Result Update July 18, 2018
Rating matrix Rating : Buy Zee Entertainment (ZEEENT) | 515 Target : | 600 Target Period : 12 months Potential Upside : 17% Another quarter of strong domestic ad growth What’s changed? Target Changed from | 630 to | 600 Consolidated revenue came in at | 1772.3 crore, largely in line with our EPS FY19E Changed from | 17.3 to | 16.4 estimate of | 1780.1 crore. Domestic ad revenues grew 22.3% (vs. our EPS FY20E Changed from | 21 to | 20 expectation of 20% YoY growth) but international ad revenues stayed Rating Changed from Hold to Buy muted (2.1% YoY), lower than our expectation of 10% growth. This led
to in line overall ad revenue growth of 18.5% YoY. On the subscription Quarterly performance front, growth was disappointing at 8.3% YoY (vs. expectation of ~13% Q1FY19 Q1FY18 YoY (%) Q4FY18 QoQ (%) YoY), impacted by a decline in international subscription by 6.6% YoY Revenue 1,772.0 1,540.3 15.0 1,725.3 2.7 while domestic subscription grew 12.3% EBITDA 565.7 484.4 16.8 506.2 11.7 EBITDA (%) 31.9 31.4 47 bps 29.3 258 bps EBITDA came in at | 565.7 crore, a tad above our expectation of Adj. PAT 339.4 251.6 34.9 231.0 46.9 | 560.7 crore, up 16.8% YoY. Consolidated EBITDA margins came in at 31.9% vs. our expectation of 31.5%. The EBITDA growth was owing to Key financials operating leverage and also supported by 3% QoQ decline in | Crore FY17 FY18 FY19E FY20E operational cost Net Sales 6,434 6,686 7,606 8,721 Reported PAT came in at | 339.4 crore (vs. expectation of | 349.4 EBITDA 1,927 2,076 2,432 2,878 crore) owing to higher-than-expected tax outgo, with tax rate of ~39% Adjusted PAT 1,285 1,393 1,576 1,922 vs. expectation of ~35% Adjusted EPS 13.4 14.5 16.6 20.0 Reiterates guidance to outperform industry ad growth Valuation summary The highlight of the quarter was strong domestic ad growth of 22.3%, FY17 FY18 FY19E FY20E largely driven by demand across categories and partly supported by a P/E (Adjusted) 38.5 35.5 31.1 25.7 favourable base quarter, which had merely 6% growth. We also believe Target P/E 44.9 41.4 36.3 30.0 EV / EBITDA 23.7 22.4 18.7 15.4 domestic ad growth is a reflection of Zee’s continued overall market share P/BV 5.8 5.4 4.7 4.1 expansion in the non-sports entertainment segment as it has increased its RoNW 15.0 15.3 15.3 15.9 markets in Hindi GEC as well as regional markets of Bengali, Marathi, RoCE 21.2 25.6 24.5 25.5 Telugu and Tamil. We note that the management reiterated its guidance
of beating the expected industry ad growth in FY19. We believe Zee’s Stock data superior bouquet offering with an exhaustive and strong regional Particular Amount presence will drive its ad growth trajectory outperformance. Going ahead, Market Capitalization (| crore) 49,431.8 we build in 16% CAGR in ad revenues over FY18-20E to | 5660 crore. Total Debt (FY18) (| crore) 1.0 Cash (FY18) (| crore) 1,611.7 Management terms new tariff regime an opportunity for ARPU uptick EV (| crore) 47,710.4 The management indicated that the new tariff order is an opportunity for 52 week H/L (| ) 619/ 458 taking ARPU upwards for the industry. Moreover, Zee, a leading Equity capital (| crore) 96.0 broadcaster with a presence across genres and markets, would be a key Face value (|) 1.0 beneficiary. The management also maintained its guidance of low teen Price performance subscription growth in FY19E. Furthermore, we also believe the tailwinds 1M 3M 6M 12M of digitisation of Phase III/IV could keep the momentum in domestic TV Today -7.5 -7.2 -1.7 69.4 subscription growth buoyant over the next couple of years. Hence, we Sun TV -18.1 -16.3 -31.1 -10.5 build in overall subscription revenue CAGR of 12.6% (vs. ~15.5% earlier ZEEL -8.5 -12.1 -17.2 -1.2 given challenges on the international subscription front) in FY18-20E to | 2571 crore. Research Analyst
Strong performance across genres; upgrade to BUY Bhupendra Tiwary Zee Entertainment is poised to maintain its industry leading performance [email protected] both in terms of ad growth as well as margins trajectory, given its strong bouquet of regional channels and prudent content spending. The digital Sameer Pardikar expansion trajectory also remains on course, as per expectations, with [email protected] limited margin erosion. The recent correction of over ~12% in the last three months has made the risk reward favourable amid its robust
performance. We continue to value the company at 30x FY20E P/E to
arrive at a target price of | 600. We upgrade the stock to BUY.
