Radio: Well tuned to flourish

Radio| Well tuned to flourish

Radio

Well tuned to flourish



Radio industry to grow at ~16%

next 5 years

Radio (INR b)

Growth

30%

20%

10%

-10%



Over the past 18 months, the Indian radio industry has witnessed a 66% increase in

the number of channels to reach 407, led by phase-III auctions and phase-II license

renewals. The launch of these channels over the last six months is likely to drive radio

industry revenue CAGR of 16% over CY16-21E, ~1.4x of traditional media (ex-digital).

Despite the evolution of the digital medium, radio remains a stable advertising medium

globally, backed by its localized and interactive content. Notably, radio operators have

introduced digital radio to mitigate the risk of losing share to digital medium. We

believe the radio listenership base in India is likely to increase going forward, driven by

(i) wider footprint and (ii) phase-III-led content differentiation avenues.

Entertainment Network India Limited (ENIL)/Music Broadcast’s (MBL) heavy upfront

investment of INR7.1b/3.4b in phase-III auctions and phase II renewals led to single-

digit return ratios in FY17. However, ENIL/MBL are expected to reach RoIC of 20%/25%

by FY20, led by improving EBITDA margins and asset turns.

Large operators like ENIL/MBL with market shares of 30%/14% have strong execution

capabilities. Inventory addition should help ENIL/MBL to record revenue growth of

16%/15% and EBITDA CAGR of 30%/20% over FY17-20.

We initiate coverage on ENIL with a Neutral rating and a TP of INR 928, assigning 20x

on FY19E EBITDA of INR2.1b, led by its healthy growth and market leadership. We

initiate coverage on MBL with Buy rating and a TP of INR 469, assigning 18x EV/EBITDA

on FY19E EBITDA of INR1.3b, as we believe the company should improve its market

share led by an increasing listenership base.

Asset monetization phase to improve sector RoIC

Phase-III opens up growth opportunities

The Indian radio industry has witnessed significant inventory (advertising time)

growth over the past 18 months. Notably, over this period, the number of radio

channels in the country increased 66% to 407 from 245, while the total number of

cities with presence of private FM operators has grown to 113 from 85. This has led

to steady growth in advertising time in an otherwise inventory-starved radio

industry. Additionally, the renewal of Phase-II licenses in FY16 for 15 years has

provided much-needed clarity on long-term business continuity and mitigated the

risk of high license cost. Also, we note that the radio industry’s current share of

India’s overall ad pie at ~4% has grown from 1.5% during the Phase-I period. The

new frequencies should increase the ad share further, helping catch up with the

world average of 7% and the US’ 11% (ex-digital). With significant inventory

addition, radio (market size of INR23b in CY16) is likely to emerge as the fastest

growing ad market (+16%, 1.4x of the traditional ad market, over CY16-21E, ex-

digital) in India.

Well tuned to flourish

Radio:

Digital unlikely to hurt radio market

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24 July 2017

Radio is largely associated with music/songs in India. With the advent of various

digital platforms, IPods/MP3 players, etc., it was widely expected that the need to

listen to radio would reduce over time. However, we note that radio listenership

and ad market has grown consistently, with radio operators bringing in interactive

RJ talk shows, local city updates and other interesting programs to the table, giving

listeners a feeling of two-way communication. A similar trend is observed globally –

Radio| Well tuned to flourish

Content Differentiation and

Interactive medium

provides radio an edge over

digital media

radio remains a stable advertising medium in most developed markets, despite the

advent of the digital platforms (~7% share of the total ad pie). We believe that the

radio listenership base is likely to improve in India, with (i) an increase in the

number of cities under radio coverage and (ii) content differentiation (multiple

frequencies, allowance of news/current affairs). Also, with increasing internet

penetration, radio operators have started introducing digital radio (offering music of

different genre, mood, artist and time period). We note that due to the lack of

listeners and a viable revenue model in the digital medium, radio operators for now

are only offering limited content (music). However, as digital medium evolves, we

believe the operators should expand their offering to include localized content, RJ

talks, etc., to de-risk their businesses.

ENIL, MBL: Strong execution capability, leadership position to drive

industry-leading revenue growth

CAGR FY17-

20E

Revenue

EBITDA

PAT

ENIL

(%)

MBL

(%)

Entertainment Network India Limited (ENIL) and Music Broadcast (MBL) remain the

top two players in the radio space, with market shares of 30% and 14%, respectively.

At 13% and 17%, ENIL and MBL’s revenue growth has remained resilient over the

last five years. ENIL added 42 stations over the last two years to be the largest

operator with 73 channels (excluding three Oye FM stations), while MBL added 11

channels to take its total channel count to 39. Fresh inventory with the launch of

new channels is likely to help ENIL/MBL record revenue growth of 16%/15% over

the next three years (FY17-20E). Additionally, operating leverage from an inherent

fixed cost structure and networking of new channels are expected to drive profit

margins. We thus expect EBITDA/PAT CAGR (FY17-20) of 30%/43% for ENIL and

20%/41% for MBL.

Heavy lifting concluded; asset monetization mode (RoIC, FCF)

Phase-III has seen overall INR13b cumulative investment in upfront license cost,

which is ~60% of the private FM market size. ENIL and MBL have spent >INR7b and

INR3.4b, respectively, toward Phase-III license acquisition, set-up cost and renewal

of Phase-II licenses (i.e. nearly 60-70% of their balance sheet size). This has resulted

in their RoCE and RoEs plummeting from average 20-25% to currently below cost of

capital. However, incremental maintenance capex should be a meager INR50-60m,

driving steep FCF and RoIC growth. We expect ENIL and MBL to reach RoIC of

20%/25% by FY20, led by improving EBITDA margins and asset turns. Also, their FCF

yield should improve to ~5%, with FCF generation of INR4.3b for ENIL and INR2.6b

for MBL over the next three years (FY17-20).

Meagre incremental

maintenance capex will

drive FCF and RoIC growth

post the huge investments

in phase III

FCF and PAT growth for ENIL

FCF growth

PAT growth (%)

Valuation: ENIL (Neutral); MBL (Buy) – it’s a three-year story

Global radio companies with low-single-digit growth garner ~10-12x EV/EBITDA on a

one-year forward basis. At current price, ENIL is trading at EV/EBITDA of 25x/20x

and P/E of 70x/45x for FY18E/19E. The company’s strong execution capability is

evident from its intact leadership position (30% market share over the last 10 years),

despite operating in a homogeneous product market. We assign 20x on FY19E

EBITDA of INR2.1b, arriving at a target price of 928, which is 2% above CMP. We

initiate coverage with a

Neutral

recommendation. ENIL is expected to witness

super-normal growth over FY18-20, RoIC recovery to ~20% and high FCF generation

with FCF yield of 5%. Subsequently, if we assign 15x EV/EBITDA on weighted-

24 July 2017

Radio| Well tuned to flourish

average 1QFY22E EBITDA of INR3.6b, we arrive at a target price of 1,270/share.

Including the valuation of the three ‘Oye’ FM stations (which may be acquired by

March’18) of INR51/share, the combined TP is INR 1,321, implying 45% upside over

a three-year period (+15% annually). We think the current price captures large

portion of ENIL’s growth potential.

MBL is trading at EV/EBITDA of 13x/10x and P/E of 22x/17x for FY18/19E. The

company is trading at ~30-35% discount to ENIL in terms of FY19E EV/EBITDA,

despite its healthy growth and RoIC/FCF potential. We believe there is strong

likelihood of shrinking of this discount. We value the company at 18x EV/EBITDA on

FY19E EBITDA of INR1.3b, arriving at a TP of INR469/share, ~29% upside from the

CMP of INR365. We initiate coverage with

Buy.

The high multiple is provided to

capture the super-normal EBITDA/PAT CAGR opportunity of 20%/41% over the next

three years (FY17-20). MBL’s growth is a three-year story, as RoIC is likely to recover

from current 13% to 25% over the next three years. Subsequently, if we assign 15x

EV/EBITDA on weighted average 1QFY22E EBITDA of INR1.9b, we arrive at a TP of

626/share, implying 72% upside over a three-year period.

24 July 2017

Phase-III: Total number of channels increased by two thirds and cities by one thirds

Cities

113

Channels’

407

113

PHASE-II

PHASE-III

PHASE-II

PHASE-III

Radio (INR b)

Phase I

Phase lI

Share of total ad spend (%)

Phase lIl

Strong growth

expected with

addition of

new licenses

3.8

2.0

3.8

3.6

3.8

3.9

4.0

4.2

4.3

4.5

47.8

1.0

0.6

1.5

0.9

6.0

7.4

8.4

8.3

10.0

11.5

12.7

14.6

17.2

19.8

22.7

Top players of the Indian Radio market

PHASE-III

PHASE-II

ENIL

SUN TV

BIG FM

MBL

Phase III norms

to favor radio

market

Allowance of multiple

frequencies

Full-scale networking now

permitted

Extension of the radio license

period to 15 years

Lock-in of three years v/s five

years earlier

Passive yet

interactive media

Expanding

footprint

after Phase III

auctions

PARAMETERS

Digital

Radio still

in nascent

stages

Radio: Still holds an edge

over Digital Media

Content

differentiation

MBL: Return ratios to improve from FY18

ROCE

138.0%

23.3%

21.8%

13.2% 13.3%

13.1% 8.8%

44.3%

11.2%

14.2%

9.9%

19.5%

12.5%

13.9%

ROIC

ROE

25.3%

ENIL: Asset monetization mode – Return Ratios to

have a steady growth

ROE

16.9%

74.6%

13.1%

9.8%

6.7%

5.0%

6.0%

7.4%

8.9%

6.5%

7.7%

12.0%

19.7%

13.9%

10.5%

14.7%

12.9%

ROCE

ROIC

9.9%

12.6%

13.9%

18.4%

Radio| Well tuned to flourish

Global peer comparison

Exhibit 8: Radio: Global radio peer comparison

Company Name

Germany

Bauer

USA

Entercom Comm.

Entravision Comm.

Townsquare Media

Sirius XM Holdings

Sky

Luxembourg

RTL Group

France

NRJ

India (USD m)

ENIL

MBL

1.1

MCap

675

323

0.4

103

14.8

29.1

33.8

15.2

24.7

16.5

26.8

35.2

22.2

37.5

41.0

PE (x)

73.1

52.2

44.8

33.9

10.6

26.7

13.2

32.6

11.9

24.5

16.2

RoE (%)

Revenue (USD m)

EBITDA Margin (%)

EV/EBIDTA (x)

11.9

6.9

7.4

7.7

21.6

21.9

22.0

14.9

13.3

12.9

8.7

7.9

7.6

21.7

17.8

17.0

17.9

16.5

15.9

16.7

21.7

17.5

15.0

10.8

11.9

10.8

0.4

0.6

0.2

25.5

0.5

0.3

0.5

5.0

0.5

0.4

0.5

5.3

0.5

0.3

0.5

5.7

23.4

24.8

19.6

33.9

22.9

15.7

20.2

38.0

24.8

27.3

21.1

38.8

16.0

31.7

10.8

27.5

9.9

40.0

11.4

30.7

7.6

20.9

9.4

24.8

10.2

13.4

7.0

15.7

8.1

13.2

6.9

15.4

7.3

10.3

6.4

14.2

-44

-51

0.5

1.5

1.6

1.7

11.5

11.7

12.0

17.3

17.1

13.6

5.4

6.9

6.4

MCap

USD b

Revenue (USD b)

EBITDA Margin (%)

PE (x)

EV/EBIDTA (x)

RoE (%)

CY16 CY17E CY18E CY16 CY17E CY18E CY16 CY17E CY18E CY16 CY17E CY18E CY16 CY17E CY18E

Source: Bloomberg

Exhibit 9: ENIL – EV/EBITDA

EV/EBDITA(x)

Median(x)

48.0

Peak(x)

Min(x)

Avg(x)

Exhibit 10: ENIL – P/E

P/E (x)

5 Yrs Avg(x)

11 Yrs Avg(x)

10 Yrs Avg(x)

38.6

32.0

17.8

16.0

0.0

12.6

4.1

Source: MOSL

24 July 2017

Radio| Well tuned to flourish

Industry landscape



With Phase-III, FM radio coverage has increased substantially, with the number of

channels/cities under coverage growing 66%/33%, offering huge opportunities. The

government raised INR13b from Batch 1 and 2 of Phase-III.

Batch 1 of phase-III involved only the existing cities; auctions helped the government

garner 153% of the reserve price. The two large radio stations Radio Mirchi and Radio

City acquired 17 and 11 channels, respectively.

