Prabhudas Lilladher's research report on Entertainment Network (India)
We cut our FY23E/FY24E EBITDA estimates by 21%/9% respectively due to general weakness in ad-environment and slower yield recovery. Going ahead, revival in radio business will be led by volumes which have shown signs of improvement (capacity utilization in legacy/batch-1/batch-2 stations stood at 74.7%/31.4%/26.5% respectively in FY22). In order to diversify out of radio business (low growth market), ENIL is taking steps to increase exposure to core solutions & digital business which is expected to form ~50% of the top-line in FY25E.
On digital front, Mirchi app has already been unveiled in international markets and India launch is expected by May end. While Mirchi’s diversification efforts are commendable we await green shoots on delivery front and retain HOLD on the stock with a TP of Rs184 (earlier Rs200). Our TP is based on 50% weight to EV/EBITDA methodology with per share value of Rs93 (5x FY24E EBITDA; no change) and 50% weight to DCF approach with per share value of Rs92.
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