Buy Ent.Network; target of Rs 820: Motilal Oswal

Motilal Oswal's research report on Ent.Network

Revenue declined 1.5% YoY (+18% QoQ) to INR1, 484m (2% beat) , which  management attributed to a  client -specific issue (now resolved) and the  preponement of the festive season to 2QFY18 (~ INR120m). Excluding th is one -off impact, revenue growth was 4.6% YoY. EBITDA fell 6.6% YoY to INR356m (5% miss) due to weak revenues, with the margin down 130bp YoY to 24% (170bp miss). PAT declined 20% YoY (+119% QoQ) to INR131m (8% miss) due to lower EBITDA and a 9% YoY increase in depreciation from newer stations.

Outlook

The asset monetization phase should drive RoCE to 1 2% by FY20 from meager 5% in FY17. Based on the cut in EBITDA, we lower our TP to INR 820 (INR910 earlier), assigning 15x Dec’19 EV/EBITDA. Maintain Buy. For all recommendations report, click here

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