Batch 2 of phase-III opened up 69 fresh cities (17 new cities), but the high reserve

prices led to lower participation, leading to only 6% increase in reserve price. ENIL and

Sun TV were the only two participants among the larger players.

Migration of Phase-II licenses without auction helped in two ways: 1) provided

business visibility with a 15-year license period and 2) resolved the risk of high

renewal price.

Radio still on aggressive growth path

Phase 2

Cities

Channels

245

Phase 3

113

407

Phase-III opens up growth opportunities

Radio is the only ad market wherein inventory is capped through licensing. In 2016,

(10 years after Phase-II), the government released fresh radio frequencies through

Phase-III auctions. Over the last 18 months, led by Phase-III licensing, the radio

industry witnessed the number of channels grow by 66% to 407 (from 245 in Phase-

II). Total cities under private FM coverage too grew by ~33% to 113 from 85. This

has led to steady growth in radio ad inventory in an otherwise inventory-starved

industry.

Exhibit 11: Phase-III –Total number of channels increased by two thirds

Cities

Channels

407

245

Phase 2

Phase III Batch 1

113

Phase III Batch 2

Total

Exhibit 12: Phase III: Lower reserve prices and high growth potential in category C circles

Existing channels

Channels alloted in 2nd batch of phase III

Channels alloted in 1st batch of phase III

13 2

A+

101

Others

Source: FICCI-KPMG 2017, MOSL

July 2017

Radio| Well tuned to flourish

Existing cities breathe a new life in Batch 1 of Phase-III

Company

ENIL

HT Media

Sun TV

BIG FM

Investment

(INR b)

3.4

1.8

1.2

Batch 1 of the Phase-III auction rolled out 135 channels for auction in 69 existing

cities. We note that since there was no new station for the last 10 years, ad

inventory was largely exhausted in most of the existing cities, particularly of big

operators like ENIL. Thus, the auction allowed significant supply support to drive

growth in the sector. Operators participated in 55 of these 69 cities, with 96 of the

135 channels being acquired. The government garnered INR11b via the auction,

which is 153% higher than the reserve price, highlighting the huge interest in the

sector. Among the top spenders were HT Media (INR3.4b for 10 channels), ENIL

Group (INR3.39b for 17 channels), Sun TV-led Digital Radio Group (INR1.8b for 8

channels) and Big FM (INR1.2b for 14 channels). Many operators added second

frequencies in the existing cities – the largest was ENIL, adding nine channels

through second frequencies; HT Media added second frequency in two large cities

(Delhi and Mumbai).

Exhibit 13: Batch 1 Phase-III: Channels acquired in 55 cities

135

No of Cities

Stations

Available

Acquired

Did not receive bid

Source: FICCI-KPMG 2017, MOSL

Exhibit 14: Batch 1 Phase-III: ENIL bought maximum

channels

10 10

11 11

Alloted

Launched

Exhibit 15: Batch 1 Phase-III: Channels launched in top cities

Alloted

Launched

A+

My FM Radio Fever

Mirchi FM

Radio Big FM Red FM FM Others

city

Tadka

Source: I&B Ministry, MOSL

Government gained only 6%

higher price in Batch 2

compared to 153% in

Batch 1

High reserve price highlights low interest in Batch 2 of Phase-III auctions

In the Batch 2 of Phase-III auctions, there were a total of 266 channels available in

92 cities. Out of these, 69 were fresh cities with 227 stations. The auction also

included 39 unsold channels from 23 cities of Batch 1 of Phase-III. The Batch 2 of

Phase-III saw limited interest, with only ENIL and Sun TV showing interest among the

large radio brands. The high reserve price linked to the highest auction price circles

in each zone filtered on the basis of population led to the lack of interest. The

July 2017

Radio| Well tuned to flourish

reserve price did not factor in the varying market size and the potential of each

city/town, despite similar population. Of the 69 fresh cities, only 28 cities saw

participation with acquisition of 43 channels.

Overall, 66 channels in 28 cities were acquired in Batch 2 of Phase-III. The

government garnered INR2b, i.e. 6% higher than the reserve price (A category

witnessed a 30% increase, while bids for the rest of the categories were close to

their reserve price). Sun Group and ENIL were the only two large radio operators

participating in the auction. Sun Group acquired 13 channels for INR806m (was the

biggest spender) via Kal Radio and South Asia FM, while ENIL acquired 21 channels

for INR513m. We believe the lack of interest will likely propel the government to re-

evaluate the auction prices. Lower prices should expand radio penetration and help

reach in smaller cities, improving the share of radio in the total ad pie.

Exhibit 17: Batch 2 – Phase-III: Participation in only 43 new

channels

Available

227

39 16

Fresh

Total

Fresh

Total

Auction

Remaining

266

184

200

Exhibit 16: Batch 2 – Phase-III: 28 new cities gets FM

Available

Auction

Remaining

Existing

Source: FICCI-KPMG 2017, MOSL

Exhibit 18: Batch 2 Phase-III: FM deepens footprint in category C&D circles

Channel

Radio Mirchi

Red FM

Others

A+

Others

Source: MOSL

ENIL and SUN TV – Acquired

channels in 10 & 7 fresh

cities respectively in Batch 2

Focus on newer markets to expand the listenership base

In Batch 2, channels were acquired in 28 new cities. Of these cities, there were 17

with no operational FM stations. This gives the companies a huge first-mover

advantage with potential to boost the listenership base. ENIL’s Radio Mirchi

acquired channels in 10 fresh cities, while Sun TV-operated South Asia FM and Kal

Radio acquired channels in five and two cities, respectively.

July 2017

Radio| Well tuned to flourish

Exhibit 19: Batch 2 Phase-III: FM extended to fresh cities

Company

ENIL

City

Amravati

Bhavnagar

Hubli-Dharwad

Jamnagar

Ujjain

Bharuch

Junagarh

Mehsana

Palanpur

Raigarh

Erode

Hubli

Nellore

Salem

Vellore

Dehradun

Leh

FM Frequency

92.1

91.5

98.3

91.9

92.3

91.9

93.7

91.1

91.9

93.5

93.9

93.5

Source: MOSL

Sun TV

Renewal of Phase-II license brings end to a major uncertainty

Phase-II licenses that expired in 2015 were renewed via Phase-III migration without

any auction process. Renewal of Phase-II licenses (which happened in FY16)

mitigated two key risks: 1) license period and 2) renewal price. Unlike telecom

(where spectrum renewal has been a thorn in the flesh due to high pricing), radio

saw a much better solution. First, the uncertainty around the continuation of the

business on the lines of telecom was removed, with the license period being

extended to 15 years from 10 years earlier. Second, the risk of high price for renewal

was removed, with the government benchmarking the increase in license cost

against the previous auction price. This capped the license cost increase to ~50% of

the previous highest bids, mitigating the risk of high renewal costs. Phase-II renewal

is a big positive as the existing business now has clear business visibility for the next

15 years without any hefty payments.

July 2017

Radio| Well tuned to flourish

Radio remains the fastest growing ad medium



The Indian radio industry expected to grow at a 16% CAGR over CY16-21, the fastest

rate after digital media. Radio’s share of total ad spend is also set to increase.

Acquisition of Phase-III channels and allowance of multiple frequencies will be the key

drivers in expanding the listenership base and also the ad market.

Home listeners still form more than 75% of the total listenership base. In the top

cities, Radio Mirchi and Radio City lead the charts.

ENIL consistently holds ~30% of the revenue market share. MBL remains the third

largest player with a 14% market share.

The Indian radio market (size of INR22.7b) is the fastest ad medium after digital,

growing at a 15% CAGR over CY11-16. Since its privatization, radio’s share of the

total ad pie has been improving steadily (from just 1.5% in early 2000s to ~ 4.3%

now) with addition of new licenses.

Exhibit 20: Strong growth expected with addition of new licenses

Phase I

Radio (INR b)

Share of total ad spend (%)

Phase lI

3.8

3.6

3.8

3.9

4.0

4.2

Phase lIl

4.2

4.3

4.5

47.8

1.0

0.6

1.5

0.9

2.0

6.0

7.4

8.4

8.3

10.0

11.5

12.7

14.6

17.2

19.8

22.7

Source: Company, MOSL

Radio to grow at a CAGR of

16% over CY16-21

(exdigital) and form 4.5%

share of the total ad pie by

FY21

Exhibit 21: Digital and Radio: Two biggest growth engines of the ad industry

CAGR (2011-16)

CAGR (2016-21)

37.9%

30.8%

14.5% 16.1%

11.6%

14.4%

7.6% 8.0%

8.0%

-0.3%

Radio

OOH

Digital Advertising

Source: FICCI-KPMG 2017, MOSL

Phase-III to increase radio’s share of total media pie

The Indian radio market is likely to record a 16% CAGR (~1.4x of the traditional ad

market, excl. digital) over the next five years (CY16-21), outpacing the media

industry ex digital growth of 11%, according to KPMG FICCI 2017 report.

Subsequently, radio’s share of the total ad pie is likely to reach 4.5% by FY21,

factoring in Batch 1 and 2 licenses. Excluding the digital media, radio’s share is likely

to grow from 5% in CY16 to 6.3% in CY21.

July 2017

Radio| Well tuned to flourish

Exhibit 22: Radio’s share of the ad pie to increase steadily

Radio (INR b)

Radio Share

Exhibit 23: Radio share ex of digital should reach 6% by CY21

Radio (INR b)

Radio Share (Ex of Digital)

Source: FICCI-KPMG 2017, MOSL

This should be driven by two key factors: 1) Capacity-hungry radio industry which

was running at over 100% utilization level in top cities has been dropping ad buyers

due to low inventory. However, they can now be serviced with additional inventory

obtained from Phase-III channels. 2) With multiple frequencies, alternative content

can be tested. Both these factors would boost the listenership base, expanding the

ad market.

The launch of Batch 1 and 2 frequencies will take the total number of channels to

407 (from 245 channels in 85 cities now). Subsequently, Phase-III targets to offer

additional 676 channels, which will significantly expand radio’s reach in the country,

supporting demand growth.

70% radio listenership is at home

Exhibit 24: Radio listenership at home – still above 75%

At home listeners are still

the biggest consumers of

the radio markets

constituting ~75% of the

listenership base

Home 2016

75 76

Home 2015

72 72

Out of home 2016

77 80

89 89

Out of home 2015

78.1 79.1

25 24

28 28

23 20

11 11

Kolkata

21.9 20.9

Mumbai

Delhi

Bangalore

Average

Source: FICCI-KPMG 2017, MOSL

Radio listenership in cars and out-of-home category is known to be flipping

continuously to miss ads. However, the home category of listeners, have lesser

channel-flipping possibilities. Radio listenership share of over 70% of the home

category (sticky listeners) highlights that the risk of flipping while playing ads is

significantly low.

July 2017

Radio| Well tuned to flourish

Radio Mirchi and Radio City remain prominent in top cities

One of the key concerns about radio is that there is limited independent and

authentic listenership research. This has led to each radio company relying on its

own independent research. RAM does research of the top four ad markets, which

indicates that ENIL’s Radio Mirchi ranks among the top 3 in terms of listenership

base. MBL’s Radio City is in the top 2 in Bengaluru and Mumbai; it does not have

operations in Kolkata.

Exhibit 25: Radio City – Gaining popularity in Bengaluru

2016 (% market share)

20 21

2015 (% market share)

14 13

17 18

14 14

14 13

11 11

Exhibit 26: BIG FM – No. 1 in Mumbai

2016 (% market share)

2015 (% market share)

17 17

Radio city Big FM'

91.1

92.7

Radio

Mirchi

98.3

Fever 104

AIR FM

rainbow

101.3

Others

Big FM'

92.7

Radio city Fever 104

91.1

Radio

Mirchi

98.3

Red FM

93.5

Others

Source: FICCI-KPMG 2017, MOSL

Exhibit 27: Radio Mirchi – Retains top spot in Kolkata

2016 (% market share)

2015 (% market share)

20 20

16 15

Exhibit 28: HT Media’s Fever FM – Top FM station in Delhi

2016 (% market share)

2015 (% market share)

18 19

10 11

13 14

11 12

10 11

Radio

Mirchi

98.3

Big FM'

92.7

Fever FM

104

Ishq FM Aamar FM

104.8

106.2

Others

Fever FM

104

Radio

Mirchi

98.3

AIR FM Radio city Red FM

rainbow

91.1

93.5

101.3

Others

Source: FICCI-KPMG 2017, MOSL

Smaller stations to increasingly shift toward local advertisers

Local advertising has grown

significantly

Sectorial mix of advertising

to change considering the

demonetization effects

The share of local advertising in the radio market has increased from 20-30% in

early-2000s to 60% currently. Radio’s key USP is that it caters to the local market,

allowing advertisers to target specific markets (unlike TV). This also allows radio

companies to garner better pricing, as local advertisers’ budgets are of small ticket

size and thus can be squeezed.

