HDFC Securities is bullish on Music Broadcast has recommended buy rating on the stock with a target price of Rs 387 in its research report dated October 26, 2018.
HDFC Securities' research report on Music Broadcast
Music Broadcast Limited (MBL) 2QFY19 results were in-line but weak. Revenue/EBITDA/PAT grew by 5.7/9.7/5.1% YoY. PAT lagged EBITDA owing to higher tax expense (39% of PBT). Hope pinned on sharp revival in 2HFY19 led by festive season and elections. Mgmt reiterates its 12-14% YoY revenue growth guidance (1HFY19 7%). Small industry size of Rs 20-25bn, being an add-on medium and for free; we believe that the impact from digital/data revolution should be limited on radio, in-line with the management. Led by Phase-III expansion in new markets, utilization and modest price increases in established markets; the radio industry should be able to deliver high single-digit growth.
We like MBL owing to its superior execution, focused strategy of geographic then multi-frequency expansion in same markets, healthy balance sheet (Rs 2bn C&CE), return ratios and cash flows. Reiterate BUY with TP of Rs 387 (25x Sep-20E FCFE/sh).