SECTOR: MEDIA
TV Today Network
STOCK INFO.
BLOOMBERG
BSE Sensex:20957.81
S&P CNX: 6241.10
TVTN@IN
REUTERS CODE
6 December 2013
Initiating Coverage
(Rs CRORES)
Buy
Rs118
TVTO.BO
Y/E MARCH
FY13
FY14E
FY15E
We recommend to BUY TV Today Network with one year price
target of
Rs
175 at 15xFY14E earnings.
TV Today Network runs four news channels namely AajTak,Headlines
Today,Tez and Dilli AajTak.
Digitisation, a windfall gains for broadcasters:
Broadcasters are
likely to enjoy windfall gains as digital cable opens up the under declared
pay-TV revenues. Digitisation will also ensure increase in cable
capacity, which will lead to reduction in carriage cost paid by
broadcasters to erstwhile analog cable oparators. The power of
bargaining will shift from distribution networks to content. In such a
scenario, we believe broadcasting networks will grow their profit at
CAGR of 35-40% during FY13-FY17 just because of increase in
subscription revenue, which will flow entirely to bottom line. Please
look at Table 1 and Table 2 for schedule of digitization and growth in
subscription revenue.
News Content's double whammy:
News channels suffer double
whammy as they need to pay high carriage fee on top of low
subscription income as compared to General Entertainment Channels
(GECs) to get their channels carried on analog networks. Carriage
fee is the single largest cost item in P&L of news channels at ~30-
35% of revenues. This has lead to financial bleeding of almost all
news channels. Two of the three listed players are barely profitable
and one is loss making for a long period of time. Digitisation will
reduce the carriage fee, which will ensure better financial performance
from news broadcasters.
TV Today Network, a turnaround:
Surge in revenues with not
much increase in associated cost will ensure a huge turnaround in
operational performance of the company. The company will likely report
life high profit at the end of FY14, which will also ensure RoE of
~20%. We expect revenues to grow at CAGR of 23% during FY13-
15E vs 10% growth during FY06-13. This will lead to disproportionate
growth in PAT at CAGR of 171% during FY13-15E vs PAT CAGR of
-11% during FY06-13.
Valuations and View:TV
Today is play on turnaround of news
broadcasting business as well as general theme of digitization in media
space. The stock offers attractive risk reward at ~10x FY14E EPS
with ~4% dividend yield in FY14E. Historically, the company has traded
at median PE of 21x and lowest PE of 9x since listing in FY04.
Therefore, we believe there is a decent upside to stock in 1 year time
frame even if we take 30% discount to median valuations. Recommend
BUY with target price of Rs 175 in 12 months time (15x FY14E, 30%
discount to median valuations).
Sales
EBITDA
PAT
BV/Share (Rs.)
EPS (Rs.)
EPS growth (%)
P/E (x)
P/BV (x)
EV/EBITDA (x)
Div yld (x)
ROE (%)
313
42
12
55
2
15%
58
2.2
16.6
0.6%
4%
415
135
69
65
12
476%
10
1.8
4.5
4.2%
19%
477
164
88
74
15
27%
8
1.6
3.3
5.9%
21%
KEY FINANCIALS
Shares Outstanding (Cr.)
Market Cap. (Rs Cr.)
Market Cap. (US$ m)
Sales CAGR 3 Yrs to FY13E
PAT CAGR 3 Yrs to FY13E
5.95
702
115
12%
77%
STOCK DATA
52-W High/Low Range (Rs)
Major Shareholders (as of Dec 2010)
Promoter
Domestic Inst & Govt.
Foreign
Public & Others
Average Daily Turnover(6 months)
Volume
Value (Rs million)
1/6/12 Month Rel. Performance (%)
1/6/12 Month Abs. Performance (%)
175170
1.61
39/51/28
38/52/34
124/53
58%
4%
0%
39%
Maximum Buy Price :
Rs
Rs120
Rakesh Tarway
(rakesh.tarway@MotilalOswal.com); Tel: +91 22 30896679

TV Today Network
About the company:
TV Today Network Ltd is a company engaged in news broadcasting operations. The
company is a part of India Today group and operates a network of TV news channels,
namely Aaj Tak, Headlines Today, Tez and Dilli Aaj Tak. They are first Indian broadcaster
to uplink from India, a 24 hour Hindu news channel.
The company also has also made
strategic investment worth Rs 45 Crore during FY12 in Mail Today Newspaper
(Private) Limited, which publishes a news paper called Mail Today.
The company
has one subsidiary, namely TV Today Network (Business) Ltd
Risk Factors:
Disitization Rollout: TV Today's investment story is entirely built on estimates of declining
carriage fees and growing subscription revenues. This in turn is a function of the pace at
which digitisation takes place in India. Rollout thus far has faced issues of non-
commencement of billing, even in Phase - 1 cities. Factors such as these, and general
delay in roll-out, as has been seen in several cities, can potentially have a negative impact
on our estimates.
Uncertain Advertising Environment: Weaker economic growth may put pressure on Ad
revenues. TV advertisement has largely been insulated from slowdown in Advt due to
robust FMCG Ad spends. Further slowdown in economy, may not keep FMCG Ad spend
insulated.
Competitive Intensity: News broadcasting is an extremely competitive space with more
than 20 news broadcasters. News broadcasters find it difficult to differentiate on content,
which makes the genre a case study of perfect competition. Aaj Tak is a leader in Hindi
news basket for an extended period of time and ad rates are at the top quartile of industry.
Increase in competitive intensity may take away this leadership.
Schedule for Digitization (Table 1)
Phase
1
2
3
4
Source: TRAI, Bharat Business Channel DRHP
Cities
Delhi, Kolkata,Mumbai and Chennai
Cities with 1 mn+ population
All Urban Areas
Rest of India
Sunset Date
31st Oct 12
31st Mar 13
30th Sep 2014
31st Dec 2014
Potential Subs(Mn)
8
20
61
NA
Growth in subscription revenue (Table 2)
Broadcasting revenues(Rs in Bn)
Advertisement
Subscription
Total
Sub/Total
Source: FICCI KPMG 2013
2012
125
70
195
36%
2013E
139
87
226
38%
2014E
157
116
273
42%
2015E
180
156
336
46%
2016E
207
191
398
48%
2017E
240
224
464
48%
6 December 2013
2

