ICICI Direct is bullish on TV Today Network has recommended buy rating on the stock with a target price of Rs 340 in its research report dated May 21, 2019.
ICICI Direct's research report on TV Today Network
TV Today reported a weak set of numbers as the dual impact of new tariff order (NTO) and pre-emptive volume cut to improve ad volume led to a steep decline in TV broadcasting revenues of 11% YoY to Rs 141.5 crore. We note that this was a steeper decline than Zee Media and TV18 (business, national news) that reported 3.9% YoY and 1% YoY revenue decline for the quarter, respectively, due to NTO impact. The overall topline at Rs 165.7 crore was down 8.6% YoY. The performance of the radio business was also weak as it reported ~32% YoY revenue decline (albeit on a small base) to Rs 4.7 crore. Digital revenues grew 24% YoY to Rs 19.5 crore. Given the weak topline show, the margins declined by 1000 bps YoY to 18.8%.
TV Today has maintained its leadership in the Hindi news segment across cycles and enjoys a strong balance sheet with net cash of~ Rs 287 crore. The TV news broadcasting growth, going ahead, is expected to be strong on political advertisement related benefits and also on a favourable base. The stock has corrected ~30% in the last six months and offers favourable risk reward. We roll over our valuations to FY21 valuing it at 12x FY21E P/E vs. 13x FY20E earlier to arrive at a target price Rs 340/share (vs. Rs 350 earlier). We upgrade the stock from HOLD to BUY.
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