TV Today Research Report By ICICI-Direct

Tagged: ICICI-Direct, TV Today Network

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September 9, 2014 at 9:49 pm #962

Vidhi Khanna
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Operating leverage to kick in quite strongly, carriage costs to reduce, BUY

Digitisation would bring twin benefits of declining carriage cost and uptick in subscription revenue as the distribution industry shifts to cost per subscriber (CPS) model. Carriage cost forming about 30-35% of revenue is expected to decline at an annual rate of 10% over the next two years. With most other costs largely fixed in nature, high degree of operating leverage would accrue to TV Today, resulting in 35.1% EBITDA CAGR (FY14-16E) to Rs. 199.4 crore. With a revival in EBITDA margins, valuation multiples are expected to inch up to historical levels. We value the company at 15x FY16E EPS of | 20.0 to arrive at a target price of Rs. 300.
We are initiating coverage on TV Today with a BUY rating.

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