Result Update October 11, 2018
Rating matrix Rating : Buy Zee Entertainment (ZEEENT) | 464 Target : | 540 Target Period : 12 months Potential Upside : 15% Strong show; future portends heavy spending
What’s changed? Consolidated revenue came in at | 1975.9 crore, better than our Target Changed from | 600 to | 540 estimate of | 1856.8 crore. Domestic ad revenue grew 23.3% (vs. our EPS FY19E Changed from | 16.4 to | 15.7 expectation of 20% YoY growth) boosted by Zee5 revenues while EPS FY20E Unchanged overall ad revenue growth was 22.7% YoY (vs. our expectation of Rating Unchanged 18.1%). On the subscription front, domestic subscription growth came in at 25.9% YoY (vs. our expectation of 15% YoY) boosted by early Quarterly performance deal closures and better monetisation of phase III markets. Q2FY19 Q2FY18 YoY (%) Q1FY19 QoQ (%) International subscription grew 1.9% YoY Revenue 1,975.9 1,582.1 24.9 1,772.0 11.5 EBITDA came in at | 675.7 crore, better than our expectation of | 594.3 EBITDA 675.7 491.2 37.6 565.7 19.5 crore, growth of 37.6% YoY. Consolidated EBITDA margins came in at EBITDA (%) 34.2 31.0 315 bps 31.9 228 bps 34.2% vs. our expectation of 32.0%. EBITDA growth was owing to Adj. PAT 386.7 327.6 18.0 339.4 14.0 operating leverage playing out Key financials Reported PAT came in at | 386.7 crore (vs. expectation of | 390 crore) | Crore FY17 FY18 FY19E FY20E owing to higher than expected tax outgo, with tax rate of ~40.4% vs. Net Sales 6,434 6,686 7,754 8,806 expectation of ~33.3% EBITDA 1,927 2,076 2,483 2,906 Strong ad growth; H2 may be relatively softer on high base Adjusted PAT 1,285 1,393 1,506 1,920 Adjusted EPS 13.4 14.5 15.8 20.0 The quarter was marked by superior domestic ad growth of 23.3%, largely driven by monetisation of market share gains across genres as Valuation summary well as marginal boost from Zee5 revenues. We also note that base FY17 FY18 FY19E FY20E quarter (Q2FY18) was favourable with ad growth of merely ~6%. We note P/E (Adjusted) 35.0 32.3 29.6 23.4 that the management has reiterated its guidance of beating the expected Target P/E 40.3 37.2 34.1 27.0 industry ad growth in FY19, albeit H2FY19 growth will be relatively lower EV / EBITDA 21.4 20.2 16.7 13.8 owing to high base. Going ahead, we build in 16.5% CAGR in ad revenues P/BV 5.2 4.9 4.3 3.7 in FY18-20E to | 5710 crore. RoNW 15.0 15.3 14.7 16.0 RoCE 21.2 25.6 24.5 25.5 Early deal closures, phase III rebasing boost subscription growth Domestic subscription growth, for the quarter, was at 25.9% YoY, Stock data boosted by early deal closures and better monetisation of phase III Particular Amount markets. Hence, the management indicated that it would now be higher Market Capitalization (| crore) 44,949.7 than earlier guidance of low teen subscription growth in FY19E. Total Debt (FY18) (| crore) 1.0 Therefore, we build in overall subscription revenue CAGR of 13.1% (vs. Cash (FY18) (| crore) 1,611.7 EV (| crore) 43,228.3 ~12.6% earlier given superior domestic subscription traction) in FY18- 52 week H/L (| ) 619/ 458 20E to | 2596 crore. Equity capital (| crore) 96.0 Zee5 current metric strong; content spending strategy ahead to be key Face value (|) 1.0 The company also shared Zee5 metric saying it has a monthly active user Price performance base of 41 million and an average daily time spent of 31 minutes. 1M 3M 6M 12M Notwithstanding Zee’s strong aspirations (~500-600 hours of OTT content TV Today -15.1 -9.7 -22.5 -0.6 creation over 18 months), we note that OTT competition for Zee includes Sun TV -12.1 -24.9 -30.5 -23.1 a strong field of players such as Netflix, Amazon Prime, Hot Star and ZEEL -8.0 -19.9 -24.3 -17.7 Voot, who have kept their offerings strong with high content spending. Therefore, we believe overall spending in terms of digital content will Research Analyst restrict the cash generation over the next couple of years. Bhupendra Tiwary Strong TV segment performance but OTT still black box [email protected] We note that while Zee’s market share gain across genres and bouquet offering lends it a competitive advantage, the outlook ahead will largely Sameer Pardikar be led by digital strategy success. The OTT space, nascent currently, [email protected] warrants a huge content spending strategy and ability to fight out with the global biggies. While we maintain our BUY rating (given the recent price correction), we now value the company at 27x FY20E P/E (vs. 30x earlier) to arrive at a target price of | 540. The lower target multiple is on account of uncertainty that digital space poses.