Local advertisers remain the mainstay

Sector-wise, apart from local advertisers, real estate remained the largest

contributor (15% share), followed by FMCG (14%). Other major contributors include

telecom and e-commerce. This sectorial mix could change in CY17, with

demonetization already impacting retail/real estate contribution and e-commerce

players tightening their strings over freebies.

July 2017

Radio| Well tuned to flourish

Exhibit 29: Real estate/FMCG led in 2016 – impact of demonetization possible in FY17

2016 (% market share)

2015 (% market share)

32%

37%

15%

12%

14%

11%

12%

14%

10%

12%

Real estate

FMCG

Telecom

E- Commerce Automobile

BFSI

Others

Source: FICCI-KPMG 2017, MOSL

Top Players

ENIL

SUN TV

BIG FM

MBL

Channels

Top four national players hold the widest presence

ENIL is among the top radio players in the market, with a largest network of 73

stations (excluding three Oye FM stations). ENIL operates four brands: Radio Mirchi,

Mirchi Love, Ishq FM and Mirchi 95. Post the completion of the lock-in period in

March 2018, ENIL is likely to acquire TV Today’s three more channels, taking the

count to 76. Reliance and Sun TV, which were the top players in terms of network

pre-Phase-III, now have 59 and 68 channels, respectively. Reliance Group’s venture

– Big FM – is now 49% acquired by Zee Group, and may be fully acquired post the

completion of the lock-in period. Sun TV’s 68 channels are operated under two

brands – Red FM (a pan-India brand) and Kal Radio (a regional brand).

The other three large players that have expanded their network significantly are: a)

MBL’s Radio City (to 39 channels from 28 channels), HT Media’s Fever (to 15

channels from 5 channels) and DB’s My FM (to 31 channels from 17 channels). MBL

also acquired Radio Mantra’s eight channels and additional 11 from Phase-III

auction to reach ~60% of radio presence. HT Media acquired Radio Ahaa FM and

additional 10 channels, of which two are of multiple frequency (in Delhi and

Mumbai), while DB added 14 channels (mainly in category B and C circles).

Exhibit 30: Mirchi, Sun Group and BIG – top three by number of channels owned

Before Phase III

Phase III Batch 1

Phase III Batch 2

Pan India

Metro focus

Non-Metro focus

Niche Radio

Source: FICCI-KPMG 2017, MOSL

July 2017

Radio| Well tuned to flourish

Revenue market share and profitability – ENIL remains the biggest player

ENIL has been the dominant player in the radio industry for the past 15 years (since

radio was liberalized), currently holding 30% revenue market share. This is

significantly ahead of the second largest player Reliance Broadcast (Big FM; 18%

market share) and MBL (Radio City; 14% market share). ENIL’s share also includes

contribution from non-FCT (~30% of revenues) related to activation and concerts.

Exhibit 31: ENIL – still the biggest player in the Indian radio industry by revenue

Others, 8.9%

DB - My FM, 6.7%

BAG, 0.5%

Music Broadcast,

14.3%

Next Media

Works, 4.1%

Sun TV, 10.3%

ENIL, 28.9%

Reliance

Broadcast, 18.0%

Source: FICCI-KPMG 2017, MOSL

Player/EBITDA

Margin

ENIL

MBL

FY17

(%)

FY20E

(%)

Radio industry average EBITDA margin remains at ~33-35%. Margins of all radio

operators were languishing as of FY17 due to the rollout of Phase-III stations. We

expect margins to recover to ~30% as the launch of fresh stations stabilizes with

inventory gains in ~2-3 years. ENIL’s standalone radio business has been profitable

for more than 12 years due to its larger revenue base, which allows it to leverage

fixed costs.

Exhibit 32: Dainik Bhaskar’s MY FM – EBITDA margin and RoCE above peers

EBITDA Margin

ROCE

34%

23%

8.5%

25%

17.4%

2.3%

HT Media

BAG

34%

16%

1.2%

Next Media

Works

Music

Broadcast

38%

20.9%

11.9%

ENIL

Dainik Bhaskar

Source: FICCI-KPMG 2017, MOSL

July 2017

Radio| Well tuned to flourish

Global radio market remains steady



Globally, the radio market has grown, despite the increasing appeal of digital content.

The global radio market holds 7% of the overall ad pie (excluding digital media).

The Indian radio market, with an expected CAGR of ~16% over CY16-21, should reach

6% of the country’s total ad pie (excluding digital).

Radio’s average share of the global ad pie is 5%, and 7% excluding digital media. In

the US, the share of radio is 11% ex-digital, while in most of the other European

countries, it ranges from 5-8%. One of the key points to note is that the radio ad

market continues to grow in most developed countries, despite the advent of digital

content. Global radio growth was 5% in 2015, at par with TV and internet. Thus,

radio has remained a fairly stable industry, eliminating fears of a shift to digital

media. India has so far lagged due to radio’s presence in only 85 cities, which have

already reached nearly full capacity. However, with increased capacity, radio’s share

in overall ads in India should reach closer to the world average of 7-8%.

Exhibit 33: Limited presence in India – radio ad spend share lower than global average

Radio market share of advertising

11%

-2%

CAGR (2010-15)

-2%

Exhibit 34: With new licenses, India’s radio ad spend can match global average

Radio market share of advertising ex Digital

11%

-2%

10%

1.8%

11%

CAGR (2010-15)

-2%

Exhibit 35: India –Highest CAGR expected over 2017-22

RADIO MARKET SHARE OF ADVERTISING FY17 (%)

13.2

2.0

8.0

0.5

3.0

1.2

3.0

5.0

2.9

0.1

3.0

-1.1

2.0

-0.2

5.3

-1.6

CAGR % (2017-22)

1.5

9.0

2.4

1.0

4.0

-2.5

5.0

0.0

4.0

1.0

12.0 11.0 12.0

Source: Zenith OptiMedia, MOSL

July 2017

Radio| Well tuned to flourish

Pricing remains firm



Ad rates for ENIL have remained

steady over the past few years

Ad Rates (INR/10sec)

Air time sold/channel (in hrs)

Industry has not witnessed pricing pressure due to Phase-III-led new station launches.

Minimal 15-20% capacity addition in capacity-dearth market has not created any

excess supply concerns.

ENIL and MBL have taken price increases.

Limited capacity addition to abate pricing issues

With increased inventory in the radio industry, the key risk facing the radio

companies is a price decline on account of excess ad airtime supply in the market.

However, over the last 18 months, companies have not witnessed price declines,

and we believe the risk is overdone, given:



In Phase-II, capacity increased ~50%, i.e. 3-4 channels over the existing 4-5

channels, which led to excess supply and affected pricing. On the contrary, in

Phase-III, capacity increased 10-15%, i.e. 1-2 channels over 7-8 existing

channels. This would lead to less supply glut in the system.



Currently, operators are running at full capacity in the top cities. The free

commercial time (FCT) is running at an excess of 20-25 minutes per hour in peak

time v/s 13-15 minutes per hour policy. ENIL has in fact started reducing ad

inventory gradually to improve listenership and subsequently offset it by price

increases.



Unlike Phase-II when radio was getting established sales had to first market the

advertisement impact of radio medium and then test the strength of the Radio

brand, content and listenership base. With over 10-15 years of established

brand across wider markets, the radio medium as well as brand is well

established. This should help in faster ramp-up of capacity utilization and absorb

supply of large players.



Most operators with revenue market share of 15-20% have seen an increase in

license fees in several cities due to a hike in the auction price. The license

condition of 4% of revenue or 2.5% auction value, whichever is higher, has been

increased owing to a sharp rise in auction value of existing station licenses. In

such a scenario, the radio industry should witness cost-push inflationary price

increase.



With the advent of multiple new stations, where radio operators can hold more

than one frequency in the same city, the second station may operate at lower

pricing in the initial 1-2 years of its operations. However, we do not see any

pricing risk for the primary frequency. Due to the second frequency’s

differentiated content strategy and listenership target market, it may not have a

direct bearing on pricing of the primary frequency.

July 2017

Radio| Well tuned to flourish

Phase III norms to favor radio market



We believe the Phase-III norms are in favor of the radio companies. Now that the FM

companies are allowed to hold multiple frequencies in the same city, companies can

increase their bottom line at very low incremental costs.

The government has allowed networking, which will help companies reduce their

capex and opex. Also, the extension of the license period to 15 years brings in business

certainty.

In recent changes, FM stations will be allowed to broadcast current affairs and news

from All-India Radio (AIR). This was prohibited previously, but this change will benefit

the FM companies.

Allowance of multiple frequencies

One of the key concerns in the radio industry until Phase-II was that companies

were not allowed to own more than one channel in a city. This is contrary to the TV

or print businesses, wherein one can add multiple channels or pages to expand

capacity. This has been one of the key factors for slower growth in the top cities,

where bigger players like ENIL had exhausted capacity, leaving limited growth

through pricing or extending ad per hour. With the allowance of multiple

frequencies, ENIL, HT and other larger operators (which have acquired second

frequencies in multiple cities) can see higher growth. Also, as the lock-in period of

Phase-II licenses expires by March 2018, many smaller operators are likely to

consolidate, opening up opportunities for growth. ENIL’s acquisition of three TV

Today channels (hold multiple frequencies in Mumbai, Delhi and Kolkata), which is

stuck due to the lock-in clause, should be cleared by March 2018.

Exhibit 36: ENIL – dual frequencies in nine cities with the launch of Mirchi Love FM

Number of Dual FM stations

Key drivers for future growth of

radio market:

Dual Frequencies

Networking

Radio license period increased to

15 years vs. 10 years earlier

Reduction in Lock-in period

ENIL

HT Media

Red FM-Sun TV

Source: FICCI-KPMG 2017, MOSL

The ownership of multiple frequencies would also address the key issue of lack of

content differentiation among channel operators. A second frequency can be

operated from the same premises as the main frequency with minimal increase in

capex. Further, operating costs are much lower as it encourages shared

infrastructure and services. Thus, the operators will be able to target niche markets

to attain listenership loyalty. ENIL has branded its second frequency with a love

theme ‘Mirchi Love’. HT and Red FM have adopted retro themes with Radio Nasha

and REDTRO brands, respectively.

July 2017

Radio| Well tuned to flourish

Full-scale networking has been permitted

The government has approved networking, which would improve viability of the

radio operators in smaller towns as it will reduce both capex and opex. The set-up

cost in smaller cities ranges from INR10-20m per station, while the operating cost is

INR5-10m for smaller stations. With the introduction of networking, there would be

~50% of capex and opex cost savings. This would allow the radio business to operate

on a lower asset base, allowing faster EBITDA breakeven and higher margins.

Extension of the radio license period to 15 years

The Broadcasting Ministry has extended the radio license period to 15 years from 10

years in the Phase-II regime, which could mean significant cost savings for

companies and thus improved business certainty.

News content and current affairs

Until Phase-II, radio was restricted from broadcasting news and current affairs,

limiting the flexibility of the radio companies. However, Phase-III allows news and

current affair broadcasting, which has to be streamed from AIR. We believe this is a

step in the right direction to increase content differentiation for the radio

companies.

Lock-in of three years v/s five years earlier

The reduction in the lock-in period (will be over by March 2018) will be a key trigger

point for consolidation of the smaller regional channels into large networks. This

should enhance marketability of the large operators, with much more aggressive

push and wider reach. ENIL and Zee already have marketing tie-ups with TV Today

and Big FM. MBL has marketing tie-ups with ITM Software and Entertainment, and

Ananda Offset (may be acquired post the completion of the lock-in period). This will

accelerate growth of the overall radio industry, in our view.

July 2017

Radio| Well tuned to flourish

Digital: Unlikely to hurt radio market



Digital medium was seen as a big threat to the radio industry. However, its impact has

been limited as passive listeners continue to prefer radio due to its interactive nature.

Digital content is still evolving. Top FM brands can enter this space and prove to be

competitive with their in-house content generation and execution capabilities.

New stations, multiple frequencies, content differentiation and increased inventory

after Phase-III auctions will benefit the radio industry.

Radio remains one of the oldest broadcasting mediums. It is largely associated with

music/songs in India. With the advent of various digital platforms, IPods/MP3

players, digital radio streaming, etc., it was widely expected that the need to listen

to radio would reduce over time. However, radio is expected to grow at 16% CAGR

over CY16-21E) will continue remaining the second fastest growing media vertical

after digital.