ICICI Securities Ltd | Retail Equity Research
Variance analysis Q1FY19 Q1FY19E Q1FY18 Q4FY18 YoY (%) QoQ (%) Comments Revenue 1,772.0 1,780.1 1,540.3 1,725.3 15.0 2.7 Domestic ad revenue growth continued to be strong and grew 22.3% YoY. Internation subscription continued to be weak and declined 6.6% YoY
Other Income 49.8 50.0 47.9 191.3 4.0 -74.0 Raw Material Expenses 0.0 0.0 0.0 0.0 NA NA Employee Expenses 171.4 169.1 166.9 163.8 2.7 4.6 Admin & Other Expenses 226.5 213.6 178.6 233.4 26.9 -2.9 Marketing Expenses 140.2 133.5 124.1 132.6 13.0 5.7 Operational Cost 668.3 703.1 586.3 689.3 14.0 -3.0
Other Expenses 0.0 0.0 0.0 0.0 NA NA EBITDA 565.7 560.7 484.4 506.2 16.8 11.7 The beat at the EBITDA level was largely driven by lower-than-expected operational cost EBITDA Margin (%) 31.9 31.5 31.4 29.3 47 bps 258 bps Depreciation 57.6 59.4 31.1 59.4 85.4 -3.0 Interest 5.3 15.0 14.7 127.4 -64.0
Total Tax 207.1 187.7 234.4 280.5 -11.7 -26.2 Adj. PAT 339.4 349.4 251.6 231.0 34.9 46.9 PAT was lower owing to higher tax outgo, with tax rate of 39% vs. expectation of 35%
Key Metrics Ad Revenue Growth 18.6% 18.5% 6.0% 23.9% Domestic Subscription % 12.2% 16.2% -9.3% -0.7% International Subscription % -6.6% 5.5% -9.3% -8.0%
Source: Company, ICICI Direct Research
Change in estimates FY19E FY20E (| Crore) Old New % Change Old New % Change Comments Revenue 7,627.7 7,605.6 -0.3 8,771.6 8,720.9 -0.6 Re-alligned estimates to incorporate Q1FY19 performance EBITDA 2,440.8 2,432.4 -0.3 2,894.6 2,877.9 -0.6 EBITDA Margin (%) 32.0 32.0 -2 bps 33.0 33.0 0 bps Adjusted PAT 1,664.7 1,590.3 -4.5 2,018.1 1,922.0 -4.8 EPS (|) 17.3 16.4 -5.1 21.0 20.0 -4.7 Lower earnings owing to higher tax outgo & lower other income
Source: Company, ICICI Direct Research
Assumptions Current Earlier FY16 FY17 FY18 FY19E FY20E FY19E FY20E Ad Revenue Growth 29.4% 7.1% 14.5% 15.9% 16.1% 14.9% 16.1% Slightly raised our estimates to incorporate strong domestic ad growth Domestic Subscription % 13.2% 13.0% -10.1% 14.0% 16.5% 15.0% 16.7% Align our estimates in line with management guidance International Subscription % 6.9% 3.0% -11.5% -4.1% 5.1% 9.7% 12.9% Lowered our international subscription estimates as per management commentary
Source: Company, ICICI Direct Research
ICICI Securities Ltd | Retail Equity Research Page 2
Company Analysis
Exhibit 1: Ad growth trend
6,000.0 5,660.4 35 28.9 4,875.7 5,000.0 30 4,204.8 25 4,000.0 3,673.5 3,429.6 20 3,000.0 2,660.3 2,380.021.2 (%) 11.8 16.0 16.1 15
| crore | 14.5 2,000.0 10 7.1 1,000.0 5 - - FY14 FY15 FY16 FY17 FY18 FY19E FY20E
Ad revenue Growth
es Source: Company, ICICI Direct Research
Exhibit 2: Subscription revenue trends
3,000 20.0 14.6 15.0 2,500 12.8 10.5 10.0 2,000 10.0 5.0 1,500 - (%) | crore | 1,000 2,243 (5.0) 500 (10.0) 2,058 2,263 2,029 (10.3) 2,571 - (15.0) FY16 FY17 FY18 FY19E FY20E
Subscription revenue Growth (RHS) Source: Company, ICICI Direct Research
EBITDA margin expansion trend to continue We expect Zee to post an EBITDA margin of 32% and 33% in FY19E and FY20E, respectively, vs. 31.1% in FY18 as the management has guided that it would maintain 30%+ trajectory despite digital spends.
Exhibit 3: EBITDA and PAT margins trend
35.0 32.0 33.0 30.0 29.9 31.1 25.0 25.7 25.8 21.4 22.4 20.0 20.0 20.0 20.8 17.9 % 15.0 10.0 5.0 - FY15 FY16 FY17 FY18 FY19E FY20E
EBITDA margin PAT margin
es Source: Company, ICICI Direct Research
ICICI Securities Ltd | Retail Equity Research Page 3
BARC rating
