Hold Entertainment Network India; target of Rs 180: ICICI Direct

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ICICI Direct's research report on Entertainment Network India

Entertainment Network India (ENIL) reported a weak set of Q4FY20 numbers. Revenues came in at Rs 151.8 crore (down 13.6% YoY) with core radio revenue de-growth of ~16% YoY in Q4FY20. The solutions business witnessed 12% YoY decline in revenues. Reported EBITDA came in at Rs 23 crore while margins came in at 15.1%. Adjusted for Ind-AS, like to like EBITDA came in at ~Rs 14 crore, drop of ~67% YoY, while adjusted margins were at ~9%. Weaker topline and high employee expenses resulted in EBITDA decline. Subsequently, the company reported a net loss of Rs 3.2 crore against net profit of Rs 19.4 crore in Q4FY19.

Outlook

We believe weakness in ad revenue will persist till H1FY21E considering the extended lockdown. Hence, we maintain our HOLD rating on the stock with a revised target price of Rs 180 (implying ~4x FY22E EV/EBITDA).

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