Tv18 Broadcast reports 306% Net Income growth in 2016 and 10.8% Revenue growth

20-04-2016 • About Tv18 Broadcast ($TV18BRDCST) • By InTwits

Tv18 Broadcast reported FY2016 financial results today. Here are the key drivers of the company's long term financial model:

Tv18 Broadcast is a fast growth stock: FY2016 revenue growth was 10.8%, 5 year revenue CAGR was 26.0% at FY2016 ROIC 5.2%
EBITDA Margin is quite volatile: 10.3% in FY2016, 11.0% in FY2015, 10.8% in FY2014, 6.8% in FY2013, -4.2% in FY2012
Tv18 Broadcast has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.5%. At the same time it's a lot of higher than industry average of 5.8%.
CAPEX is quite volatile: ₹1,117m in FY2016, ₹948m in FY2015, ₹606m in FY2014, ₹393m in FY2013, ₹486m in FY2012
The company has potentially unprofitable business model: ROIC is 5.2%

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 surged on 10.8%. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased slightly on 0.67 pp from 11.0% to 10.3% in FY2016. During FY2012-FY2016 EBITDA Margin topped in FY2015 at 11.0%.

Net Income margin increased on 5.1 pp from 1.9% to 7.0% in FY2016. Net Income margin followed a growing trend at 2.8 pp per annum in the last 5 years.

Investments (CAPEX, working capital and M&A)

The company's CAPEX/Revenue was 4.3% in FY2016. The company showed CAPEX/Revenue growth of 2.0 pp from 2.3% in FY2013 to 4.3% in FY2016. Average CAPEX/Revenue for the last three years was 3.8%. During the last 5 years CAPEX as a % of Revenue bottomed in FY2013 at 2.3% and was growing since that time.

Return on investment

The company operates at low ROIC (5.2%) and ROE (5.1%). ROIC showed almost no change in FY2016. ROE increased on 3.8 pp from 1.3% to 5.1% in FY2016. During FY2012-FY2016 ROIC topped in FY2015 at 5.3%. ROE followed a growing trend at 3.5 pp per annum in FY2012-FY2016.

Leverage (Debt)

Debt level is 1.4x Net Debt / EBITDA and 2.0x Debt / EBITDA. Net Debt / EBITDA jumped on 0.1x from 1.3x to 1.4x in FY2016. Debt increased on 4.3% while cash dropped on 11.8%.

Tv18 Broadcast has short term refinancing risk: cash is only 35.1% of short term debt.

Valuation and dividends

The company's trades at EV/EBITDA 27.0x and P/E 37.5x while industy averages are 17.8x and 21.9x. The company's EV/(EBITDA-CAPEX) is 46.5x with the industry average at 22.8x.

Management team

The company's CEO Avinash Kaul has spent 6 years with the company. Ramesh Kumar Damani is a Tv18 Broadcast's CFO. Ramesh Kumar Damani has spent 5 years at the company.

Financial and operational results

Tv18 Broadcast ($TV18BRDCST) key annual financial indicators

mln. INR	2012	2013	2014	2015	2016	2016/2015
P&L
Revenue	13,928	16,907	19,681	23,184	25,690	10.8%
SG&A					5,052
EBITDA	-590	1,156	2,129	2,552	2,657	4.1%
Net Income	-738	-254	1,036	445	1,810	306.4%
Balance Sheet
Cash	2	2,694	2,884	1,677	1,480	-11.8%
Short Term Debt	6,704	3,830	3,879	3,547	4,211	18.7%
Long Term Debt	2,942	1,673	1,018	1,464	1,016	-30.7%
Cash flow
Capex	486	393	606	948	1,117	17.8%
Ratios
Revenue growth	72.1%	21.4%	16.4%	17.8%	10.8%
EBITDA growth	-240.0%	-296.0%	84.2%	19.9%	4.1%

EBITDA Margin	-4.2%	6.8%	10.8%	11.0%	10.3%	-0.7%
SG&A, % of revenue					19.7%
Net Income Margin	-5.3%	-1.5%	5.3%	1.9%	7.0%	5.1%
CAPEX, % of revenue	3.5%	2.3%	3.1%	4.1%	4.3%	0.3%

ROIC	-6.4%	2.7%	4.0%	5.3%	5.2%	-0.1%
ROE	-10.9%	-1.3%	3.1%	1.3%	5.1%	3.8%
Net Debt/EBITDA		2.4x	0.9x	1.3x	1.4x	0.1x

Peers in Broadcasting & Cable TV

Below we provide Tv18 Broadcast benchmarking against other companies in Broadcasting & Cable TV 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 5	FY2012	FY2013	FY2014	FY2015	FY2016
Hinduja Ventures ($HINDUJAVEN)	25.6%	31.8%	29.6%	81.8%	-
Zee Media Corporation ($ZEEMEDIA)	10.6%	-1.7%	11.3%	62.6%	-
Siti Cable Network ($SITICABLE)	12.0%	37.0%	41.6%	36.2%	-
Entertainment Network (India) ($ENIL)	-32.9%	9.2%	13.2%	14.0%	-
Zee Entertainment Enterprises ($ZEEL)	0.6%	21.7%	18.6%	11.5%	-
Median (9 companies)	10.6%	9.2%	22.9%	11.5%	-
Tv18 Broadcast ($TV18BRDCST)	-	21.4%	16.4%	17.8%	10.8%

