Network18 Media & Investments reports 38.6% CAPEX growth in 2016 and 8.6% Revenue growth

20-04-2016 • About Network18 Media & Investments ($NETWORK18) • By InTwits

Network18 Media & Investments reported FY2016 financial results today. Here are the key drivers of the company's long term financial model:

Network18 Media & Investments is a fast growth stock: FY2016 revenue growth was 8.6%, 5 year revenue CAGR was 18.0% at FY2016 ROIC 2.0%
Network18 Media & Investments has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.3%. At the same time it's a lot of higher than industry average of 3.4%.
CAPEX is quite volatile: ₹1,838m in FY2016, ₹1,326m in FY2015, ₹1,170m in FY2014, ₹699m in FY2013, ₹862m in FY2012
The company has potentially unprofitable business model: ROIC is 2.0%
It operates with high leverage: Net Debt/EBITDA is 4.9x while industry average is 13.6x

Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.

Revenue and profitability

The company's Revenue increased on 8.6%. Revenue decline was accelerating on average at -5.3 pp per annum in the last 5 years. EBITDA Margin showed almost no change in FY2016. EBITDA Margin followed a growing trend at 4.5 pp per annum in FY2012-FY2016.

SG&A as a % of Revenue decreased slightly on 1.6 pp from 26.6% to 25.0% in FY2016.

Net Income margin jumped on 33.1 pp from -34.1% to -1.0% in FY2016.

Investments (CAPEX, working capital and M&A)

In FY2016 the company had CAPEX/Revenue of 5.4%. CAPEX/Revenue increased on 2.5 pp from 3.0% in FY2013 to 5.4% in FY2016. Average CAPEX/Revenue for the last three years was 4.7%. Network18 Media & Investments investments to CAPEX were large: 102% of EBITDA.

Return on investment

The company operates at low but positive ROIC (2.0%) and negative ROE (-2.2%). ROIC showed almost no change in FY2016. ROE surged on 47.1 pp from -49.2% to -2.2% in FY2016. ROIC followed a growing trend at 3.0 pp per annum in the last 5 years.

Leverage (Debt)

Debt level is 4.9x Net Debt / EBITDA and 5.9x Debt / EBITDA. Net Debt / EBITDA surged on 0.6x from 4.2x to 4.9x in FY2016. Debt jumped on 11.1% while cash dropped on 35.0%.

Network18 Media & Investments has short term refinancing risk: cash is only 19.9% of short term debt.

Financial and operational results

Network18 Media & Investments ($NETWORK18) key annual financial indicators

mln. INR	2012	2013	2014	2015	2016	2016/2015
P&L
Revenue	19,719	23,545	26,841	31,088	33,771	8.6%
SG&A				8,254	8,438	2.2%
EBITDA	-2,741	-408	997	1,567	1,803	15.1%
Net Income	-3,927	-1,055	-368	-10,599	-347
Balance Sheet
Cash	1,339	3,922	3,110	2,970	1,930	-35.0%
Short Term Debt	12,814	7,115	8,950	8,068	9,673	19.9%
Long Term Debt	5,908	2,450	1,525	1,551	1,017	-34.4%
Cash flow
Capex	862	699	1,170	1,326	1,838	38.6%
Ratios
Revenue growth	33.4%	19.4%	14.0%	15.8%	8.6%
EBITDA growth	-928.7%	-85.1%	-344.2%	57.1%	15.1%

EBITDA Margin	-13.9%	-1.7%	3.7%	5.0%	5.3%	0.3%
SG&A, % of revenue				26.6%	25.0%	-1.6%
Net Income Margin	-19.9%	-4.5%	-1.4%	-34.1%	-1.0%	33.1%
CAPEX, % of revenue	4.4%	3.0%	4.4%	4.3%	5.4%	1.2%

ROIC	-10.8%	-2.8%	0.3%	1.6%	2.0%	0.4%
ROE	-74.1%	-7.4%	-1.4%	-49.2%	-2.2%	47.1%
Net Debt/EBITDA			7.4x	4.2x	4.9x	0.6x

Peers in Holding Companies

Below we provide Network18 Media & Investments benchmarking against other companies in Holding Companies industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.

