Buy Entertainment Network; target of Rs 353: Ventura

Ventura is bullish on Entertainment Network India and has recommended buy rating on the stock with a target of Rs 353 in its April 17, 2013 research report.
 
"Entertainment Network (India) (ENIL) is IndiaRs s leading private FM radio player with a market share of ~24 percent. Being closely associated with the Times Group, it is able to leverage its parentRs s strong presence in the print media as well as news broadcasting business to offer integrated advertising solutions to clients. ENIL carries out radio broadcasting across the country under the brand name 'Radio Mirchi'. It has a presence across 14 states with 32 radio stations in 10 different languages. It also provides event management/experiential marketing services under the brands of 360 Degrees, Spell Bee, Gadget Awards, Design Warz and Teen Diva."
 
“We initiate coverage on Entertainment Networks India Ltd (ENIL) as a BUY with a Price Objective of Rs 353. At CMP of Rs 224, the stock is trading at 13.6x and 11.5x its estimated earnings for FY14E & FY15E respectively, representing a potential upside of ~57 percent over a period of 18 months. Being the leading player in the FM broadcasting industry with a market share of ~24 percent and a listener base of over 41 mn, ENIL is well poised to benefit from the Phase III implementation which is expected to happen in FY2014. We expect revenues to grow at a CAGR of 12 percent to Rs 421.3 crore by FY15 on the back of improved advertising spend due to the impending elections to the state and Union parliament. Backed by high utilizations and firm pricing we expect the earnings to grow at a CAGR of 18 percent to Rs 92.6 Crore by FY15. Phase III entails substantial capex and we expect ENIL to bid for 90-100 channels for which Rs 350-400 crore would be the capital outlay.”
 
“For most industry incumbents (excluding ENIL) raising this kind of capital would be a tall order given their stretched balance sheets. However, we foresee no such issues with ENIL as it has ~Rs 220 crore of cash. Further in case of aggressive competitive bidding, the debt component if at all would be meager and not affect the strength of its balance sheet,” says Ventura research report.

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