ICICI Securities Ltd | Retail Equity Research Variance analysis Q2FY19 Q2FY19E Q2FY18 Q1FY19 YoY (%) QoQ (%) Comments Revenue 1,975.9 1,856.8 1,582.1 1,772.0 24.9 11.5 Domestic ad revenue growth was aided by market share gain while subscription growth was aided by better monetisation of Phase III subscribers
Other Income 36.9 50.0 188.4 49.8 -80.4 -25.8 Raw Material Expenses 0.0 0.0 0.0 0.0 NA NA Employee Expenses 168.7 185.7 181.4 171.4 -7.0 -1.6 Admin & Other Expenses 240.0 222.8 189.6 226.5 26.6 6.0 Marketing Expenses 165.1 148.5 141.0 140.2 17.0 17.8 Operational Cost 726.3 705.6 578.9 668.3 25.5 8.7
Other Expenses 0.0 0.0 0.0 0.0 NA NA EBITDA 675.7 594.2 491.2 565.7 37.6 19.5 The beat at the EBITDA level was largely driven by superior revenues EBITDA Margin (%) 34.2 32.0 31.0 31.9 315 bps 228 bps Depreciation 58.8 55.7 41.1 57.6 43.2 2.1 Interest 5.5 5.0 0.3 5.3 1,846.4
Total Tax 262.4 194.3 183.2 207.1 43.3 26.7 Adj. PAT 386.7 390.0 327.6 339.4 18.0 14.0 PAT was lower owing to higher tax outgo, with tax rate of 40.5% vs. expectation of 33.3%
Key Metrics Ad Revenue Growth 22.7% 18.1% 2.9% 18.6% Domestic Subscription % 25.9% 15.0% -13.5% 12.2% International Subscription % 1.9% 3.0% -16.1% -6.6% Source: Company, ICICI Direct Research
Change in estimates FY19E FY20E (| Crore) Old New % Change Old New % Change Comments Revenue 7,605.6 7,754.1 2.0 8,720.9 8,806.1 1.0 Re-align our estimates to incorporate H1FY19 performance EBITDA 2,432.4 2,483.3 2.1 2,877.9 2,906.0 1.0 EBITDA Margin (%) 32.0 32.0 4 bps 33.0 33.0 0 bps PAT 1,590.3 1,505.7 -5.3 1,922.0 1,920.1 -0.1 EPS (|) 16.6 15.7 -5.3 20.0 20.0 0.0 Earnings for FY19 have ben cut to account for higher tax rate Source: Company, ICICI Direct Research
Assumptions Current Earlier FY16 FY17 FY18 FY19E FY20E FY19E FY20E Ad Revenue Growth 29.4% 7.1% 14.5% 17.0% 16.0% 15.9% 16.1% Slightly raise our estimates to incorporate strong domestic ad growth Domestic Subscription % 13.2% 13.0% -10.1% 17.0% 14.7% 14.0% 16.5% Align our estimates in line with management guidance International Subscription % 6.9% 3.0% -11.5% 0.1% 1.4% -4.1% 5.1% Source: Company, ICICI Direct Research
ICICI Securities Ltd | Retail Equity Research Page 2
Company Analysis
Exhibit 1: Ad growth trend
6,000.0 5,710.3 35 28.9 4,921.7 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 17.1 (%) 11.8 16.0 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 2,500 15.0 12.8 13.8 12.5 10.0 2,000 10.0 5.0 1,500 - (%) | crore | 1,000 2,308 (5.0) 500 (10.0) 2,058 2,263 2,029 (10.3) 2,596 - (15.0) FY16 FY17 FY18 FY19E FY20E
Subscription revenue Growth (RHS) Source: Company, ICICI Direct Research
EBITDA margins 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 es
35.0 32.0 33.0 30.0 29.9 31.1 25.0 25.7 25.8 21.8 20.0 20.0 20.0 20.8 19.6 17.9 % 15.0 10.0 5.0 - FY15 FY16 FY17 FY18 FY19E FY20E
EBITDA margin PAT margin
Source: Company, ICICI Direct Research
ICICI Securities Ltd | Retail Equity Research Page 3 BARC Rating Maintained leadership in the Marathi market with, on an Exhibit 4: Marathi market average, 42% market share, while Colors and STAR have 50.0 16.9% and 15.8% average viewership share 45.0 40.0 35.0 30.0 25.0 20.0
15.0 Market Share (%) Share Market 10.0 5.0
-
Wk 39
Wk 38
Wk 35
Wk 37
Wk 34
Wk 36
Wk 33