Maintained leadership in Marathi market with an average Exhibit 4: Marathi market 43% market share, followed by Colors and STAR with 50.0 17.7% and 14.5% market share, respectively 45.0 40.0 35.0 30.0 25.0 20.0
15.0 Market Share (%) Share Market 10.0 5.0
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Wk 14
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Wk 25 Wk 26 Zee Marathi Zee Talkies Colors Marathi STAR Pravah
Source: Company, ICICI Direct Research
Zee Bangla gained significant traction and became the Exhibit 5: Bengali market leading channel in the urban market 45.0 40.0 35.0 30.0 25.0 20.0 15.0 Market Share (%) Share Market 10.0 5.0
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Wk 25 Wk 26 STAR Jalsha Zee Bangla Jalsha Movies Colors Bangla
Source: Company, ICICI Direct Research
ICICI Securities Ltd | Retail Equity Research Page 4
Exhibit 6: Telugu market 29.0 Zee Telugu increased its share and was the second ranked channel in the Andhra Pradesh and Telangana market 27.0 25.0
23.0
21.0 Market Share (%) Share Market 19.0
17.0
Wk 15 Wk 16 Wk 17 Wk 18 Wk 19 Wk 20 Wk 21 Wk 22 Wk 23 Wk 24 Wk 25 Wk 26 Wk 14 STAR Maa ETV Telugu Gemini TV Zee Telugu
Source: Company, ICICI Direct Research
Zee Kannada continued to be the second ranked channel in Exhibit 7: Kannada market Karnataka 40.0
35.0
30.0
25.0
20.0 Market Share (%) Share Market 15.0
10.0
Wk 14
Wk 15
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Wk 25 Wk 26 Colors Kannada Zee Kannada Udaya Movies Udaya TV
Source: Company, ICICI Direct Research
Zee Tamil further improved its market share and was the Exhibit 8: Tamil market third ranked channel in the market 50.0 45.0 40.0 35.0 30.0 25.0
Market Share (%) Share Market 20.0 15.0
10.0
Wk 14
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Wk 25 Wk 26 Sun TV STAR Vijay KTV Zee Tamil
Source: Company, ICICI Direct Research
ICICI Securities Ltd | Retail Equity Research Page 5
Exhibit 9: Oriya market Zee Sarthak continued to maintain its strong leadership 50.0 position in the Oriya market 45.0 40.0 35.0 30.0 25.0 20.0
15.0 Market Share (%) Share Market 10.0 5.0
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Wk 14
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Wk 25 Wk 26 Zee Sarthak Tarang TV Alankar Prarthana
Source: Company, ICICI Direct Research
The Zee bouquet maintained leadership in the Hindi GEC Exhibit 10: Hindi GEC market market with 23.3% market share between Zee Anmol and 15.0 Zee TV 14.0 13.0 12.0 11.0 10.0
Market Share (%) Share Market 9.0 8.0
7.0
Wk 14
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Wk 25 Wk 26 Zee Anmol Zee TV Colors STAR Plus Rishtey Sony Pal
Source: Company, ICICI Direct Research
ICICI Securities Ltd | Retail Equity Research Page 6
Zee Anmol emerged as a strong No. 2 player in the all Exhibit 11: All genres market genre market, with an average market share of 12.2%, only 17.0 behind Sun TV with average market share of 14.2% 16.0 15.0 14.0 13.0 12.0 11.0
Market Share (%) Share Market 10.0 9.0 8.0 7.0
Wk 14
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Wk 26 Sun TV Zee Anmol Zee TV STAR Bharat Sony Pal
Source: Company, ICICI Direct Research
Conference Call Highlights
