Kenneth Andrade & Akash Prakash Recommend 4x Multibagger Stock

Gains galore from recommendations of Akash Prakash & Kenneth Andrade

First, we have to express our gratitude to Akash Prakash of Amansa Capital and Kenneth Andrade of Old Bridge Capital for generously offering stock recommendations to us.

The two stalwarts put their heads together and handpicked stocks which have the ideal combination of safety and growth potential.

Akash Prakash recommended Federal Bank, the blue chip mid-cap private bank, which is the favourite of Billionaires Rakesh Jhunjhunwala and MA Yussuffali.

Federal Bank is up an eye-popping 123% since then.

Kenneth Andrade recommended Coromandel International, the blue-chip of the reputed Murugappa group.

Coromandel International is up a fabulous 78% since then.

Both stocks are powerhouses and are good for more gains in the foreseeable future.

Kenneth Andrade’s latest recommendation – Entertainment Network India Ltd (ENIL)

“ENIL a.k.a Radio Mirchi is the market leader in the Radio space with 30% market share,” Kenneth told the distinguished audience at the Sohn India 2017 conference even as they listened to him with rapt attention and furiously made notes.

“Radio is an attractive space with 4% of Media spend and growing at a CAGR of 16.9%. ENIL has already done significant capex and its time to reap the benefits,” Kenneth added in his typical soft spoken mumble.

Akash Prakash’s Amansa Holdings already has a stranglehold in ENIL

It is not a coincidence that Amansa Holdings, Akash Prakash’s investment arm, already holds a massive chunk of 28,31,439 shares of ENIL as of 31st March 2017.

The investment is worth Rs. 258 crore at the CMP of Rs. 912.

It is obvious from the size of the bet that Akash Prakash has placed on ENIL that he completely endorses Kenneth Andrade’s theory that ENIL is the ideal investment candidate with low risk and high reward potential.

ENIL boasts of other distinguished shareholders such as Acacia Banyan Partners, IDFC Premier Fund, Pinebridge Investments etc.

[*C] Consolidated     [*S] Standalone    

ENIL is a 4x Multibagger: Motilal Oswal

Ravi Shenoy of Motilal Oswal deserves to be complimented for his visionary outlook because as far back as in January 2014, when radio stocks were not even in reckoning as investment candidates, he recommended a buy of ENIL with the confident assurance that the entire radio sector would grow 4x and shower multibagger gains on investors.

His logic is impeccable and deserves to be noted:

“We recommend to Accumulate ENIL for a target of Rs 400 (20xFY15E EPS)

We estimate that ENIL will grow its revenues and PAT at 12% and 19% CAGR over FY13-FY15E. Growth beyond FY15E will depend upon Phase-III auctions which will be a key trigger in FY15E. We recommend to Accumulate the stock for a target of Rs 400 (20xFY15E EPS)”.

The stock is up 175% since Ravi Shenoy’s buy recommendation.

Entertainment Network is poised for healthy growth ahead: ICICI Direct

Bhupendra Tiwary and Sneha Agarwal of ICICI-Direct have also conducted a meticulous analysis of Radio Mirchi and given it the all-clear signal.

The core logic is as follows:

“Margins to improve as new stations break even from H2FY18 onwards

Radio, as a segment in the Indian media sector, is likely to outpace its peers such as television, print owing to expanding reach and higher leverage in terms of pricing. The segment is likely to report 16-18% revenue growth over the next three to five years. We also reiterate that ENIL, being a leader, is expected to be a key beneficiary of the expanding reach of the radio. While the new channel launches in phase III are expected to pressurise margins in H1FY8E, a gradual recovery would be seen from H2FY18E onwards. The company’s focus on improving the profitability of the non-radio business is also heartening. Therefore, we upgrade the recommendation on ENIL to BUY with a DCF-based target price of Rs 860.”

Of course, the conservative target price predicted by the duo has been effortlessly taken out by ENIL.

What about Music Broadcast?

At this stage, we have to note that Music Broadcast is ENIL’s arch rival. While the latter runs ‘Radio Mirchi 98.3’, the former runs ‘Radio City 91.1’.

Both radio channels are top favourites amongst the teeny boppers who listen to radio channels.

According to Bhupendra Tiwary and Sneha Agarwal of ICICI-Direct, Music Broadcast is also a powerhouse given that its operating revenues and EBITDA have grown at 21%, 29% CAGR in FY14-17 to Rs 271.4 crore, Rs 91.1 crore, respectively.

Radio City has posted a six year CAGR of ~12.1% vs. 9.1% by industry in advertising volumes.

Strong leadership in key cities, leading player in radio space

It is also stated that Radio City is the first and oldest private FM radio broadcaster in India with over 15 years of expertise and a pan-India presence spanning 39 frequencies. As per RAM data, it has consistently been the No. 1 radio station in terms of average listenership share in Bengaluru and Mumbai with 24.1% and 17.2%, respectively, among private players. MBL is also present in 12 of the 15 most populated cities in India. The presence in key metros along with an expanded network in some key cities makes it a meaningful player in the eyes of advertisers.

Strong financials, cash flows, discount to ENIL

Bhupendra Tiwary and Sneha Agarwal have opined that Radio City, with its strong capital allocation and robust earning growth potential remains a strong bet on the radio sector. It is emphasized that at the current market price, the company is available at 29.6x FY19E earnings, which is at ~15% discount to ENIL.

Conclusion

So far, novice investors have been focusing on traditional investment avenues. The idea of investing in a FM radio station has never occurred to us. However, the guiding light shown by Kenneth Andrade and Akash Prakash enables us to become pioneers and take an early position in these stocks before the hoi polloi does!