Wk 32 Wk 29
Wk 31 Wk 28
Wk 30 Wk 27 Zee Marathi Zee Talkies Colors Marathi STAR Pravah
Source: Company, ICICI Direct Research
Zee Bangla has taken further lead vs STAR Jalsha with Exhibit 5: Bengali market 41.4% average viewership share 50.0 45.0 40.0 35.0 30.0 25.0 20.0
15.0 Market Share (%) Share Market 10.0 5.0
-
Wk 39
Wk 38
Wk 37 Wk 35
Wk 36 Wk 34
Wk 33
Wk 32
Wk 31 Wk 29
Wk 30 Wk 28 Wk 27 STAR Jalsha Zee Bangla Jalsha Movies Colors Bangla
Source: Company, ICICI Direct Research
Exhibit 6: Telugu market 29.0 Zee Telugu is now No 2 player and has taken the lead vs. other players in the last five to six weeks, surpassing ETV 27.0 and Gemini TV 25.0
23.0
21.0 Market Share (%) Share Market
19.0
17.0
Wk 39
Wk 38
Wk 37
Wk 35 Wk 36
Wk 34
Wk 33
Wk 32
Wk 31
Wk 29 Wk 30
Wk 28 Wk 27 STAR Maa ETV Telugu Gemini TV Zee Telugu
Source: Company, ICICI Direct Research
ICICI Securities Ltd | Retail Equity Research Page 4
Exhibit 7: Kannada Market 40.0 35.0 30.0 25.0 20.0
15.0 Market Share (%) Share Market 10.0
5.0
Wk 27
Wk 28
Wk 29
Wk 30
Wk 31
Wk 32
Wk 33
Wk 34
Wk 35
Wk 36
Wk 37
Wk 38 Wk 39 Colors Kannada Zee Kannada Udaya Movies Udaya TV STAR Suvarna
Source: Company, ICICI Direct Research
Zee Tamil further improved its market share and is No 2 Exhibit 8: Tamil Market player as far as latest rankings 50.0 45.0 40.0 35.0 30.0 25.0
Market Share (%) Share Market 20.0 15.0
10.0
Wk 27
Wk 28
Wk 29
Wk 30
Wk 31
Wk 32
Wk 33
Wk 34
Wk 35
Wk 36
Wk 37
Wk 38 Wk 39 Sun TV STAR Vijay KTV Zee Tamil
Source: Company, ICICI Direct Research
Exhibit 9: Oriya market Zee Sarthak continued to maintain its strong leadership 50.0 position in the Oriya market with 42% average viewership 45.0 market share 40.0 35.0 30.0 25.0 20.0
15.0 Market Share (%) Share Market 10.0 5.0
-
Wk 27
Wk 28
Wk 29
Wk 30
Wk 31
Wk 32
Wk 33
Wk 34
Wk 35
Wk 36
Wk 37
Wk 38 Wk 39 Zee Sarthak Tarang TV Alankar Prarthana
Source: Company, ICICI Direct Research
ICICI Securities Ltd | Retail Equity Research Page 5
Zee Bouquet maintained leadership in Hindi GEC market Exhibit 10: Hindi GEC Market with 23.4% market share between Zee Anmol and Zee TV 15.0 14.0 13.0 12.0 11.0 10.0
Market Share (%) Share Market 9.0 8.0
7.0
Wk 27
Wk 28
Wk 29
Wk 30
Wk 31
Wk 32
Wk 33
Wk 34
Wk 35
Wk 36
Wk 37
Wk 38 Wk 39 Zee Anmol Zee TV Colors STAR Plus Rishtey Sony Pal
Source: Company, ICICI Direct Research
Exhibit 11: All Genres Market 19.0
17.0
15.0
13.0
11.0
Market Share (%) Share Market
9.0
7.0
Wk 27
Wk 28
Wk 29
Wk 30
Wk 31
Wk 32
Wk 33
Wk 34
Wk 35
Wk 36
Wk 37
Wk 38
Wk 39
Sun TV Zee Anmol Zee TV Colors
Source: Company, ICICI Direct Research
ICICI Securities Ltd | Retail Equity Research Page 6
Conference Call Highlights
Aiming for 30%+ revenue contribution from Zee5 in the next five years, planning to launch 60 shows in the next six to nine months: As per the management, ZEE5 has been the fastest growing digital entertainment platform and has become the No. 2 platform in India. The management indicated that they expect 30%+ revenue contribution from Zee5 in the next five years. The company released 29 original shows on Zee5 till date including two series of its marquee property Karenjit Kaur – An Untold Story. The management envisaged production of 600 hours of digital content in the next 18 months including 60 shows in the next six to nine months. The company shares that Zee5 has 41.3 million monthly active users (MAU) in September 2018, up 190% compared to April 2018 while Zee5 users currently spend an average of 31 minutes per day on the platform, with ~60% of viewership coming from regional space. As per the management, cost of producing digital content is 3x that of TV content. The company launched Zee5 in international markets ex north America and China on October 2, 2018