Strong domestic ad growth on viewership share gain, industry growth may be higher than earlier expected range: The management attributed strong domestic ad revenue growth to higher ad spends across categories and increase in network viewership share. The management further said the government’s initiative to aid the farming sector and good monsoon predictions bode well for growth in the rural market, which subsequently helps beat earlier industry ad revenue guidance of 10-12% in FY19. The management also indicated that domestic ad growth for the company, for FY19, would exceed industry growth International ad, subscription growth adversely impacted by geopolitical issues: The management indicated that international ad revenue for the quarter was impacted by geopolitical issues in the Middle East while international subscription revenues were adversely impacted by the UK market, where it is now a free-to-air (FTA) channel vs. pay channel earlier. The management maintained its low teen guidance for domestic subscription growth Planning to foray into Malayalam market; expansion in Punjab market also on the anvil: The management indicated they are planning to launch a Malayalam channel. If all regulatory approvals come as per their expectation, the channels would be launched around September 2018. The management also indicated they are planning to launch Punjabi along with other regional movies channels. However, the timeline of the same has not been finalised yet Looking to launch Zee5 in international market; aggressive expansion in domestic market: The management indicated they are planning to launch Zee5 in the international market in FY19. They indicated they have released 14 Zee5 original shows already across six languages while 20 more shows are lined up for release in Q2FY19. The management indicated that halving the subscription charges for Zee5 is a well thought marketing strategy and is for a limited period till August 15, 2018. They also indicated that targeted breakeven period for any venture is in the range of
ICICI Securities Ltd | Retail Equity Research Page 7
three to five years. However, considering the nature of aggressive investments requirement for the digital platform, the breakeven could be at the higher end of this range. The management also indicated they have not signed any deals with telcos Maintains margin guidance of 30%+ despite investments in Zee5: The management reiterated an EBITDA margin guidance of 30%+ in FY19. The EBITDA margin guidance would take care of all investments going into the Zee5 platform including international expansion as well as launch of new regional channels Others: Cash on the balance sheet is at | 3000 crore. The management mentioned that a portion of this cash is in international subsidiaries on account of (i) cash requirement for expansion in international market (ii) cash received after sale of sports business is also lying there (ii) tax inefficiency (effective tax rate on repatriation of 17%). However, over the last couple of quarters, the same has begun to be repatriated back
ICICI Securities Ltd | Retail Equity Research Page 8
Valuation Zee is poised to maintain its industry leading performance both in terms of ad growth as well as margins trajectory, given its strong bouquet of regional channels and prudent content spending. The digital expansion trajectory also remains on course, as per expectations with limited margin erosion. The recent correction of over ~15% in the last two months has made the risk reward favourable amid its robust performance. We continue to value the company at 30x FY20E P/E to arrive at a target price of | 600. We upgrade the stock to BUY.