Radio is passive, yet interactive

Even before the entry of digital platforms, radio faced threat from the availability of

IPods and MP3 players. However, we note that radio listenership and ad market has

grown consistently in the past. This could be attributed to two things: (1) most

people listen to radio while doing some other activity (e.g. driving, household

chores). Active music listeners may not prefer radio, but the target audience of radio

is passive, which prefer radio over MP3 players/IPods. (2) Despite passive listening,

consumer research indicates the preference for radio due to the interactive RJ talks

and local city updates, which gives a feeling of two-way communication.

Digital radio evolving

As internet penetration improves, there would be listeners who would prefer digital

radio due to its wider content and possibility of more localized content. Most radio

operators thus have introduced digital radio, which offers a playlist of different

genre, mood, artist and time period. Currently, due to the lack of listeners, digital

content just involves a simple playlist without any localized content and RJ talks.

However, as this medium evolves, companies are likely to accelerate the shift

toward digital to de-risk their businesses. Digital radio has limited entry barriers and

could thus see threat from new entrants; however, we believe that large radio

operators with strong brands and execution capability would be well placed to

tackle competition.

Global market remains firm

Most developed countries continue to witness growth in the radio market, despite

exponential growth in the digital medium over the past few years. On an average,

radio contributes ~7-8% of the global ad market, which is far higher than 4-5% in

India. This could be mainly attributed to better content differentiation, particularly

in the developed markets. We also note that, globally, radio is not just associated

with music – there is a huge listenership base for alternate content like talk shows,

news, sports and others.

July 2017

Radio| Well tuned to flourish

Exhibit 37: Radio witnessing growth across the globe (ex of digital)

RADIO MARKET SHARE OF ADVERTISING FY17 (%)

13.2

2.0

0.5

3.0

1.2

3.0

5.0

2.9

0.1

3.0

-1.1

2.0

-0.2

5.3

-1.6

1.5

9.0

-2.5

5.0

0.0

4.0

2.4

CAGR % (2017-22)

8.0

1.0

12.0 11.0 12.0

1.0

4.0

Source: Zenith OptiMedia 2013, MOSL

Content differentiation

With Phase-III, the Indian government introduced two key favorable steps to

increase listenership: 1) multiple frequencies and 2) allowance of news and current

affairs. Multiple frequencies (similar to TV) will allow the radio players to operate

more than one channel in each city. With the first channel largely focusing on the

mass listeners and the second one operating at lower incremental cost, we should

see content differentiation. This has already started with the launch of retro

channels. Even though news/current affairs are only allowed from AIR, we believe it

is a welcome step. Gradually, we should see content differentiation playing a key

role in increasing the listenership base and supporting growth of the sector.

Expanding footprint should increase listeners, depth will attract advertisers

One of the key factors restricting growth of the radio industry and its share of the

total ad pie is that private FM radio has been limited to only 85 cities in the country

until now. With Phase-III, the government plans to expand FM radio to over 280

additional cities, which will increase the share of radio. We believe the lackluster

response in the previous Phase-III auction will force the government to reduce

pricing, thereby increasing auction interest and expanding radio to more cities.

July 2017

Radio| Well tuned to flourish

Companies

BSE Sensex: 32,246

S&P CNX: 9,966

July 2017

Entertainment Network India

Music Broadcast

July 2017

July 2017

Radio| Well tuned to flourish

Initiating Coverage | Sector: Radio

BSE SENSEX

32,246

S&P CNX

9,966

Entertainment Network India

CMP: INR911

TP: INR928 (2%)

Neutral

Maintaining dominant Position

Stock Info

Bloomberg

Equity Shares (m)

52-Week Range (INR)

1,6,12 Rel. Perf. (%)

M.Cap. (INR b)

M.Cap. (USD b)

Avg Val, INRm

Free float (%)

ENIL IN

47.7

1088/667

-6/-1/11

43.4

0.7

15.0

28.9

Financials Snapshot (INR b)

Y/E MARCH

FY17 FY18E FY19E

Sales

5.6

6.4

7.4

EBITDA

1.3

1.6

2.1

0.5

0.7

1.0

EPS (Rs)

11.4

13.8

21.2

EPS Gr. (%)

-45.5

20.7

53.7

BV/Sh. (INR)

179.3 191.9 211.9

P/E (x)

79.7

66.0

43.0

P/BV (x)

5.1

4.7

4.3

EV/EBITDA (x)

35.3

27.2

20.2

EV/Sales (x)

8.0

6.8

5.7

RoE (%)

6.7

7.4

10.5

RoCE (%)

5.0

6.5

8.9

Shareholding pattern (%)

As On

Jun-17 Mar-17 Jun-16

Promoter

71.2

DII

4.3

3.6

2.3

FII

15.7

16.5

16.6

Others

8.9

8.8

10.0

FII Includes depository receipts

Stock Performance (1-year)

Ent.Network

Sensex - Rebased

1,000

900

800

700

600

Portfolio boost post Phase-III; Phase -II license renewal ushers in smooth play

Entertainment Network India’s (ENIL) strong execution capabilities are evident

from its: i)

intact leadership position,

with ~30% share in a homogeneous market,

ii)

strong execution capability,

with revenue CAGR of 14% and EBITDA CAGR of

20% over FY10-15 via diversification in its non-FCT business (30% of overall

revenue), which is particularly impressive given the prevailing volatile ad market

with supply constraints. ENIL’s radio portfolio has strengthened significantly over

the last two years, led by i) addition of 17 channels in Phase-III and four Oye

stations (excluding three Oye stations awaiting regulatory approval), ii) renewal of

Phase-II licenses for INR3.4b with a 15-year license period and iii) addition of 21

stations through batch 2 of Phase-III.

Three-pronged growth opportunity

ENIL’s growth is expected to be led by: 1)

Pricing increase in the existing stations:

In the existing 32 stations, we expect ~6-8% revenue growth led by pricing. 2)

Volume growth

led by the launch of 17 new stations, and additional 21 stations in

the batch 2 of phase-III. 3)

Growth in non-FCT business:

Revenue growth of the

non-FCT business (on-ground activation, concerts and events) is estimated at 10-

12%. Subsequently, we expect revenue CAGR of 16% over FY17-20E to INR8.6b.

EBITDA margin to scale new highs

EBITDA margin is expected to be on upward trajectory, as: i) batch 1 of phase-III

stations, which incurred loss of INR299m in FY17, should breakeven in FY18, ii)

margin of non-FCT business is expected to improve from single-digit currently to

~20% as the concerts segment turns margin-accretive, and iii) margin of the

existing channels is expected to be supported by networking and operating

leverage. Subsequently, we expect overall margin to expand 920bp to 31.9% over

FY17-20E, driving 30% EBITDA CAGR to INR2.8b. The investment for incremental 21

stations in batch 2 of phase-III should not have significant impact on overall

EBITDA, given its lower contribution.

Asset monetization phase to drive RoIC, FCF

ENIL has completed heavy lifting with capex of INR7.5b over the last two years,

including license and set-up cost, without any equity dilution and net cash position

of INR100m as of FY17. Front-ended capex and large inventory availability would

allow ENIL to add cumulative FCF of INR4.3b over the next three years (FY17-20),

with annual FCF of INR1.5b in FY18/19E. We expect ENIL’s RoIC to start rebounding

to reach 20% in FY20, led by healthy asset monetization phase, license period

extension to 15 years and low maintenance capex.

July 2017

Radio| Well tuned to flourish

Rich valuations

ENIL is trading at rich valuations of EV/EBITDA of 25x/20x on FY18/19E. On P/E, it is

trading at 70x/45x on FY18/19E. We assign 20x on FY19E EBITDA of INR2.1b, arriving

at a target price of INR928, 2% above CMP. We initiate coverage with a

Neutral

recommendation. The rich valuation can be ascribed to the super-normal

EBITDA/PAT CAGR of 30%/43% over FY17-20E, as the new stations turn profitable,

RoIC trajectory improves and annual FCF generation increases consistently.

Subsequently, if we assign 15x EV/EBITDA on weighted average 1QFY22E EBITDA of

INR3.6b, we arrive at a target price of 1,270. Including the three Oye FM stations’

valuation of INR51/share, the combined TP works out to INR1,321, implying 45%

upside over a three-year period (15% annually).

July 2017

Radio| Well tuned to flourish

Strong execution capabilities

CAGR

Revenue

EBITDA

PAT

Pre-

Post-

Phase III Phase III

(%)

FY10-15 FY17-20E

ENIL’s strong execution capabilities are evident from two points. First, the company

has maintained its leadership position with ~30% market share, despite operating in

a homogeneous market. This highlights the strong brand value created by

management.

Second, despite operating in a weak ad market with supply constraints, ENIL posted

revenue/EBITDA CAGR of 14%/20% over FY10-15 (pre-phase-III period). To protect

profitability, ENIL ventured into the innovative and complementary FCT segment in

FY12, which includes on-the-ground activation and concert businesses, among

others. This has allowed the company to maintain growth and market share over the

past five years, with over 25% revenue coming from the activation business.

Exhibit 38: Sales to grow with increasing utilization levels of even new stations

Revenues (INR m)

104

Capacity Utilization (%)

2302

FY09

2308

FY10

2800

FY11

3014

FY12

3384

FY13

3848

FY14

4385

FY15

5086

FY16

5565

FY17

6385

7427

8605

FY18E FY19E FY20E

Exhibit 39: ENIL’s revenues grew at 14% CAGR over FY10-15

Revenues (INR m)

EBITDA Margin (%)

2308

FY10

2800

FY11

3014

FY12

3384

FY13

3848

FY14

4385

FY15

Exhibit 40: Ad rates and volumes both increasing steadily

Ad Rates (LHS) (INR/10sec)

1,223

Air time sold/channel (RHS) (in hrs)

1,382

1,354

1,301

1,285

749

825

287

901

286

1,064

315

272

270

272

317

336

267

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18E

Source: ENIL, MOSL

July 2017

Radio| Well tuned to flourish

Portfolio strength boost with phase-III

ENIL capacity addition:

Acquired 17 stations in Batch 1

Acquired 21 stations in Batch 2

Acquired 4 TV Today stations

The radio industry operating at more than 110% capacity utilization has been

starving for incremental capacity to support growth over the past 2-3 years. With

fresh capacity available, we expect healthy pent-up demand growth over the next

few years. In addition, an increase in the number of listeners (led by multiple

channels and varied content) would further boost the radio ad pool, generating

steady earnings and cash flow.

Renewal of phase-II licenses – another positive

With the recent phase-II license renewals at INR3.2b for the existing 32 stations and

phase-III auction of INR3.4b, ENIL has garnered two key levers of growth. Unlike

telecom, the radio industry has seen a smooth renewal process of phase-II licenses,

along with low renewal pricing. This has removed a major risk to the existing

business. Importantly, ENIL has retained its existing leadership market share of

~30%, and it has been PAT profitable for the past 10 years with 17% IRR, which is a

remarkable achievement, in our view.

Exhibit 41: ENIL to recover PAT growth through its newer FM stations

PAT (INR m)

13%

31%

27%

-6%

-46%

PAT growth (%)

21%

54%

58%

565

FY12

639

FY13

834

FY14

1,060

FY15

1,000

FY16

545

FY17

658

FY18E

1,011

FY19E

1,595

FY20E

Source: Company, MOSL

Phase-III acquisitions open up growth opportunities

Phase-III has been a much-awaited growth opportunity for ENIL. Over the past five

years, the company managed to accumulate cash worth INR5.8b (i.e. ~75% of FY15

balance sheet) purely for phase-III growth opportunity. ENIL acquired licenses in 17

circles in the phase-III auctions. In addition, the company acquired four Oye FM

stations (additional three will be acquired after license expiry in March 2018). This

would significantly boost growth over the next five years, in our view. The combined

investment in phase-II and III is expected to drive revenue CAGR of 13% and EBITDA

CAGR of 9% over FY16-19E. This growth would be driven by higher capacity

utilization and better pricing.

Brand

Mirchi

Mirchi Love

Focus

Bollywood &

Regional

Romantic songs

Flagship brand: Mirchi, Mirchi Love and Ishq operate in second frequencies

ENIL has four brands:



Mirchi – flagship brand across the 32 existing stations.



Mirchi Love – new brand targeting the age group of 26-30.



Mirchi 95 – second frequency in Bangalore/Hyderabad; content is similar to the

primary frequency; only language is different (caters to both regional and

Hindi/English listeners).



Ishq FM – rebranded version of TV Today channel (erstwhile name Oye FM);

Mirchi’s second ‘Love’ brand – global research indicates ‘Love’ is one of the

most common and biggest radio market.

