Prabhudas Lilladher's research report on Music Broadcast
While MBL’s revenue of Rs407mn was in-line with our estimates, EBITDA margin of 10.2% surpassed our expectations of 7.5% led by stringent cost control. Total operating cost stood at Rs365mn for the quarter and annualized savings of Rs500-550mn is expected in FY21E. Roughly 50% of the cost savings is expected to be permanent in nature resulting in 300bps margin expansion in a normalized environment post-COVID. Consequently, we increase our FY22E/FY23E EBITDA estimates by 5.0%/4.1% respectively as we bake in the benefits of cost reduction program. In addition, ad-volumes are also recovering (up 1.6x QoQ and 9% YoY) but yields continue to remain under pressure due to promotional discounting. However, management indicated that yields would stabilize by 1QFY22 as promotional offers are gradually withdrawn.
We value the stock at EV/EBITDA multiple of 5.5x (no change) and arrive at a TP of Rs24 given improvement in ad-environment, stringent focus on cost control and expected yield recovery. Our DCF enabled per share value also stands at Rs24, resulting in blended TP (50% weight to each methodology) of Rs24 (earlier Rs23). Re-iterate HOLD.