Prabhudas Lilladher's research report on Music Broadcast
While MBL’s top-line was in-line with our estimates, EBITDA margin of 8.3% was lower than our estimate of 14.0% due to higher than expected other expenses incurred towards digital initiatives. Though yields are yet to recover to pre-COVID levels, ad-volumes were up 9% YoY but lower than industry growth of 20% YoY, as MBL decided to forego low yield business. Overall, we believe this strategy is better as compared to volume at any price, given yields take longer to recover. Given the current quarter performance, we cut our FY23E EBITDA estimates by 25% but broadly maintain our FY24E/FY25E estimates as we build-in gradual recovery in ad-volumes amid improvement in overall macro-environment.
We retain our HOLD rating given strong liquidity position (Rs2,840mn of cash balance as on 1HFY23 which is ~34% of market cap) and strategy to diversify the business (digital to have ~50% share in 5 years) away from radio. We arrive at a TP (50% weight to DCF and EV/EBITDA methodology) of Rs23. We continue to value the stock at 5.5x Sep-24 EBITDA (no change in target multiple).