July 2017

Radio| Well tuned to flourish

Radio Mirchi – diversifying into multiple brands

ENIL has moved from building on a single brand (Radio Mirchi) to a multiple brand

format. The original Radio Mirchi is a CHR (Contemporary Hits Radio) station that

plays Bollywood and regional music. Its new brand Mirchi Love focuses on the

theme of love and plays romantic melody songs across eras. Mirchi Love targets

young adults with high disposable income, while the mother brand Radio Mirchi

continues to target a younger bunch of listeners. The four acquired stations from TV

Today have been renamed from Oye FM to Ishq FM to create better listenership,

sales and brand recall. The focus on different themes/content through multiple

brands/shows will help ENIL increase

its

listenership base. Even advertisers can

target their audience more effectively through the two brands.

Exhibit 42: Mirchi Love - Complements Mirchi (CHR) and increases listenership

City

Ahmedabad

Bangalore

Hyderabad

Jaipur

Kanpur

Lucknow

Nagpur

Pune

Surat

Station

98.3 FM - Mirchi

104 FM - Mirchi Love

98.3 FM – Mirchi (Kannada)

95 FM – Mirchi 95(Hindi)

98.3 FM – Mirchi (Telugu)

95 FM – Mirchi 95 (Hindi)

104 FM - Mirchi Love

98.3 FM - Mirchi

104 FM - Mirchi Love

98.3 FM - Mirchi

91.9 FM - Mirchi Love

98.3 FM - Mirchi

107.2 FM - Mirchi Love

98.3 FM - Mirchi

91.9 FM - Mirchi Love

98.3 FM - Mirchi

104.2 FM - Mirchi Love

98.3 FM - Mirchi

91.9 FM - Mirchi Love

Source: MOSL

A rational auction strategy

ENIL’s investment of INR3.4b was on average 2.2x of the reserve price, but lower

than 3.0x average for the overall auction. This highlighted rational bidding. ENIL lost

the large metro stations – Mumbai and Delhi – due to its over-valued auction price.

This could impact the overall market share dynamics with HT Media ( Fever FM ) and

Sun TV subsidiary Digital Radio Broadcasting (Red FM) now owning multiple

frequencies in metro circles. However, we believe ENIL’s actions are justified on two

counts. First, the company has been very clear on its rational auction strategy,

without which it is difficult to turn profitable. This is evident from the previous

phase-II auction in 2006-07, in which ENIL has garnered 17% IRRs, while others are

yet to recover accumulated losses. Second, ENIL’s acquisition of three Oye stations

in Mumbai, Delhi and Kolkata (should be concluded by March 2018) would allow it

to significantly increase its market standing with limited capex.

July 2017

Radio| Well tuned to flourish

New Stations: Expect ENIL to garner 25% revenue share by FY20…

The market opportunity of 17 stations is estimated at ~INR6.8-7.0b in FY17. This is

~50% of the overall private radio ad market of ~INR14-15b. ENIL should witness

accelerated overall revenue growth of 16% over FY17-20E for the complete bouquet

of 52 channels (after closing Goa). This is on the back of incremental volumes from

the fresh inventory of 17 new stations. The new stations’ launch and fresh capacity

in the system should allow ENIL to cater to a wider ad market and listenership base

with new markets and differentiated content.

Exhibit 43: Revenues to increase led by steady growth in utilization levels

Revenues (INR m)

75%

59%

Utlisation levels (%)

64%

68%

70%

62%

69%

5,086

FY16

5,565

FY17

6,385

7,427

8,605

9,680

10,826

FY18E

FY19E

FY20E

FY21E

FY22E

Source: Company, MOSL

…and ~20% market share over FY19-20E

The 17 new stations should reach a revenue base of ~INR2b in FY20E (i.e. four years

post commencement of operations). This would be volume-driven, following

expectations of 65% capacity utilization over the same period. On the other hand,

we have not factored in any price increase in the new stations in the first five years

until they reach 80% capacity utilization, as radio companies usually prioritize

volume over pricing in a perishable products market until sizeable airtime ad supply

is available. ENIL expects to start as a fourth- or fifth-ranked player for the new or

the second frequency, and targets to move up in the next 2-3 years. Our analysis

shows that the new stations could garner ~20% market share in five years, led by

higher growth on account of available inventory.

Exhibit 44: Capacity utilization ramp-up in the newer cities

A Circles

98%

76%

54%

32%

10%

FY17E

FY18E

FY19E

FY20E

FY21E

Source: Company, MOSL

B, C & D Circles

Blended

Capacity utilization to grow

most in B, C & D circles

17 stations of Batch 1 to

breakeven in FY19 driven by

only volume increase

July 2017

Radio| Well tuned to flourish

The new stations’ bid value factors in 40% revenue base of the existing stations, i.e.

third or fourth-player position with a 15% market share over 3-4 years. The existing

channels are expected to clock 100% capacity utilization in FY18, which will lead to

limited volume-led growth opportunity. We have assumed 6% average price-led

revenue growth over FY18-20E as ENIL plans to improve pricing partly at the cost of

volumes.

Exhibit 45: Revenue growth will be led by new stations

Phase II 35 stations* (INR m)

Phase III 21 stations Batch 2 (INR m)

Phase III 17stations Batch 1 (INR m)

Share of Phase III 17 stations Batch 1

23%

211

1,985

6,328

FY20E

25%

316

2,443

27%

456

2,873

19%

14%

307

4,332

FY15

4,921

FY16

5,188

FY17

880

5,430

FY18E

1,441 84

5,824

FY19E

6,836

FY21E

7,406

FY22E

*Acquired 4 TV Today stations and sold the Goa station in 2016-17 Source: Company, MOSL

EBITDA margin to scale new highs

New stations to turn profitable

ENIL’s 17 stations of Batch 1

likely to break even in FY19

and 21 stations of Batch 2 in

FY22

The 17 new stations incurred loss of INR299m in FY17 due to the first year of high

marketing and promotion, coupled with the impact of delayed launch and

demonetization. We believe that as utilization levels improve, the inherent fixed

cost model should allow strong margin improvement (reaching over 60% by FY20E).

The higher margin also builds in cost synergies of operating multiple frequencies,

corporate cost sharing and networking. We arrive at IRR of ~15.5% for the new

stations over the 15-year license period.

Existing stations to garner better margins

ENIL launched a major national marketing campaign to promote the new stations,

which led to EBITDA margin contraction to 28.7% in FY17 from its previous sustained

levels of 32-33%. With lower marketing costs going forward, coupled with annual

price increase of 6-8%, EBITDA of the existing 35 stations should improve 210bp

over the next three years to reach 30.9% in FY20E.

Exhibit 46: EBITDA margins dipped in FY17 owing to new station launches

Revenues (INR m)

31%

23%

25%

EBITDA Margins (%)

35%

32%

28%

37%

5,086

FY16

5,565

FY17

6,385

FY18E

7,427

FY19E

8,605

FY20E

9,680

FY21E

10,826

FY22E

Source: Company, MOSL

July 2017

Radio| Well tuned to flourish

Exhibit 47: New stations to help expand EBITDA margin

Phase II 35 stations* (INR m)

Phase III 21 stations Batch 2 (INR m)

Phase III 17 stations Batch 1 (INR m)

Share of Phase III 17 stations Batch 1

21%

1,379

FY15

-10%

1,590

(161)

FY16

-1%

1,487

-24%

(299)

FY17

1,550

(15)

FY18E

446

1,755

FY19E

30%

850

1,965

FY20E

35%

1,190

37%

1,494

2,161

FY21E

2,396

FY22E

*Acquired 4 TV Today stations and sold Goa station in 2016-17 Source: Company, MOSL

Networking, operating synergies to lower new station cost

Cost savings from operating

synergies and allowance of

networking and multiple

frequencies

ENIL’s new stations should gain from networking, which allows creating a cluster of

5-8 channels in the same region. This helps save set-up costs across multiple

cities/towns and lowers station running cost by 30-40%. Further, operating

synergies from running multiple frequencies in the same geography and splitting of

corporate expenses facilitate significant cost savings.

Non-FCT business to improve margin

The non-FCT business (contributes 30% of revenues; includes on-ground activation

and concerts businesses) has single-digit margins because of the concerts business,

which was only started few years ago. With a decent scale and learning curve

already achieved, management plans to increase the number of annual concerts

from 40-45 now to ~90-100 going forward. Improving scale in concerts and stable

on-ground business should allow the non-FCT business to achieve healthy double-

digit EBITDA margin over the next two years. We expect the existing stations to

grow at 10% EBITDA CAGR over FY17-20E and the new stations to reach INR850m

(30% of total EBITDA) from INR299m loss in FY17. Subsequently, overall EBITDA

should grow at 30% CAGR over FY17-20E.

Exhibit 48: Share of non-FCT increasing

Non FCT Sales (in mn)

30%

29%

28%

27%

Share of Non Radio

1,378

FY16

1,648

FY17

1,846

FY18

2,068

FY19

2,316

FY20

2,594

FY21

2,905

FY22

Source: Company, MOSL

Expect healthy RoCE expansion

Spent net INR 6.6b towards Phase II and III investments

Total amount spent by ENIL toward phase-II renewal and phase-III cities stands at

INR6.84b. The company paid INR40m toward acquisition of four Oye FM stations to

TV Today. Investment for phase-III auction-acquired licenses is INR3.4b. The phase II

July 2017

Radio| Well tuned to flourish

renewal cost, including the four Oye FM stations, is INR3.65b. However, INR248m

set-off for the balance period of the previous license tenure led to actual cash

outflow of INR3.4b toward phase-II.

4 active Oye FM stations under

ENIL: Amritsar, Jodhpur, Patiala

and Shimla

Remaining 3 Oye FM stations

yet to be included: Delhi,

Mumbai and Kolkata

Exhibit 49: Phase-II and phase-III license cost

INR m

Phase II

Gross Value for 32 stations

Gross Value for 4 Oye Stations

Previous Period Net Off

Net Cash Flow (a)

Phase III Cash Outflow (b)

Oye FM Acquisition (C)

Total Cash outflow (a+b+c)

3,283

125

248

3,161

3,392

6,593

Source: Company, MOSL

Amount

Strong balance sheet to support capex sans dilution

The front-ended investment in the radio industry toward one-time license and set-

up cost bunches capex in one year. Due to its well-capitalized balance sheet

(~INR6.0b in cash as of FY16), the short-term debt for the balance amount is not

significant. As of FY17, it remains in net cash position of INR100m.

Exhibit 50: Low leverage despite heavy capex

0.19

-0.09

-0.30

-0.52

-0.66

835

FY13

FY14

1,009

-0.77

908

-0.84

FY15

1,060

FY16

441

FY17

FCF (INR m)

Net Debt to equity (x)

0.04

-0.01

1,071

FY09

959

FY10

499

FY11

1,104

FY12

Source: Company, MOSL

Exhibit 51: No capex driving FCF growth

FCF (INR m)

121%

21%

-24%

1,104

FY12

835

FY13

1,009

FY14

FCF growth (%)

FCF -INR4.8b

89%

-10%

908

FY15

17%

-58%

1,060

FY16

441

FY17

832

FY18E

1,538

FY19E

1,974

FY20E

85%

28%

Source: Company, MOSL

July 2017

Radio| Well tuned to flourish

Total portfolio of 52 channels operating at average 63% capacity utilization as of

FY17 offers strong revenue growth opportunity with no capex. Incrementally,

investment in batch 2 of phase-III is also largely capitalized, with only additional

INR389m in FY18E. This should allow strong volume-led asset monetization, driving

EBITDA/PAT CAGR of 30%/43% over FY17-20E, with annual maintenance capex of

meager ~INR50m for the 52-station portfolio. Subsequently, cumulative FCF

generation over the next three years is a sizeable INR4.3b.

Exhibit 52: PAT growth will be led by new capacity

FCF growth

121%

31%

21%

-24%

FY12

FY13

FY14

-10%

FY15

PAT growth

89%

27%

17%

-6%

FY16

-46%

21%

85%

58%

13%

54%

28%

-58%

FY17

FY18E

FY19E

FY20E

Source: Company, MOSL

Better asset turns and margin driving return ratios

With capital deployment of ~INR7.5b toward phases II/III investments, FY15 RoIC of

75% has

reduced to the sub cost of capital of 6% in FY17.

However, with no major

incremental capex requirement over the next 3-4 years, we believe RoIC will revert

to ~20% by FY20E.

