HDFC Sec turns bullish on radio stocks, bets on ENIL & Music Broadcast

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26 Aug, 2025 12:21

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HDFC Securities is betting on radio stocks given the rising consumer sentiment, growth in advertising revenues and upcoming assembly and Lok Sabha elections. It feels the radio sector may witness healthy cash flows on the back of high operating leverage as well as low maintenance capex.

“The sector reported a healthy 17 percent advertising revenue growth over FY14-16, despite stagnant advertising inventory. Over FY16-18e, revenue growth struggled at 4.7 percent CAGR, despite a 33 percent estimated addition to advertising inventory from new frequency additions.”

Among key risks, it cites delayed economic revival and its impact on advertising growth. Additionally, it said that threats from televisions, CDs and DVDs have also sustained.

It has initiated coverage on two major players in this space - Entertainment Network India and Music Broadcast – with an upside target of up to 27 percent.

HDFC Securities expects Music Broadcast to deliver superior growth and return ratios. But was quick to add that its limited footprint would restrict opportunities if the industry grows quickly. For Music Broadcast, the brokerage has a buy call with a target of Rs 492 per share, an upside of 27 percent to Tuesday’s closing price.

The research firm pointed out expanding network of its radio stations from 20 in 2015 to 39 at present, including eight Radio Mantra stations acquired from Jagran Group and 11 acquisitions in phase III as well. It expects Music Broadcast to register healthy revenue and earnings CAGR of 13% and 22% over FY18-20e, respectively. “Core RoCE will improve from 11.8% to 19.1%.”

On ENIL, the brokerage has a buy call with a target price of Rs 827 per share, an upside of over 20 percent to Tuesday’s closing price. It cites economic tailwinds, higher utilisation and price increases in established stations along with contributions from new stations as reasons to bet on the stock.

“Over FY16-18e, ENIL’s operational stations expanded to 52 from 32. Yet, its revenue, EBITDA and PAT grew by 3/-15/-46% CAGR, respectively. This is owing to an economic slowdown and company specific issues in FY18. Launch of new stations accentuated the decline.”