Exhibit 12: Valuations Sales Growth EPS Growth PE EV/EBITDA RoNW RoCE (| cr) (%) (|) (%) (x) (x) (%) (%) FY17 6434.1 10.0 23.1 25.2 22.2 23.7 15.0 21.2 FY18 6685.7 3.9 15.4 -33.4 33.4 22.4 15.3 25.6 FY19E 7605.6 13.8 16.4 6.6 31.4 18.7 15.3 24.5 FY20E 8720.9 14.7 20.0 21.9 25.7 15.4 15.9 25.5
Source: Company, ICICI Direct Research
ICICI Securities Ltd | Retail Equity Research Page 9
Recommendation history vs. consensus
700 100.0 90.0 600 80.0 70.0 500 60.0
(|) 50.0 (%) 400 40.0 30.0 300 20.0 10.0 200 0.0 Jul-15 Sep-15 Dec-15 Feb-16 May-16 Jul-16 Sep-16 Dec-16 Feb-17 May-17 Jul-17 Sep-17 Dec-17 Feb-18 May-18 Jul-18
Price Idirect target Consensus Target Mean % Consensus with BUY
Source: Bloomberg, Company, ICICI Direct Research
Key events Date Event Apr-10 The education business undertaking of the company was demerged from the company and transferred to Zee Learn Ltd on the appointed date Mar-11 Zee Entertainment Studios Ltd, BVI and ZES Mauritius Ltd, Mauritius amalgamated with their holding company ZES Holdings Ltd, Mauritius Jan-12 Company introduces new Bangla movie channel Dec-13 Court approves bonus issue of redemable preference shares in the ratio of 1:21 Jun-14 Launches new channel Zee Zindagi, which serves as a platform for global content Jan-15 Launches new channel & TV Aug-16 Zee Entertainment enters into definitive agreement to sell its sports business held under wholly-owned subsidiaries viz. Taj TV and Taj Television India Pvt Ltd to Sony Networks India Pvt Ltd for an all-cash consideration of ~ $385 million (~| 2600 crore). The deal entails a non-compete clause of four years
Nov-16 Zee Entertainment announces the acquisition of the TV business of Reliance Broadcast Network (RBNL), which houses Big Magic (comedy genre GEC) and Big Ganga (Bhojpuri GEC) for an enterprise valuation (EV) of | 298.4 crore
Source: Company, ICICI Direct Research
Top 10 Shareholders Shareholding Pattern Rank Name Latest Filing Date % O/S PositionPosition (m) Change (m) (in %) Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 1 Cyquator Media Services Pvt. Ltd. 30-06-2018 25.1 241.41M 0.0 Promoter 43.07 43.07 43.07 41.62 41.62 2 Essel Group 30-06-2018 16.5 158.35M +0.72M FII 44.67 43.85 42.25 41.38 40.77 3 OppenheimerFunds, Inc. 31-05-2018 7.5 72.40M -0.02M DII 5.29 5.83 8.08 10.61 10.93 4 Life Insurance Corporation of India 30-06-2018 4.9 46.95M 0.0 Others 6.97 7.25 6.60 6.39 6.68 5 Schroder Investment Management Ltd. (SIM) 31-03-2018 2.0 19.05M +0.81M 6 Vontobel Asset Management, Inc. 31-03-2018 1.9 18.30M -6.61M 7 ICICI Prudential Asset Management Co. Ltd. 30-06-2018 1.9 17.75M +1.73M 8 The Vanguard Group, Inc. 31-03-2018 1.7 15.97M -8.70M 9 BlackRock Institutional Trust Company, N.A. 30-06-2018 1.5 14.10M -0.86M 10 Aditya Birla Sun Life AMC Limited 30-06-2018 1.3 12.14M +0.69M
Source: Reuters, ICICI Direct Research
