Prabhudas Lilladher's research report on Entertainment Network (India)
While ENIL’s top-line of Rs1,031mn was in-line with our estimate, there was a miss at bottom-line level due to an exceptional loss of Rs178mn pertaining to impairment provision in the US and Bahrain businesses on account of COVID. Going ahead, revival in radio business will be led by volumes which have shown signs of improvement (up 20% during 1HFY23 in top-21 markets over pre-COVID base) while yields would take longer to recover. 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. While Mirchi’s diversification efforts are commendable we await green shoots on delivery front as losses on digital business will have to be absorbed in the initial phase.
We keep our estimates broadly unchanged and expect sales/EBITDA CAGR of 9%/19% respectively over FY23-FY25E and retain HOLD on the stock with a TP of Rs189. Our TP is based on 50% weight to EV/EBITDA methodology with per share value of Rs96 (6x Sep-FY24E EBITDA; no change in target multiple) and 50% weight to DCF approach with per share value of Rs93.