TV Today Network
IVRCL: Financials and Valuation
TV Today Network. Financials & Valuation
INCOME STATEMENT (CONSOLIDATED)
Y/E MARCH
(
Rs
CRORE)
RATIOS (CONSOLIDATED)
Y/E MARCH
FY11A FY12A
FY13A FY14E FY15E
FY11A FY12A FY13A FY14E FY15E
Revenues
growth (%)
Production Cost
Employee Cost
Other Expenses
Operating Profit
% of Net Sales
Other Income
Interest+Bank Charges
Depreciation
Other Write Offs
PBT
Extraordinary income
Tax
Rate (%)
Adjusted PAT
Reported PAT
293
3%
39
88
141
26
9%
9
1
16
-
18
0
6
33%
12
12
308
5%
40
93
149
26
9%
6
1
14
-
16
0
6
36%
10
11
313
1%
39
93
146
35
11%
7
3
21
-
18
0
5
31%
12
12
415
33%
42
96
149
128
31%
7
4
28
-
103
-
34
33%
69
69
477
15%
52
108
161
156
33%
9
4
29
-
132
-
43
33%
88
88
Adjusted EPS(Rs)
Rs)
growth (%)
Book Value
DPS
Payout (incl. Div. Tax.)
Total Debt/Equity
Valuation (x)
P/E
EV/EBITDA
EV/Sales
Price/Book Value
Dividend Yield on CMP(%)
Return Ratios (%)
RoE
OPM
NPM
2
-56%
53
0.75
42%
0.10
2
-15%
53
0.75
50%
0.22
2
15%
55
0.75
43%
0.23
12
476%
65
5.00
59%
0.14
15
27%
74
7.00
59%
0.08
-
-
-
-
-
-
-
-
-
-
58.4
16.6
2.2
2.2
0.6%
10.1
4.5
1.4
1.8
4.2%
7.9
3.3
1.1
1.6
5.9%
4.0%
4.1%
3.3%
3.3%
3.8% 19.5% 21.3%
13.1% 32.0% 33.9%
3.8% 16.4% 18.2%
11.7% 10.2%
BALANCE SHEET (CONSOLIDATED)
Y/E MARCH
FY11A FY12A
(Rs CRORE)
Rs
FY13A FY14E FY15E
CASH FLOW STATEMENT
(CONSOLIDATED)
(Rs CRORE)
Rs
Y/E MARCH
FY11A FY12A FY13A FY14E FY15E
Share Capital
Reserves
Net Worth
Loans
Other Liabilities
SOURCES OF FUNDS
Gross Fixed Assets
Less: Depreciation
Net Fixed Assets
Capital WIP
Curr. Assets
Inventories
Debtors
Cash & Investments
Loans & Advances
Creditors and Provision
Net Current Assets
Net Deferred Tax Assets
Other Assets
30
283
312
18
12.3
343
202
139
63
75
235
-
99
80
56
61
174
11
19
30
288
318
56
13.38
388
204
149
55
175
191
-
89
60
42
61
129
15
14
388
30
295
325
60
399
383
161
222
10
226
-
94
77
56
85
141
17
10
399
30
358
387
40
441
407
188
219
-
310
-
109
145
56
114
196
17
10
441
30
411
441
20
475
422
218
205
-
378
-
134
188
56
134
244
17
10
475
Op Profit Before WC Changes
Working Capital Changes:
Inventories
Debtors
31
0
(16)
31
0
7
37
(14)
30
(4)
57
(83)
3
(79)
0
39
(5)
(1)
(0)
32
10
2
12
42
0
(8)
(16)
26
3
(6)
39
(16)
1
(15)
0
4
(5)
(6)
(0)
(7)
17
12
29
135
0
(15)
0
28
13
(34)
114
(15)
0
(15)
0
(20)
(6)
(4)
0
(30)
69
31
100
164
0
(25)
0
20
(5)
(43)
116
(15)
0
(15)
0
(20)
(35)
(4)
0
(58)
43
100
143
13.81 13.81 13.81
Loans and Advances and Others 11
Current Liabilities & Provisions (11)
Total working cap changes
Direct Taxes Paid
(16)
(5)
Net Cash from Oper. Activities 9
(Inc)/Dec in FA
(Inc)/Dec in Investments
Net Cash from Investments
Equity Issuance/Repayment
Debt Issuance/Repayment
Dividend Paid
Interest Paid
Others
Net Cash from Financing
Inc/Dec of Cash
Add: Beginning Balance
Closing Balance
(33)
77
43
0
(25)
(5)
(1)
(22)
(54)
(1)
3
2
APPLICATION OF FUNDS 343
6 December 2013
3

TV Today Network
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Disclosure of Interest Statement
1. Analyst ownership of the stock
2. Group/Directors ownership of the stock
3. Broking relationship with company covered
4. Investment Banking relationship with company covered
TV Today Network
No
No
No
No
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