Maintained 30%+ EBITDA margins for FY19 despite digital investments; inventory investments to be moderate: The management indicated that despite incremental spending on digital platform Zee5, they would maintain EBITDA margin upwards of 30% in FY19. They also indicated that content investment intensity is expected to taper down in FY19 while movie spending will not be even half of FY18 levels of ~| 900 crore
Maintained industry beating ad revenue growth guidance in FY19; raised subscription growth guidance for FY19: The management indicated that domestic ad revenue for the quarter was boosted by viewership market share in some of its key markets as well as some gain coming in from Zee5. The management guided for industry beating domestic ad revenue growth in FY19, with mid teen growth in H2FY19. They indicated that subscription growth for the quarter was boosted by Zee5 as well as better monetisation, especially in the phase III markets. The management was also confident of beating its earlier mid-teen domestic subscription growth guidance for FY19
Continue to explore partnership with other players in digital ecosystem; planning to launch new channel in Kerala: The management indicated that content deal with two large telcos would be able to get some consumer insights in terms of number of subscribers accessing their content or average minute per user, etc, which would be useful for them to fine tune their digital strategy going ahead. As per the management, they are exploring similar deals with other telecom operators, broadband service providers and e- commerce companies. The management indicated they are planning to launch a new channel ’Zee Keralam’ in December while launch of movie channels and other regional channels has been postponed to next fiscal vs. earlier guidance in FY19
Other highlights: i) The management indicated that it expects to recover its investment in SGGD sometime in this month wherein it expects returns of 11% on this investment against original expected 17% returns, ii) The management indicated they have a cash balance of | 3,000 crore on the books and intends to return anything more than | 1000 crore to shareholders
ICICI Securities Ltd | Retail Equity Research Page 7
Valuation We note that while Zee’s market share gain across genres and bouquet offering lends it a competitive advantage, the outlook ahead will largely be led by digital strategy success. The OTT space, nascent currently, warrants a huge content spending strategy and ability to fight out with the global biggies. While we maintain our BUY rating (given the recent price correction), we now value the company at 27x FY20E P/E (vs. 30x earlier) to arrive at a target price of | 540. Lower target multiple is on account of uncertainty that digital space poses.
