in EBITDA margins. The company reported better-than-expected PAT of Rs 199 mn for the quarter. However, for the full year, the PAT was lower than our expectations because of Rs 142 mn of operating expenses in Q1FY07 on account of consolidation of Awaaz.

With ad spends expected to grow at more than 15% CAGR over FY06-09E and positive outlook on subscription revenues due to implementation of CAS and higher penetration of DTH, we believe that TV 18 with its strong leadership position in the business news genre is well placed to exploit this opportunity. The management of TV 18 has demonstrated excellent execution capabilities by venturing into new businesses to drive future growth of the company. It has built a vast bouquet of portals under Web 18 to capitalize on the internet opportunity. The company is now exploring other avenues like foray into financial daily space and media process outsourcing. After adjusting for INR 2 bn of value of the 10.5% stake in Network 18 (held in a trust) and INR 12 bn of value from its web subsidiary, the stock trades at 31.7x FY09E. We maintain our 'ACCUMULATE' recommendation on the stock.

(Note: e-Eighteen.com, which owns moneycontrol.com and indiaearnings.com is a subsidiary of Television Eighteen).