Recent Activity Investor name Investor name Buys Sells ICICI Prudential Asset Management Co. Ltd. +13.77M +1.73M The Vanguard Group, Inc. -76.85M -8.70M Wellington Management Company, LLP +12.69M +1.44M Vontobel Asset Management, Inc. -58.40M -6.61M Schroder Investment Management Ltd. (SIM) +7.16M +0.81M BlackRock Institutional Trust Company, N.A. -6.83M -0.86M Essel Group +5.76M +0.72M Waddell & Reed Investment Management Company -7.81M -0.86M Aditya Birla Sun Life AMC Limited +5.52M +0.69M AGF Investments Inc. -6.63M -0.73M
Source: Reuters, ICICI Direct Research
ICICI Securities Ltd | Retail Equity Research Page 10
Financial summary
Profit and loss statement | Crore Cash flow statement | Crore (Year-end March) FY17 FY18 FY19E FY20E (Year-end March) FY17 FY18 FY19E FY20E Total operating Income 6,434.1 6,685.7 7,605.6 8,720.9 Profit after Tax 2,221.7 1,479.1 1,576.4 1,922.0 Growth (%) 10.0 3.9 13.8 14.7 Add: Depreciation 115.2 182.1 228.2 235.5 Operational Cost 2,782.5 2,527.5 3,030.9 3,488.4 Add: Interest paid 137.2 144.8 131.3 131.0 Employee Expenses 604.3 665.7 772.2 872.1 (Inc)/dec in Current Assets -593.1 -1,390.5 -483.2 -596.0 Admin & Other Expenses 673.2 839.0 809.9 872.1 Inc/(dec) in CL and Provisions 55.7 358.5 251.6 305.1 Marketing Expenses 447.3 577.3 560.2 610.5 Others 0.0 0.0 0.0 0.0 Total Operating Expenditure 4,507.3 4,609.5 5,173.2 5,843.0 CF from operating activities 1,936.7 774.0 1,704.3 1,997.6 EBITDA 1,926.9 2,076.1 2,432.4 2,877.9 (Inc)/dec in Investments -288.8 -183.2 -850.0 -850.0 Growth (%) 27.6 7.7 17.2 18.3 (Inc)/dec in Fixed Assets -282.6 -346.3 -300.0 -300.0 Depreciation 115.2 182.1 228.2 235.5 Others 597.1 -143.7 -1.7 -2.0 Interest 137.2 144.8 131.3 131.0 CF from investing activities 25.7 -673.2 -1,151.7 -1,152.0 Other Income 3.6 433.6 349.8 440.0 Issue/(Buy back) of Equity 0.0 0.0 0.0 0.0 Exceptional Items (1,223.4) (134.6) 21.3 - Issue of Preference Shares 193.6 -383.2 0.0 0.0 PBT 2,901.4 2,317.5 2,401.4 2,951.4 Inc/(Dec) in loan funds 0.2 (0.2) - - Minority Interest (1.2) (1.4) (1.7) (2.0) Interest paid 137.2 144.8 131.3 131.0 PAT from Associates (0.4) 1.2 3.1 1.6 Others -643.2 -863.8 -517.6 -517.0 Total Tax 680.5 840.9 829.8 1,033.0 CF from financing activities -312.1 -1,102.4 -386.3 -386.0 PAT 2,221.7 1,479.1 1,576.4 1,922.0 Net Cash flow 1,650.3 -1,001.6 166.2 459.6 Growth (%) 116.4 -33.4 6.6 21.9 Opening Cash 963.1 2,613.3 1,611.7 1,777.9 Adjusted PAT 1,285.2 1,393.3 1,576.4 1,922.0 Closing Cash 2,613.3 1,611.7 1,778.0 2,237.5
Growth (%) 25.2 8.4 13.1 21.9 Source: Company, ICICI Direct Research Reported EPS (|) 23.1 15.4 16.4 20.0
Source: Company, ICICI Direct Research
Balance sheet | Crore Key ratios (Year-end March) FY17 FY18 FY19E FY20E (Year-end March) FY17 FY18 FY19E FY20E Liabilities Per share data (|) Equity Capital 96.0 96.0 96.0 96.0 EPS 23.1 15.4 16.4 20.0