Exhibit 12: Valuations Sales Growth EPS Growth PE EV/EBITDA RoNW RoCE (| cr) (%) (|) (%) (x) (x) (%) (%) FY17 6434.1 10.0 23.1 25.2 19.9 20.9 15.0 21.2 FY18 6685.7 3.9 15.4 -33.4 29.9 19.8 15.3 25.6 FY19E 7754.1 16.0 15.7 1.8 29.3 16.3 14.7 24.5 FY20E 8806.1 13.6 20.0 27.5 23.0 13.6 16.0 25.5
Source: Company, ICICI Direct Research
ICICI Securities Ltd | Retail Equity Research Page 8
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 Sep-15 Dec-15 Feb-16 May-16 Jul-16 Oct-16 Dec-16 Feb-17 May-17 Jul-17 Oct-17 Dec-17 Mar-18 May-18 Jul-18 Oct-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 (as on Q1FY19) Shareholding Pattern Rank Name Latest Filing Date % O/S PositionPosition (m) Change (m) (in %) Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 1 Cyquator Media Services Pvt. Ltd. 30-06-2018 25.1 241.41M 0.0 Promoter 43.07 43.07 41.62 41.62 41.62 2 Essel Group 30-06-2018 16.5 158.35M +0.72M FII 43.85 42.25 41.38 40.77 40.77 3 OppenheimerFunds, Inc. 31-05-2018 7.5 72.40M -0.02M DII 5.83 8.08 10.61 10.93 10.93 4 Life Insurance Corporation of India 30-06-2018 4.9 46.95M 0.0 Others 7.25 6.60 6.39 6.68 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 9 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 7,754.1 8,806.1 Profit after Tax 2,221.7 1,479.1 1,505.7 1,920.1 Growth (%) 10.0 3.9 16.0 13.6 Add: Depreciation 115.2 182.1 232.6 237.8 Operational Cost 2,782.5 2,527.5 2,897.0 3,302.3 Add: Interest paid 137.2 144.8 138.2 131.0 Employee Expenses 604.3 665.7 699.9 792.5 (Inc)/dec in Current Assets -593.1 -1,390.5 -834.9 -643.2 Admin & Other Expenses 673.2 839.0 989.0 1,012.7 Inc/(dec) in CL and Provisions 55.7 358.5 292.2 287.7 Marketing Expenses 447.3 577.3 685.0 792.5 Others 0.0 0.0 0.0 0.0 Total Operating Expenditure 4,507.3 4,609.5 5,270.8 5,900.1 CF from operating activities 1,936.7 774.0 1,333.9 1,933.4 EBITDA 1,926.9 2,076.1 2,483.3 2,906.0 (Inc)/dec in Investments -288.8 -183.2 -550.0 -850.0 Growth (%) 27.6 7.7 19.6 17.0 (Inc)/dec in Fixed Assets -282.6 -346.3 -300.0 -300.0 Depreciation 115.2 182.1 232.6 237.8 Others 597.1 -143.7 -1.9 -2.0 Interest 137.2 144.8 138.2 131.0 CF from investing activities 25.7 -673.2 -851.9 -1,152.0 Other Income 3.6 433.6 286.7 400.0 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 2,377.9 2,937.2 Inc/(Dec) in loan funds 0.2 (0.2) - - Minority Interest (1.2) (1.4) (1.9) (2.0) Interest paid 137.2 144.8 138.2 131.0 PAT from Associates (0.4) 1.2 2.9 1.6 Others -643.2 -863.8 -531.4 -517.0 Total Tax 680.5 840.9 876.9 1,020.8 CF from financing activities -312.1 -1,102.4 -393.2 -386.0 PAT 2,221.7 1,479.1 1,505.7 1,920.1 Net Cash flow 1,650.3 -1,001.6 88.8 395.4 Growth (%) 116.4 -33.4 1.8 27.5 Opening Cash 963.1 2,613.3 1,611.7 1,700.5 Adjusted PAT 1,285.2 1,393.3 1,505.7 1,920.1 Closing Cash 2,613.3 1,611.7 1,700.5 2,095.8 Growth (%) 25.2 8.4 8.1 27.5 Source: Company, ICICI Direct Research Reported EPS (|) 23.1 15.4 15.7 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 15.7 20.0 Preference Share Capital 1,907.7 1,524.5 1,524.5 1,524.5 Adjusted EPS 13.4 14.5 15.8 20.0 Reserve and Surplus 6,560.8 7,465.7 8,716.4 10,381.4 BV 89.2 94.6 107.6 125.0 Total Shareholders funds 8,564.5 