Exhibit 53: Return ratios to improve after FY17

74.6%

16.9%

13.1%

9.8%

18.4%

FY15

FY16

13.9%

10.5%

6.7%

5.0%

6.0%

FY17

7.4%

6.5%

7.7%

FY18E

8.9%

12.0%

FY19E

FY20E

19.7%

ROE

ROCE

ROIC

14.7%

12.9%

Source: Company, MOSL

FCF yield to move up

ENIL’s next three years of cumulative FCF generation of INR4.3b, driven by increased

free commercial airtime inventory, will lead to significant improvement in FCF yield.

The stock at the current levels is likely to generate FCF yield of 4% over FY18-19E

and ~5% in FY20E. With steady cash flow and no capex, FCF is likely to remain high.

July 2017

Radio| Well tuned to flourish

Exhibit 54: FCF yields to keep growing

FCF (INR m)

FCF Yield (%)

FCF INR4.8b

1,071

959

FY10

1,104

499

FY11

FY12

835

FY13

1,009

FY14

908

FY15

1,060

441

FY16

FY17

832

FY18E FY19E FY20E

Source: Company, MOSL

1,538

1,974

FY09

Rich valuations

The stock is valued at 25x FY18E EV/EBITDA and 20x FY19E EV/EBITDA. On P/E, it is

trading at 70x/45x on FY18/19E. We assign 20x on FY19E EBITDA of INR2.1b, arriving

at a TP of 928, 2% above the CMP. We initiate coverage with a

Neutral

recommendation. The rich valuation is on the back of 30%/43% EBITDA/PAT CAGR

over FY17-20E as new stations turn profitable, RoIC trajectory improves and annual

FCF generation grows consistently. Subsequently, if we assign 15x EV/EBITDA on

weighted average 1QFY22E EBITDA of INR3.6b, we arrive at a TP of 1,270/share.

Including the three Oye FM stations valuation of INR51/share, the combined TP

works out to INR1,321, implying 45% upside over three-year period (15% annually).

We have excluded the three Oye stations, which are awaiting ministry approval,

from our calculations. The approval of three Oye stations — Mumbai, Delhi and

Kolkata — should add INR51/share to our target price. Assuming incremental capex

of ~INR710m (license cost), ENIL should generate healthy IRR of 22% on the three

Oye stations, led by low renewal cost compared to phase-III acquisition cost of

INR2.9b for just Mumbai and Delhi stations.

We believe ENIL is well placed for the next leg of growth with a robust portfolio of

52 stations, decent volume of airtime ad inventory and strong execution capability.

With EBITDA growth expectation of 30% over FY17-20E, earnings growth will remain

healthy. However, at current valuation, we believe the upside is largely captured.

Exhibit 55: Valuation summary (INR m)

EV/EBITDA Valuation

EBITDA

EV/EBITDA (x)

Enterprise Value

Net Debt

Market Cap

No of Shares (m)

TP (INR)

CMP (INR)

Upside

Oye FM Valuation (INR)

TP (INR)

Upside

FY19E

2,091

41,818

(2,427)

44,245

928

911

June'22

3,560.0

53,400

(7,138)

60,539

1,270

911

39%

1320

45%

Source: Company, MOSL

July 2017

Radio| Well tuned to flourish

Financials and valuations

Standalone - Income Statement

Y/E March

Total Income from Operations

Change (%)

Licence Fees & Production Exp.

Employees Cost

Marketing Expenses

Admin & Other Expenses

Total Expenditure

% of Sales

EBITDA

Margin (%)

Depreciation

EBIT

Int. and Finance Charges

PBT after EO Exp.

Total Tax

Tax Rate (%)

Reported PAT

Adjusted PAT

Change (%)

Margin (%)

FY13

3,384

12.3

335

736

664

608

2,342

69.2

1,042

30.8

317

725

-170

895

256

28.6

639

13.1

18.9

FY14

3,848

13.7

374

752

811

662

2,598

67.5

1,250

32.5

318

932

-223

1,155

320

27.7

834

30.6

21.7

FY15

4,385

13.9

371

828

976

758

2,931

66.9

1,453

33.1

329

1,125

-321

1,446

386

26.7

1,060

27.0

24.2

FY16

5,086

16.0

440

935

997

1,119

3,492

68.7

1,594

31.3

363

1,231

-251

1,482

482

32.5

1,000

-5.6

19.7

FY17

5,565

9.4

588

1,054

1,294

1,370

4,306

77.4

1,259

22.6

536

723

-60

783

238

30.4

545

-45.5

9.8

FY18E

6,385

14.7

643

1,217

1,429

1,488

4,777

74.8

1,608

25.2

670

938

-7

945

288

30.4

658

20.7

10.3

(INR Million)

FY19E

7,427

16.3

691

1,346

1,614

1,685

5,336

71.8

2,091

28.2

700

1,391

-62

1,453

442

30.4

1,011

53.7

13.6

FY20E

8,605

15.9

781

1,449

1,744

1,841

5,814

67.6

2,791

32.4

667

2,123

-170

2,293

698

30.4

1,595

57.8

18.5

Standalone - Balance Sheet

Y/E March

Equity Share Capital

Total Reserves

Net Worth

Total Loans

Deferred Tax Liabilities

Capital Employed

Gross Block

Less: Accum. Deprn.

Net Fixed Assets

Total Investments

Curr. Assets, Loans&Adv.

Account Receivables

Cash and Bank Balance

Loans and Advances

Curr. Liability & Prov.

Account Payables

Provisions

Net Current Assets

Appl. of Funds

E: MOSL Estimates

FY13

477

4,546

5,023

5,060

3,693

2,490

1,203

3,178

1,514

994

122

398

836

552

284

678

5,060

FY14

477

5,325

5,802

-42

5,759

3,724

2,808

916

4,344

1,445

1,016

138

292

946

659

287

499

5,759

FY15

477

6,269

6,746

-169

6,577

3,671

3,137

535

5,504

1,686

1,264

142

279

1,147

1,017

131

538

6,577

FY16

477

7,212

7,688

2,502

10,246

10,777

3,499

7,279

1,959

2,241

1,425

198

619

1,233

1,090

143

1,009

10,246

FY17

477

8,070

8,547

1,232

9,878

11,844

4,035

7,810

1,146

2,397

1,622

186

590

1,475

1,371

104

922

9,878

FY18E

477

8,672

9,148

1,232

10,479

12,233

4,705

7,529

1,146

3,224

1,665

969

590

1,419

1,315

104

1,805

10,479

(INR Million)

FY19E

477

9,627

10,103

1,232

11,434

12,286

5,404

6,882

1,146

5,042

1,939

2,513

590

1,635

1,531

104

3,407

11,434

FY20E

477

11,166

11,643

11,742

12,339

6,072

6,268

1,146

6,208

2,249

3,369

590

1,880

1,776

104

4,328

11,742

July 2017

Radio| Well tuned to flourish

Financials and valuations

Ratios

Y/E March

Basic (INR)

EPS

Cash EPS

BV/Share

DPS

Payout (%)

Valuation (x)

P/E

Cash P/E

P/BV

EV/Sales

EV/EBITDA

Dividend Yield (%)

Return Ratios (%)

RoE

RoCE

RoIC

Working Capital Ratios

Asset Turnover (x)

Debtor (Days)

Creditor (Days)

Leverage Ratio (x)

Net Debt/Equity

FY13

13.4

20.1

105.4

1.0

8.7

FY14

17.5

24.2

121.7

1.0

6.7

FY15

22.2

29.1

141.5

1.0

5.3

41.0

31.3

6.4

9.9

29.8

0.1

16.9

13.1

74.6

0.7

105

-0.8

FY16

21.0

28.6

161.3

1.0

5.6

43.4

31.9

5.6

9.0

28.7

0.1

13.9

9.8

18.4

0.5

102

0.0

FY17

11.4

22.7

179.3

1.0

10.2

79.7

40.2

5.1

8.0

35.3

0.1

6.7

5.0

6.0

0.6

106

0.0

FY18E

13.8

27.8

191.9

1.0

8.5

66.0

32.7

4.7

6.8

27.2

0.1

7.4

6.5

7.7

0.6

-0.1

FY19E

21.2

35.9

211.9

1.0

5.5

43.0

25.4

4.3

5.7

20.2

0.1

10.5

8.9

12.0

0.6

-0.2

FY20E

33.5

47.5

244.2

1.0

3.5

27.2

19.2

3.7

4.7

14.4

0.1

14.7

12.9

19.7

0.7

-0.4

0.1

13.6

11.0

26.1

0.7

107

-0.7

0.1

15.4

12.4

44.3

0.7

-0.8

Standalone - Cash Flow Statement

Y/E March

OP/(Loss) before Tax

Depreciation

Interest & Finance Charges

Direct Taxes Paid

(Inc)/Dec in WC

CF from Operations

Others

CF from Operating incl EO

(Inc)/Dec in FA

Free Cash Flow

(Pur)/Sale of Investments

Others

CF from Investments

Inc/(Dec) in Debt

Interest Paid

Dividend Paid

Others

CF from Fin. Activity

Inc/Dec of Cash

Opening Balance

Closing Balance

FY13

894

317

-30

-176

1,032

-170

862

-27

835

-1,294

139

-1,182

-321

443

122

FY14

1,155

318

-7

-401

159

1,224

-187

1,037

-28

1,009

-979

-965

-48

-8

-56

122

138

FY15

1,446

329

-11

-495

1,276

-328

948

-41

908

-933

-888

-48

-8

-56

138

142

FY16

1,482

363

-4

-322

-89

1,430

-343

1,087

-27

1,060

3,696

-7,047

-3,377

-128

-48

2,485

2,309

142

161

FY17

783

536

-60

-238

1,095

413

1,508

-1,067

441

813

-254

-1,270

-56

-1,266

-12

198

186

FY18E

945

670

-7

-288

-100

1,221

-389

832

-389

-56

-49

783

186

969

(INR Million)

FY19E

1,453

700

-62

-442

-58

1,591

-53

1,538

-53

-56

1,544

969

2,513

FY20E

2,293

667

-170

-698

-65

2,027

-53

1,974

-53

-1,232

170

-56

-1,118

856

2,513

3,369

July 2017

July 2017

Radio| Well tuned to flourish

Initiating Coverage | Sector: Radio

BSE SENSEX

32,246

S&P CNX

9,966

Music Broadcast

CMP: INR365

TP: INR469 (+29%)

Buy

Healthy growth opportunity

Asset monetization phase to drive steep RoIC recovery

Strong listenership base; presence in 60% of the market

Stock Info

Bloomberg

Equity Shares (m)

52-Week Range (INR)

1,6,12 Rel. Perf. (%)

M.Cap. (INR b)

M.Cap. (USD b)

Avg Val, INRm

Free float (%)

RADIOCIT IN

38.9

420/33

-1/-/-

14.2

0.2

165.0

28.6

Music Broadcast Ltd (MBL) operates 39 radio stations in India under the brand

name of Radio City. It has presence across 12 of the top 15 cities, covering 60% of

the population having access to FM radio. With 52.5m listeners in 23 cities, Radio

City is the third largest radio channel with 14% revenue market share, but it is a

leader in terms of listenership in the top cities. This allows the company to cover a

wide spectrum of product campaigns and branding for large corporates via its

gamut of channels (network). Additionally, MBL’s deep connectivity in the northern

belt allows it to leverage the strong client relations of the parent – Jagran Group.

Robust listenership base, good inventory availability

With 10-15 years of consistent delivery of strong content, Radio City has built a

healthy listenership base across multiple channels. Additionally, it is sitting at 65-

75% capacity utilization in the 28 legacy stations, which leaves nearly one third of

available inventory. We think this is a key positive, as limited inventory availability

in the top cities has been forcing the large players to opt for second frequencies.

This, along with its strong listenership base, should help the company to record

accelerated growth over the next 2-3 years.

Financials Snapshot (INR b)

FY17 FY18E FY19E

Y/E MARCH

Sales

2.7

3.2

3.6

EBITDA

0.9

1.0

1.3

0.4

0.6

0.8

EPS (Rs)

6.4

10.0

14.3

EPS Gr. (%)

0.3

56.0

42.7

BV/Sh (INR)

96.1 106.1 120.4

P/E (x)

56.7

36.4

25.5

P/BV (x)

3.8

3.4

3.0

EV/EBITDA (x)

21.5

17.9

13.6

EV/Sales (x)

7.2

5.9

4.9

RoE (%)

11.2

9.9

12.6

RoCE (%)

8.8

9.9

12.5

Shareholding pattern (%)

As On

Jun-17

Promoter

71.4

DII

7.5

FII

4.1

Others

17.0

FII Includes depository receipts

Stock Performance (1-year)

Music Broadcast

Sensex - Rebased

380

365

350

335

320

Phase-III: New engine of growth to drive 20% EBITDA CAGR over FY17-20

MBL acquired 11 new stations in Batch 1 of Phase III, of which four are in A-cities

and the rest in B-cities. MBL launched all the 11 stations in FY17, extending its

Radio City brand in the new cities and taking the total number of stations to 39.