Preference Share Capital 1,907.7 1,524.5 1,524.5 1,524.5 Adjusted EPS 13.4 14.5 16.6 20.0 Reserve and Surplus 6,560.8 7,465.7 8,787.1 10,454.1 BV 89.2 94.6 108.4 125.7 Total Shareholders funds 8,564.5 9,086.2 10,407.6 12,074.7 DPS 2.4 3.4 2.7 2.7 Total Debt 1.1 1.0 1.0 1.0 Cash Per Share 5.1 7.0 9.4 11.8 Others 1.0 14.2 12.5 10.5 Operating Ratios (%) Total Liabilities 8,566.6 9,101.4 10,421.1 12,086.1 EBITDA Margin 29.9 31.1 32.0 33.0 EBIT Margin 28.2 28.3 29.0 30.3 Assets PAT Margin 20.0 20.8 20.9 22.0 Gross Block 1,201.6 1,596.8 1,896.8 2,196.8 Inventory days 95.6 143.5 129.1 116.2 Less: Acc Depreciation 491.8 673.9 902.0 1,137.5 Debtor days 74.1 83.9 83.9 83.9 Net Block 709.8 923.0 994.8 1,059.3 Creditor days 27.7 62.8 62.8 62.8 Capital WIP 127.0 78.1 78.1 78.1 Return Ratios (%) Total Fixed Assets 836.8 1,001.0 1,072.9 1,137.4 RoE 15.0 15.3 15.3 15.9 Investments 1,593.6 2,056.0 2,906.0 3,756.0 RoCE 21.2 25.6 24.5 25.5 Inventory 1,684.4 2,627.8 2,690.4 2,776.5 RoIC 39.7 34.4 37.1 41.1
Debtors 1,305.9 1,536.5 1,747.9 2,004.3 Valuation Ratios (x) Loans and Advances 1,082.4 1,340.4 1,524.8 1,748.4 P/E 22.2 33.4 31.4 25.7 Other Current Assets 221.2 179.8 204.5 234.5 EV / EBITDA 23.7 22.4 18.7 15.4 Cash 2,613.3 1,611.7 1,777.9 2,237.5 EV / Net Sales 7.1 6.9 6.0 5.1 Total Current Assets 6,907.3 7,296.2 7,945.6 9,001.2 Market Cap / Sales 7.7 7.4 6.5 5.7 Creditors 489.1 1,149.7 1,307.9 1,499.7 Price to Book Value 5.8 5.4 4.7 4.1 Provisions 85.6 97.5 110.9 127.1 Solvency Ratios Other current liabilities 895.5 581.6 661.6 758.6 Debt/EBITDA 0.0 0.0 0.0 0.0 Total Current Liabilities 1,470.2 1,828.7 2,080.3 2,385.4 Debt / Equity 0.0 0.0 0.0 0.0 Net Current Assets 5,437.1 5,467.5 5,865.3 6,615.8 Current Ratio 7.5 4.6 4.3 4.2 Other non current assets 699.0 576.9 576.9 576.9 Quick Ratio 4.5 2.5 2.5 2.5
Application of Funds 8,566.6 9,101.4 10,421.1 12,086.1 . Source: Company, ICICI Direct Research
Source: Company, ICICI Direct Research
The historical numbers have been shown according to the previous reporting standards and have not been reclassified on the basis of the quarterly restated numbers given by the company. We will restate the numbers once the same is available for all the four quarters of FY16. ICICI Securities Ltd | Retail Equity Research Page 11 ICICI Direct Research coverage universe (Media) CMP M Cap EPS (|) P/E (x) EV/EBITDA (x) RoCE (%) RoE (%) Sector / Company (|) TP(|) Rating (| Cr) FY17 FY18E FY19E FY17 FY18E FY19E FY17 FY18E FY19E FY17 FY18E FY19E FY17 FY18E FY19E DB Corp (DBCORP) 254 280 Hold 4,672 20.4 17.6 18.5 12.5 14.4 13.7 7.1 7.8 7.3 32.2 23.5 22.8 23.5 16.8 16.3 DISH TV (DISHTV) 68 80 Hold 12,594 1.0 -0.4 1.1 66.7 60.9 13.8 11.3 6.6 20.8 3.1 9.1 22.3 0.1 3.1 ENIL (ENTNET) 703 750 Buy 3,351 11.6 7.5 16.4 60.8 94.0 43.0 26.6 28.1 19.2 9.3 6.2 11.3 6.4 3.5 8.1 HT Media (HTMED) 74 NA Unrated 1,715 7.3 13.2 7.4 10.1 5.6 10.0 8.1 4.9 5.6 10.9 12.7 9.8 7.6 12.0 6.4 Inox Leisure (INOX) 220 NA UR 2,116 3.2 12.0 9.9 69.1 18.3 22.3 16.6 11.3 9.6 7.3 13.3 14.5 5.5 10.6 12.4 Music Broadcast 299 450 Buy 1,705 8.1 8.3 12.7 37.1 35.9 23.6 17.1 16.1 11.7 11.3 13.8 16.9 6.7 8.0 10.8 PVR(MUSBRO) (PVRLIM) 1,161 NA UR 5,425 20.5 26.4 28.8 56.6 44.0 40.3 17.4 15.5 14.5 13.0 14.7 14.2 10.2 11.5 11.2 Sun TV (SUNTV) 764 1,150 Buy 30,116 26.1 28.8 36.4 29.2 26.5 21.0 16.3 14.1 11.0 37.2 35.5 37.3 25.6 24.2 25.4 TV Today (TVTNET) 427 425 Hold 2,548 17.1 19.9 25.3 24.9 21.4 16.9 14.1 11.3 9.2 26.0 30.4 29.6 16.6 19.3 19.2 ZEE Ent. (ZEEENT) 515 600 Buy 49,432 23.1 15.4 16.4 22.2 33.4 31.4 23.7 22.4 18.7 21.2 25.6 24.5 15.0 15.3 15.3 Source: Company, ICICI Direct Research