9,086.2 10,336.9 12,002.0 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 11.9 Others 1.0 14.2 12.3 10.3 Operating Ratios (%) Total Liabilities 8,566.6 9,101.4 10,350.2 12,013.3 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 19.6 21.8 Gross Block 1,201.6 1,596.8 1,896.8 2,196.8 Inventory days 95.6 143.5 140.0 130.0 Less: Acc Depreciation 491.8 673.9 906.5 1,144.2 Debtor days 74.1 83.9 83.9 83.9 Net Block 709.8 923.0 990.3 1,052.6 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 1,068.4 1,130.6 RoE 15.0 15.3 14.7 16.0 Investments 1,593.6 2,056.0 2,606.0 3,456.0 RoCE 21.2 25.6 24.5 25.5 Inventory 1,684.4 2,627.8 2,974.2 3,136.4 RoIC 39.7 34.4 36.0 39.2 Debtors 1,305.9 1,536.5 1,782.1 2,023.9 Valuation Ratios (x) Loans and Advances 1,082.4 1,340.4 1,554.6 1,765.5 P/E 19.9 29.9 29.3 23.0 Other Current Assets 221.2 179.8 208.5 236.8 EV / EBITDA 20.9 19.8 16.3 13.6 Cash 2,613.3 1,611.7 1,700.5 2,095.8 EV / Net Sales 6.3 6.2 5.2 4.5 Total Current Assets 6,907.3 7,296.2 8,219.8 9,258.4 Market Cap / Sales 6.9 6.6 5.7 5.0 Creditors 489.1 1,149.7 1,333.4 1,514.3 Price to Book Value 5.2 4.9 4.3 3.7 Provisions 85.6 97.5 113.0 128.4 Solvency Ratios Other current liabilities 895.5 581.6 674.5 766.0 Debt/EBITDA 0.0 0.0 0.0 0.0 Total Current Liabilities 1,470.2 1,828.7 2,120.9 2,408.7 Debt / Equity 0.0 0.0 0.0 0.0 Net Current Assets 5,437.1 5,467.5 6,098.9 6,849.7 Current Ratio 7.5 4.6 4.5 4.4 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 10,350.2 12,013.3 . 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 10 ICICI Direct Research coverage universe (Media) CMP M Cap EPS (|) P/E (x) EV/EBITDA (x) RoCE (%) RoE (%) Sector / Company (|) TP(|) Rating (| Cr) FY18 FY19E FY20E FY18 FY19E FY20E FY18 FY19E FY20E FY18 FY19E FY20E FY18 FY19E FY20E DB Corp (DBCORP) 188 235 Hold 3,462 17.1 15.8 19.4 11.0 11.9 9.7 5.8 6.6 5.1 23.1 23.5 26.6 16.3 16.9 18.8 DISH TV (DISHTV) 55 80 Hold 10,173 -0.4 1.0 2.4 NM 53.9 22.6 9.5 5.4 4.7 3.1 9.2 11.2 0.1 2.8 6.3 ENIL (ENTNET) 626 780 Hold 2,984 7.5 13.7 23.9 83.7 45.6 26.2 25.0 18.5 12.6 6.2 10.3 16.0 3.5 6.9 10.8 Inox Leisure (INOX) 202 275 Buy 1,946 11.9 8.0 12.0 17.0 25.3 16.9 10.6 10.1 7.8 13.2 12.6 15.3 10.6 10.3 13.4 Jagran Prakashan (JAGPRA) 108 185 Hold 3,355 10.6 9.6 9.9 10.1 11.2 10.9 5.1 5.8 5.3 18.9 18.6 18.8 16.1 14.7 14.3 PVR (PVRLIM) 1,253 1,390 Hold 5,854 26.4 33.0 43.1 47.5 38.0 29.1 16.6 14.2 12.1 14.7 15.6 17.8 11.5 12.6 14.3 Sun TV (SUNTV) 639 920 Buy 25,182 28.8 35.7 41.8 22.2 17.9 15.3 11.6 9.2 7.4 35.5 36.7 36.0 24.2 25.0 24.2 TV Today (TVTNET) 390 450 Hold 2,326 19.9 26.6 30.0 19.6 14.7 13.0 10.2 7.9 6.3 30.4 30.9 29.7 19.3 20.0 19.0 ZEE Ent. (ZEEENT) 464 540 Buy 44,601 15.4 15.7 20.0 30.2 29.6 23.2 20.0 16.5 13.7 25.6 24.5 25.5 15.3 14.7 16.0 Source: Company, ICICI Direct Research
ICICI Securities Ltd | Retail Equity Research Page 11 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 12 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 Limited Sebi Registration is INZ000183631 for stock Broker. 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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ICICI Securities Ltd | Retail Equity Research Page 13