ICICI Direct recommended hold rating on Entertainment Network India with a target price of Rs 445 in its research report dated August 08, 2019.
ICICI Direct's research report on Entertainment Network India
ENIL’s Q1FY20 revenue growth of 8.9% YoY was largely led by solutions business (forming 28% of revenues) which grew 42.4% YoY. Radio revenues, on the other hand, were muted with 1.4% YoY growth. EBITDA (excluding Ind-AS 116) came in at Rs 23.7 crore, a drop of 16.6% YoY, while adjusted margins came in at 17.9%, lower than our expectation of 21.3% given the weakness in the core radio segment. Reported PAT came in lower at Rs 3.8 crore, impacted by the weak operating performance as well as impact of Ind-AS (~Rs 2.8 crore on PBT).
Moreover, a recovery in radio ad growth is key for an overall rerating of the stock. Hence, we maintain our HOLD rating with a revised DCF based target price of Rs 445, (implying ~9x FY21E EV/EBITDA).
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