MBL spent INR1b, including upfront license and set-up cost. Management believes

that these new stations should break even in 6-8 quarters. We expect the company

to generate ~11% of revenue (at INR434m) and 7% of EBITDA (INR110m); margin of

25% from these 11 stations by FY20E. In the 28 legacy stations, it is expected to

continue its steady 11% revenue growth, contributed by an increase of 6% in

volumes and 5% in price. We expect the 28 legacy stations to grow at 13% EBITDA

CAGR over FY17-20E. Subsequently, overall EBITDA should grow at 20% CAGR over

the same period.

Mar-17

71.4

5.9

4.0

18.8

Possesses the war chest to drive growth opportunities

As the three-year lock-in period concludes by March 2018, many small/regional

radio broadcasters are likely to be up for sale, given the likely consolidation in the

sector. Currently, apart from 6-7 large metro/national players, most of the other

radio broadcasters have limited and fragmented presence across the country. MBL,

through its recent IPO, is sitting on net cash balance of INR1.3b and should reach

~INR2.6b by FY18E. Management has shown the willingness to explore acquisition

opportunities in specific gap locations. We believe that these can include Kolkata

and Gwalior, where they already have a sales alliance. We believe this could drive

healthy earnings growth for the company.

July 2017

Radio| Well tuned to flourish

FCF yield to steadily increase at

~5% as the capacity utilisation of

the new 11 stations increases

FCF (INR m)

FCF Yield (%)

1,000

-1,000

-2,000

-3,000

-2%

-7%

-12%

Improving asset turns, margins to drive RoCE

With the conclusion of Phase-II license renewal and Phase-III fresh license

acquisitions, MBL has now completed its heavy investment phase, which should

drive strong asset monetization over the next three years. MBL has incurred capex

of INR3.3b over the last two years. This offers MBL with 15 years of visibility for its

existing 28 stations and high growth opportunity in its 11 Phase-III stations. Over the

next three years, MBL should be able to grow EBITDA by 71% to INR1.6b, with net

addition of ~INR650m. Against that, cumulative capex will be a meager INR180m,

leaving it a healthy INR1.4b. Subsequently, we expect FCF yield of 5% over FY18-20E.

Valuation

MBL is trading at EV/EBITDA of 13x/10x on FY18E/19E. In terms of P/E, it is trading

at 22x/17x on FY18/19E. Global radio peers with marginal growth opportunity are

operating at ~10-12x EV/EBITDA. In comparison to its Indian listed peer ENIL, it is

trading at ~30-35% discount. We value the company at 18x EV/EBITDA on FY19E

EBITDA of INR1.3b, arriving at a target price of INR469/share, ~29% upside from

CMP of INR365.

initiate coverage with

Buy

rating on the stock.

A high multiple is provided to capture the super-normal EBITDA/PAT CAGR

opportunity of 20%/41% over the next three years (FY17-20E). MBL’s growth is a

three-year story, as RoIC is likely to recover from current 13% to 25% over the next

three years. Subsequently, if we assign 15x EV/EBITDA on weighted-average

1QFY22E EBITDA of INR1.9b, we arrive at a TP of 626/share, implying 72% upside

over three years. We believe that given its strong brand, healthy growth opportunity

and steady FCF/RoIC recovery, MBL’s current valuation discount to ENIL should

reduce.

July 2017

Radio| Well tuned to flourish

Well placed for growth

MBL

3 largest player by revenue

4 largest Radio Footprint

All 39 channels operational

MBL operates 39 stations, which is nearly half the size of peers like ENIL (73

stations), Sun TV (68) and Reliance (59). MBL still remains the third largest player in

terms of revenue market share due to its leadership position in multiple channels.

With 39 channels in operation, MBL has maintained its reach to ~60% of the

population covered by FM stations to restrict the a) Operating hassles and b) low

profitability from wide bouquet of small regional channels. Given its capacity

availability in the legacy stations, MBL has not acquired multiple frequencies like its

large peers (e.g. ENIL and HT). We thus believe that MBL is best placed in the

industry with its leadership position and available inventory.

Exhibit 56: Revenue and EBITDA margin to increase steadily over FY17-20E

Revenues (INR m)

35%

EBITDA Margins (%)

34%

33%

36%

38%

21%

25%

27%

31%

1,222

FY12

1,381

FY13

1,542

FY14

2,008

FY15

2,255

FY16

2,714

FY17

3,172

FY18E

3,611

FY19E

4,082

FY20E

Source: Company, MOSL

Exhibit 57: Ad rates and volumes both increasing steadily

Air time sold

197

212

223

230

Ad Rates

224

34,020

229

35,834

235

37,649

178

188

19,051

20,412

21,773

26,309

28,123

31,752

FY12

FY13

FY14

FY15

FY16

FY17

FY18E

FY19E

FY20E

Source: Company, MOSL

Healthy growth at legacy stations

Over the last five years, MBL’s revenue/EBITDA has grown at a steady 18%/29%

CAGR, largely contributed by the legacy stations (two thirds driven by volume

growth and one third by rate hikes). Unlike the other large radio operators, which

have already exhausted capacity in the top cities, MBL’s key positive is that it still

has one third available capacity at its 28 legacy stations. This should drive healthy

growth over the next 2-3 years; management too expects volume/price growth mix

to continue. MBL commands ~10-15% premium pricing v/s peers, particularly in

cities where it holds leadership position with limited pricing risk.

July 2017

Radio| Well tuned to flourish

Exhibit 58: 39 stations PAN India – 4 largest radio footprint

Source: Company, MOSL

Good content, famous shows help boost listenership base

MBL’s focus is to localize content and customize it based on the requirement of each

city. This has helped it retain listenership share. Some of MBL’s marquee shows

have remained on air for over 10 years – e.g. Love Guru, Babber Sher, Kal bhi aaj bhi

and Radio City super singer. This allows the company to command a leadership

position in terms of listenership.

Exhibit 59: High popularity of Radio City is owed to its long-running shows

Show

Love Guru

Babber Sher

Joke Studio

Gig City

Freedom Awards

Kal Bhi Aaj Bhi Classics

Super Singer

Theme

Relationships and Romance

Humor

Live Radio concert

Independent Music

Yesteryears of Bollywood

Singing Talent

Source: Company, MOSL

Segmental contribution

As per MBL’s FY17 investor presentation, major revenue contributors of the radio

industry were government (16%), real estate (10%) and BFSI (8%). We believe this

could change as government remains a volatile category and real estate has been

under pressure post demonetization. In our view, retail, telco and auto’s revenue

share could accelerate (led by new product launches and aggressive marketing in

these segments), offsetting pressure in other segments.

July 2017

Radio| Well tuned to flourish

Exhibit 60: Industry’s share of retail, telecom and auto might increase

Government

16%

Others

53%

Retail

Real Estate

10%

BFSI

e-Commerce

Source: Company, MOSL

Phase-III

With the acquisition of 11

stations in Phase III, Radio

City can increase its reach

from the current level of

~60%

Footprint strategy – to cover 60% of the population

With a focus on A- and B-circles, MBL targets to reach ~60% of population under FM

radio coverage. The company had a weak north footprint before Phase-III; however,

it has forayed aggressively in this market leveraging its parent Jagran’s strong

northern presence and market standing. Notably, 8 of the 11 new channels are in

cities from the northern belt.

Exhibit 61: Reach of Radio City to keep increasing as newer stations become operational

Reach

Industry Reach

Radio City Reach

Phase II

86 towns

60% of total FM audience

Phase III

302 towns

62% of total FM audience

Source: Company, MOSL

Breakeven in Phase-III to be much faster

The company took five years to break even in Phase-II licenses. However, it is

expected to do much better in Phase-III (break even likely in 6-8 quarters), as:



Experience of Phase II and a healthy portfolio size of 39 stations should help

MBL to sell ‘network’ instead of just specific channels.



New stations are launched where its parent Jagran already has presence. Thus,

it can leverage the parent’s market understanding and client relationships to sell

network to corporate clients.



Operating cost has come under control – (1) Royalty has reduced to ~3-4% of

revenue, (2) networking has allowed operating cost/station to come down by

30-40% for respective stations and (3) other corporate fixed cost can be

leveraged with a wider portfolio of stations.



Initially, MBL targets 70% revenue from corporate relationships and 30% from

retailers. With Jagran’s 25,000 retailer relationships in UP, MBL should be able

to establish its new channels much faster in that state.

July 2017

Radio| Well tuned to flourish

Exhibit 62: Future growth focused around utilization levels of Phase III stations

Legacy Stations

Number of stations

Average Utilization

Annualized Average Utilization

Top 4

Average Realization Levels

(INR/10 sec)

Growth Strategy

500-1200

65-75%

Next 6

150-300

Phase III stations

20-30%

Rest

75-100

75-85

Improving utilization levels

Top 4

500-1,200

Total Stations

50-60%

60-70%

Next 6

150-300

Rest

75-100

Improving ER* and Utilization levels

*ER = Effective Rate; Source: Company, MOSL

Expect breakeven in FY19

MBL’s CAGR

Revenue

EBITDA

PAT

FY17-20E (%)

With an operating cost structure of INR250m for the 11 new stations, MBL expects

to break even in 6-8 quarters. MBL targets IRR of 15-16% for the new stations, which

are likely to breakeven at 45-50% capacity utilization with revenue base of INR200-

250m (INR250-350m). We expect the 11 new stations to record EBITDA loss of

~INR100m in FY18E and then turn breakeven in FY19E. Subsequently, the new

stations are likely to reach EBITDA of INR110m in FY20, contributing 7% of overall

EBITDA.

Exhibit 63: Overall capacity utilization levels to increase and drive revenues

Revenues (INR m)

58%

45%

Capacity Utilization (%)

62%

69%

77%

42%

45%

48%

52%

1222

FY12

1381

FY13

1542

FY14

2008

FY15

2255

FY16

2714

FY17E

3172

FY18E

3611

FY19E

4082

FY20E

Source: Company, MOSL

Networking, cost synergies, Phase III channels to drive profitability

With the allowance of networking, the cluster-based strategy will aid in reducing

operating cost, supporting faster breakeven of the new channels. In Maharashtra,

MBL broadcasts in five cities (Sangli, Nanded, Jalgaon, Sholapur and Akola) from a

single hub in Ahmednagar. This saves production cost for ~20% of the portfolio

channels. Similarly, it may adopt networking in UP and Rajasthan to reduce costs.

Given the inherent fixed cost nature of the business (employee and SG&A together

contributing to nearly two thirds of costs), the addition of new stations should allow

the company to leverage its corporate costs and other national advertiser channel

costs. MBL has healthy ad inventory available, which should allow it to grow

revenue by nearly one third with a large fixed cost structure. Thus, network cost in

addition to fixed cost leverage should help improve EBITDA margin by ~500bp over

the next three years – FY20E

July 2017

Radio| Well tuned to flourish

Radio City to grow at 15%

CAGR over FY17-19E driving

EBITDA breakeven in FY19E

Free capacity at legacy stations, launch of Phase-III stations to drive growth

The legacy 28 stations from Phase II are expected to grow at 11% CAGR over FY17-

20, led by 5% price increase and 6-7% volume growth. The new Phase III stations,

which were launched in FY17, should reach revenue of INR434m by FY20E,

contributing 11% of overall revenue and driving incremental growth. Thus, overall

revenues should grow at 15% CAGR over FY17-20E, fueled by fresh inventory from

the Phase-III stations.

EBITDA margin for the old stations should improve as the inherent fixed cost model

should see meager 7-8% inflationary increase. Thus, the legacy 28 stations should

see 13% EBITDA CAGR, improving margin by 270bp over FY17-20E. The new 11

stations should record EBITDA loss of INR109m in FY18E, leading to slower EBITDA

growth of 14% v/s legacy stations’ +15%. However, the new stations should

breakeven in FY19E, and subsequently record EBITDA of INR110m and margin of

25% in FY20E. Overall EBITDA should grow at 20% CAGR over FY17-20E. The front-

loading investment cost, high fixed amortization and finance cost will lead to 41%

PAT CAGR over FY17-20E to reach INR1.1b.