Top companies by EBITDA margin, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Hinduja Ventures ($HINDUJAVEN)	27.7%	21.0%	18.2%	54.7%	-
Entertainment Network (India) ($ENIL)	32.1%	30.8%	32.4%	33.3%	-
Raj Television Network ($RAJTV)	-	-	-	29.6%	-
Dish Tv India ($DISHTV)	25.5%	27.3%	26.4%	28.1%	-
Zee Entertainment Enterprises ($ZEEL)	24.4%	25.9%	27.6%	25.7%	-
Median (11 companies)	18.6%	21.0%	19.9%	24.1%	-
Tv18 Broadcast ($TV18BRDCST)	-4.2%	6.8%	10.8%	11.0%	10.3%

Top companies by CAPEX/Revenue, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Siti Cable Network ($SITICABLE)	10.6%	80.9%	73.0%	32.5%	-
Den Networks ($DEN)	12.6%	60.4%	53.2%	28.5%	-
Dish Tv India ($DISHTV)	33.5%	32.2%	11.9%	26.3%	-
Hinduja Ventures ($HINDUJAVEN)	11.6%	65.8%	14.2%	7.1%	-
Balaji Telefilms ($BALAJITELE)	2.4%	1.3%	0.6%	4.3%	-
Median (9 companies)	10.6%	19.0%	13.1%	4.3%	-
Tv18 Broadcast ($TV18BRDCST)	3.5%	2.3%	3.1%	4.1%	4.3%

Top companies by ROIC, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Hinduja Ventures ($HINDUJAVEN)	8.3%	4.0%	1.0%	39.5%	-
Dish Tv India ($DISHTV)	-2.5%	-4.6%	8.7%	24.0%	-
Zee Entertainment Enterprises ($ZEEL)	21.1%	24.2%	25.5%	22.1%	-
Entertainment Network (India) ($ENIL)	15.2%	14.8%	16.7%	17.9%	-
Raj Television Network ($RAJTV)	10.1%	10.3%	11.5%	9.1%	-
Median (12 companies)	3.0%	3.8%	5.4%	9.1%	-
Tv18 Broadcast ($TV18BRDCST)	-6.4%	2.7%	4.0%	5.3%	5.2%

Top companies by Net Debt / EBITDA


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Zee Media Corporation ($ZEEMEDIA)	0.2x	0.3x	3.0x	10.1x	-
Siti Cable Network ($SITICABLE)	56.0x	9.5x	5.6x	6.7x	-
Den Networks ($DEN)	-0.5x	2.4x	1.7x	6.0x	-
Dish Tv India ($DISHTV)	2.1x	2.6x	2.0x	1.4x	-
Hinduja Ventures ($HINDUJAVEN)	0.7x	5.9x	5.6x	1.1x	-
Median (10 companies)	-0.1x	1.5x	1.7x	1.0x	-
Tv18 Broadcast ($TV18BRDCST)	-	2.4x	0.9x	1.3x	1.4x

Tv18 Broadcast stock price chart

Tv18 Broadcast financials

mln.	FY2010	FY2011	FY2012

Revenue	28,076	8,092	13,928
EBITDA	-979.331	421.2	-589.780
Net income	-1,095.590	-174.046	-737.795
CAPEX	80.144	60.335	485.7
Debt	4,720	4,992	9,646
Cash	2,383	1,672	1.974

About Tv18 Broadcast

TV18 Broadcast Limited, together with its joint ventures, produces and telecasts news and current affairs programs primarily in India. It operates Hindi and English business news channels, including CNBC-TV18, CNBC Awaaz, and CNBC-TV18 Prime HD; Hindi and English general news channels, such as CNN-IBN, IBN7, and News18; and regional news channels comprising IBN-Lokmat, ETV News, ETV Uttar Pradesh, ETV Madhya Pradesh, ETV Rajasthan, ETV Bihar, ETV Urdu, ETV Kannada, ETV Bangla, and ETV Haryana. The company also operates general entertainment television channels, such as Colors, Colors HD, Rishtey, MTV India, MTV Indies, Vh1, Sonic, Nick, Nick Jr., and Comedy Central; and regional entertainment channels, including ETV Marathi, ETV Kannada, ETV Bangla, ETV Gujarati, and ETV Oriya. In addition, it operates HistoryTV18, a factual entertainment channel. Further, the company manages various services, including domestic channel distribution, placement, international channel distribution and advertising sales, new media distribution, and content syndication for broadcasters. Additionally, it is involved in the acquisition, production, syndication, marketing, and distribution of full length feature films in India, as well as in the distribution of Indian films in various international markets. The company was formerly known as ibn18 Broadcast Limited and changed its name to TV18 Broadcast Limited in June 2011. TV18 Broadcast Limited was incorporated in 2005 and is based in Noida, India. TV18 Broadcast Limited is a subsidiary of Network18 Media & Investments Limited.