Top companies by Revenue growth, %


Top	FY2012	FY2013	FY2014	FY2015	FY2016
Kirloskar Brothers Investments ($KBIL)	8,068.8%	-2.8%	-4.6%	5.2%	-
Binani Industries ($BINANIIND)	26.5%	46.0%	5.7%	-8.5%	-
Median (2 companies)	4,047.6%	21.6%	0.5%	-1.7%	-
Network18 Media & Investments ($NETWORK18)	-	19.4%	14.0%	15.8%	8.6%

Top companies by EBITDA margin, %


Top	FY2012	FY2013	FY2014	FY2015	FY2016
Kirloskar Brothers Investments ($KBIL)	13.2%	14.6%	13.2%	9.6%	-
Binani Industries ($BINANIIND)	10.1%	11.8%	7.0%	3.6%	-
Median (2 companies)	11.7%	13.2%	10.1%	6.6%	-
Network18 Media & Investments ($NETWORK18)	-13.9%	-1.7%	3.7%	5.0%	5.3%

Top companies by CAPEX/Revenue, %


Top	FY2012	FY2013	FY2014	FY2015	FY2016
Kirloskar Brothers Investments ($KBIL)	3.7%	4.8%	4.3%	2.7%	-
Binani Industries ($BINANIIND)	79.8%	6.4%	5.6%	2.1%	-
Median (2 companies)	41.8%	5.6%	5.0%	2.4%	-
Network18 Media & Investments ($NETWORK18)	4.4%	3.0%	4.4%	4.3%	5.4%

Top companies by ROIC, %


Top	FY2012	FY2013	FY2014	FY2015	FY2016
Kirloskar Brothers Investments ($KBIL)	34.9%	20.6%	15.8%	9.4%	-
Binani Industries ($BINANIIND)	3.2%	4.9%	0.7%	-2.0%	-
Median (2 companies)	19.1%	12.7%	8.2%	3.7%	-
Network18 Media & Investments ($NETWORK18)	-10.8%	-2.8%	0.3%	1.6%	2.0%

Top companies by Net Debt / EBITDA


Top	FY2012	FY2013	FY2014	FY2015	FY2016
Binani Industries ($BINANIIND)	13.0x	8.0x	15.2x	36.1x	-
Kirloskar Brothers Investments ($KBIL)	0.3x	-0.1x	-0.2x	-0.2x	-
Median (2 companies)	6.6x	4.0x	7.5x	17.9x	-
Network18 Media & Investments ($NETWORK18)	-	-	7.4x	4.2x	4.9x

Network18 Media & Investments stock price chart

Network18 Media & Investments financials

mln.	FY2010	FY2011	FY2012

Revenue	36,810	14,779	19,719
EBITDA	65.339	330.8	-2,741.249
Net income	-1,344.360	-366.842	-3,926.640
CAPEX	4,121	327.0	862.2
Debt	21,106	16,802	18,722
Cash	5,159	3,253	1,339

About Network18 Media & Investments

Network18 Media & Investments Limited operates as a media and entertainment company in India. It is engaged in broadcasting, telecasting, relaying, and transmitting general news programs. The company operates business news channels, including CNBC-TV18, CNBC Awaaz, and CNBC-TV18 Prime HD; general news channels, such as CNN-IBN, IBN 7, and News18; and regional news channels, such as IBN-Lokmat and ETV News. It also operates general and regional entertainment channels, including Colors, Colors HD, Rishtey, MTV India, MTV Indies, Vh1, Sonic, Nick, Nick Jr., Comedy Central, ETV Marathi, ETV Kannada, ETV Bangla, ETV Gujarati, and ETV Oriya channels; and HistoryTV18, a factual entertainment channel. In addition, the company is engaged in the acquisition, production, syndication, marketing, and distribution of feature films in India; and distribution of Indian films in international markets. Further, it operates content Websites, including moneycontrol.com, in.com, Firstpost.com, IBNLive.com, and News18.coml; and digital commerce Websites, such as HomeShop18 for home shopping, as well as bookmyshow.com that provides online booking for movies, plays, sporting events, and shows in India and internationally. Additionally, the company provides business-to-consumer publications and business-to-business publications; operates B2B online properties; and offers mobile applications. It also provides investment, strategic, research, advisory, and consultancy services to clients in media and other industries; printing services; and content development for television and film entertainment, as well as engaged in multiplex operation and management business under the brand GLITZ Cinemas. The company was formerly known as Network18 Fincap Private Limited and changed its name to Network18 Media & Investments Limited in December 2007. Network18 Media & Investments Limited was incorporated in 1996 and is based in Noida, India.