ICICI Securities Ltd | Retail Equity Research Page 12 RATING RATIONALE ICICI Direct endeavours to provide objective opinions and recommendations. ICICI Direct assigns ratings to its stocks according to their notional target price vs. current market price and then categorises them as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional target price is defined as the analysts' valuation for a stock.
Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction; Buy: >10%/15% for large caps/midcaps, respectively; Hold: Up to +/-10%; Sell: -10% or more;
Pankaj Pandey Head – Research [email protected]
ICICI Direct Research Desk, ICICI Securities Limited, 1st Floor, Akruti Trade Centre, Road No 7, MIDC, Andheri (East) Mumbai – 400 093 [email protected]
ICICI Securities Ltd | Retail Equity Research Page 13 ANALYST CERTIFICATION We /I, Bhupendra Tiwary MBA, Sameer Pardikar, MBA Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. Terms & conditions and other disclosures: ICICI Securities Limited (ICICI Securities) is a full-service, integrated investment banking and is, inter alia, engaged in the business of stock brokering and distribution of financial products. ICICI Securities Limited is a Sebi registered Research Analyst with Sebi Registration Number – INH000000990. ICICI Securities is a wholly-owned subsidiary of ICICI Bank which is India’s largest private sector bank and has its various subsidiaries engaged in businesses of housing finance, asset management, life insurance, general insurance, venture capital fund management, etc. (“associates”), the details in respect of which are available on www.icicibank.com.
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The information and opinions in this report have been prepared by ICICI Securities and are subject to change without any notice. The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of ICICI Securities. While we would endeavour to update the information herein on a reasonable basis, ICICI Securities is under no obligation to update or keep the information current. Also, there may be regulatory, compliance or other reasons that may prevent ICICI Securities from doing so. Non-rated securities indicate that rating on a particular security has been suspended temporarily and such suspension is in compliance with applicable regulations and/or ICICI Securities policies, in circumstances where ICICI Securities might be acting in an advisory capacity to this company, or in certain other circumstances.
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