Exhibit 64: Revenue growth accelerated by new stations

Phase II - 28 stations

Phase III Batch 1 - 11 stations

555

646

Exhibit 65: EBITDA mix from new stations to improve

Phase II - 28 stations

Phase III Batch 1 - 11 stations

204

262

2,008

FY15

182

304

434

623

782

996

(84)

FY15

FY16

FY17

1,147

(109)

1,295

110

1,454

1,622

1,776

2,255

FY16

2,683 2,990

FY17

3,307

3,648

4,015

4,361

FY18E FY19E FY20E FY21E FY22E

Source: Company, MOSL

FY18E FY19E FY20E FY21E FY22E

Source: Company, MOSL

Heavy lifting completed; time for asset monetization

FY17

FCF

RoIC

310m

13%

FY20E

895m

25%

MBL incurred INR630m toward the acquisition of 11 new stations. About INR330m

capex is incurred toward set-up, i.e. INR30m/station. Additionally, migration cost for

28 legacy stations was INR2.37b, of which INR2.22b was toward 20 own stations and

the remaining for 8 stations acquired from Mantra.

Net of cash, MBL’s FY17 balance sheet size was ~INR5b. Thus, overall, it has spent

~INR3.3b over the last two years, i.e. nearly 60% of the invested capital (net of

cash). We believe MBL is in a strong financial position given that majority of heavy

lifting is completed, which should now allow it to sweat the assets and improve

profitability. The company will only need to spend maintenance capex of INR60m

annually, leading to cumulative FY17-20E capex of INR180m. Against this, EBITDA

will grow by 71% over the next three years to INR1.6b. This should allow MBL to

generate healthy 5% FCF yield over FY18-20E and recoup RoIC to ~25% by FY20E.

July 2017

Radio| Well tuned to flourish

Exhibit 66: FCF growing as new stations have become operational

FCF (INR m)

68%

FCF growth

91%

-114%

-453%

203%

-21%

20%

FCF yield and return ratios

will improve as the new

stations will breakeven in

FY19

318

FY13

326

FY14

623

FY15

(2,198)

FY16

310

FY17

939

FY18E

745

FY19E

895

FY20E

Source: Company, MOSL

Exhibit 67: FCF yield to grow steadily over next few years

FCF (INR m)

318

326

(2,198)

-11%

FY13

FY14

FY15

FY16

FY17

FY18E

FY19E

FY20E

623

310

FCF Yield (%)

939

745

895

Source: Company, MOSL

Exhibit 68: Return ratios to improve from FY18

138.0%

23.3%

21.8%

13.2%

13.1%

44.3%

FY15

FY16

11.2%

FY17

9.9%

FY18E

13.3%

8.8%

ROE

ROCE

ROIC

19.5%

14.2%

9.9%

12.5%

12.6%

FY19E

13.9%

FY20E

25.3%

Source: Company, MOSL

Acquisition strategy

Management has indicated that it is open for mergers and will look to acquire

regional players in the pockets where it does not have any presence. We believe

that these pockets could be MP & Chhattisgarh in central India; and Kerala in south

India.

The company recently raised INR4b equity and should have net cash of INR2.6b as of

March 2018. As the lock-in period completes in March 2018, many small regional

players which remain under stress should consolidate. With a war chest ready, it

should offer good growth opportunity for MBL.

Multiple M&A opportunities

with huge cash available

July 2017

Radio| Well tuned to flourish

Valuation attractive

MBL is trading at EV/EBITDA of 13x/10x on FY18E/19E. In terms of P/E, it is trading

at 22x/17x on FY18/19E. Global radio peers with marginal growth opportunity are

operating at ~10-12x EV/EBITDA. In comparison to its Indian listed peer ENIL, it is

trading at ~30-35% discount. We value the company at 18x EV/EBITDA on FY19E

EBITDA of INR1.3b, arriving at a TP of INR469/share, which is ~29% upside from CMP

of INR365. We initiate coverage with

Buy

rating on the stock.

A high multiple is provided to capture the super-normal EBITDA/PAT CAGR

opportunity of 20%/41% over the next three years (FY17-20E). MBL’s growth is a

three-year story, as RoIC is likely to recover from current 13% to 25% over the next

three years. Subsequently, if we assign 15x EV/EBITDA on weighted-average

1QFY22E EBITDA of INR1.9b, we arrive at a TP of 626/share, implying 72% upside

over three years. We believe given its strong brand, healthy growth opportunity and

steady FCF/RoIC recovery, MBL’s current valuation discount vs ENIL should reduce.

Exhibit 69: EV/EBITDA valuation

EV/EBITDA Valuation

EBITDA

EV/EBITDA

Enterprise Value

Net Debt

Market Cap

No of Shares

CMP

Upside

FY19E

1,296

23,330

(3,403)

26,733

469

365

29%

June'22

1,879.40

28,191

-7507.996

35,699

626

365

72%

Source: Company, MOSL

Exhibit 70: Radio City with largest listenership base

52.5

Listenership Across Markets (in m)

42.1

27.2

22.7

15.1

Exhibit 71: Radio City – No. 1 FM station in Mumbai

Listenership in Mumbai (in m)

8.4

6.4

9.1

5.9

5.5

Radio City

Radio

Mirchi

BIG FM

Red FM

Fever

Radio One

Radio City

BIG FM

Radio Mirchi

Fever

Radio One

Source: Company, MOSL

Exhibit 72: Top FM station in the competitive Delhi market

9.2

Listenership in Delhi (in m)

8.2

Exhibit 73: Radio City – most popular in Kolkata

Listenership in Kolkata (in m)

4.7

3.7

7.2

5.8

5.5

3.2

2.7

2.3

Radio City Radio Mirchi

Red FM

BIG FM

Fever

Radio City

BIG FM

Radio Mirchi

Fever

Radio One

Source: Company, MOSL

July 2017

Radio| Well tuned to flourish

Financials and valuations

Standalone - Income Statement

Y/E March

Total Income from Operations

Change (%)

Licence Fees & Programming Costs

Employees Cost

Mrktg & Advert. Expenses

Admin & Other Expenses

Total Expenditure

% of Sales

EBITDA

Margin (%)

Depreciation

EBIT

Int. and Finance Charges

Other Income

PBT bef. EO Exp.

EO Items

PBT after EO Exp.

Total Tax

Tax Rate (%)

Reported PAT

Adjusted PAT

Change (%)

Margin (%)

FY12

1,222

103

298

250

311

962

78.7

260

21.3

235

-17

-5

-22

0.0

-22

-17

-1.4

FY13

1,381

13.0

129

346

245

322

1,042

75.5

339

24.5

199

140

116

0.0

116

-795.7

8.4

FY14

1,542

11.7

128

363

246

381

1,118

72.5

424

27.5

155

269

243

0.0

243

109.4

15.8

FY15

2,008

30.3

145

430

301

509

1,385

69.0

623

31.0

157

466

471

0.0

471

93.5

23.4

FY16

2,255

12.3

230

511

206

526

1,473

65.3

782

34.7

167

614

207

148

555

-136

420

143

34.2

276

366

-22.3

16.2

FY17

2,714

20.4

300

651

240

611

1,802

66.4

913

33.6

197

716

190

570

203

35.7

367

0.3

13.5

FY18E

3,172

16.9

313

786

308

728

2,135

67.3

1,037

32.7

240

797

145

223

874

303

34.6

572

56.0

18.0

FY19E

3,611

13.9

335

865

328

787

2,315

64.1

1,296

35.9

242

1,054

224

1,248

432

34.6

816

42.7

22.6

(INR Million)

FY20E

4,082

13.0

360

952

355

852

2,519

61.7

1,564

38.3

244

1,319

254

1,574

545

34.6

1,029

26.1

25.2

Standalone - Balance Sheet

Y/E March

Equity Share Capital

Total Reserves

Net Worth

Total Loans

Deferred Tax Liabilities

Capital Employed

Gross Block

Less: Accum. Deprn.

Net Fixed Assets

Capital WIP

Total Investments

Curr. Assets, Loans&Adv.

Account Receivables

Cash and Bank Balance

Loans and Advances

Curr. Liability & Prov.

Account Payables

Other Current Liabilities

Provisions

Net Current Assets

Appl. of Funds

E: MOSL Estimates

FY12

389

-526

-137

1,486

1,349

2,130

1,708

422

1,273

645

220

407

359

292

913

1,349

FY13

389

-656

-267

1,728

1,461

2,105

1,514

590

1,199

624

123

452

347

286

852

1,461

FY14

389

-283

106

1,282

1,388

2,166

1,850

317

1,380

628

339

413

311

231

1,069

1,388

FY15

389

187

576

2,932

3,507

2,189

2,002

187

3,787

772

543

2,472

470

339

3,317

3,507

FY16

389

685

1,074

3,057

4,131

3,527

1,223

2,304

657

142

1,751

950

158

643

722

393

276

1,029

4,131

FY17

571

4,911

5,481

1,499

-270

6,710

4,536

1,420

3,116

268

3,958

817

2,679

462

631

329

234

3,327

6,710

FY18E

571

5,483

6,053

499

6,552

4,594

1,659

2,935

268

4,096

1,018

2,695

383

746

521

179

3,350

6,552

FY19E

571

6,299

6,869

-1

6,868

4,653

1,902

2,751

268

4,691

1,159

3,134

398

842

594

198

3,850

6,868

(INR Million)

FY20E

571

7,328

7,898

-1

7,897

4,711

2,146

2,565

268

6,009

1,310

4,284

415

945

671

219

5,065

7,897

July 2017

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Financials and valuations

Ratios

Y/E March

Basic (INR)

EPS

Cash EPS

BV/Share

DPS

Payout (%)

Valuation (x)

P/E

Cash P/E

P/BV

EV/Sales

EV/EBITDA

Dividend Yield (%)

FCF per share

Return Ratios (%)

RoE

RoCE

RoIC

Working Capital Ratios

Asset Turnover (x)

Debtor (Days)

Creditor (Days)

Leverage Ratio (x)

Net Debt/Equity

FY12

-0.3

3.8

-2.4

0.0

FY13

2.0

5.5

-4.7

0.0

FY14

4.3

7.0

1.9

0.0

FY15

8.2

11.0

10.1

0.0

44.2

33.1

36.1

11.5

37.2

0.0

10.0

138.0

21.8

23.3

0.6

140

4.1

FY16

6.4

9.3

18.8

0.0

56.9

39.0

19.4

10.5

30.3

0.0

-39.3

44.3

13.1

13.2

0.5

154

2.6

FY17

6.4

9.9

96.1

0.0

56.7

36.9

3.8

7.2

21.5

0.0

5.4

11.2

8.8

13.3

0.4

110

-0.3

FY18E

10.0

14.2

106.1

0.0

36.4

25.6

3.4

5.9

17.9

0.0

16.5

9.9

14.2

0.5

117

-0.4

FY19E

14.3

18.5

120.4

0.0

25.5

19.7

3.0

4.9

13.6

0.0

13.1

12.6

12.5

19.5

0.5

117

-0.5

FY20E

18.0

22.3

138.4

0.0

20.2

16.3

2.6

4.0

10.6

0.0

15.7

13.9

25.3

0.5

117

-0.6

0.0

3.3

24.4

7.6

4.5

0.9

193

-9.2

0.0

5.5

-57.5

11.7

11.5

0.9

165

-6.0

0.0

5.5

-302.2

21.0

22.7

1.1

149

8.9

Standalone - Cash Flow Statement

Y/E March

OP/(Loss) before Tax

Depreciation

Interest & Finance Charges

Direct Taxes Paid

(Inc)/Dec in WC

CF from Operations

Others

CF from Operating incl EO

(Inc)/Dec in FA

Free Cash Flow

(Pur)/Sale of Investments

Others

CF from Investments

Issue of Shares

Inc/(Dec) in Debt

Interest Paid

CF from Fin. Activity

Inc/Dec of Cash

Opening Balance

Closing Balance

FY12

-17

235

-15

-60

212

-3

209

-21

188

-175

-70

-245

FY13

116

199

-17

346

-6

340

-25

315

-16

-243

-52

-271

131

FY14

243

155

-4

-77

373

-20

353

-37

316

-8

-46

-203

-56

-259

133

181

FY15

471

157

-54

643

-46

597

-27

570

-1,983

-2,010

1,649

-51

1,599

186

192

378

FY16

561

167

190

-106

113

925

-303

622

-2,861

-2,240

-134

2,305

-689

-88

-192

-281

-349

432

FY17

570

197

190

-203

223

977

-314

662

-352

310

-126

-433

4,041

-1,558

-190

2,292

2,521

158

2,679

FY18E

874

240

145

-303

-7

951

998

-59

939

223

164

-1,000

-145

-1,145

2,679

2,695

(INR Million)

FY19E

1,248

242

-432

-61

1,027

-224

804

-59

745

224

165

-500

-30

-530

439

2,695

3,134

FY20E

1,574

244

-545

-65

1,208

-254

954

-59

895

254

196

1,150

3,134

4,284

July 2017

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