Media, Education & Others

Apr-Jun'20 Earnings Preview

July 8, 2020 Radio space: For our coverage universe we expect a ~75-80% fall in top-line for
1QFY21, as in April 2020 industry volumes/revenues for top 15 markets were
~15%/~15-20% of normal volumes/revenues respectively. We expect April and May
to be sub-optimally low on utilization front with gradual recovery in June. Cut back
in government ad spends is expected to put added pressure on inventory utilization.
We thus expect ENIL/MBL to report a fall in top-line by 79%/75% respectively in
1QFY21. While ENIL is targeting cost reduction of Rs600-700mn in FY21 and MBL
has reduced operating cost to Rs100-110mn per month in lockdown given the low
utilization and subsequent loss of operating leverage we expect EBITDA loss of
Rs644mn/227mn for ENIL/MBL respectively. Based on the challenging ad-
environment we maintain our HOLD rating on both ENIL/MBL with a TP of
Rs157/Rs17 respectively.

Multiplex space: With multiplexes being shut in 1QFY21, NBOC for the industry is
expected to be NIL. However, in 1QFY20, there were 3 Bollywood movies that
crossed Rs1bn in NBOC viz; De De Pyar De, Bharat, and Kabir Singh. In case of
Hollywood, Avengers/Aladdin clocked Rs3.7bn/Rs560mn respectively. Even if we
assume that base quarter performance of Bollywood was replicated/bettered in
1QFY21 (~2-3 movies clocking more than Rs1bn is a normal trend) it would have
been really challenging to surpass Hollywood NBOC given that a tent-pole like
Avengers was present in the base quarter. Thus, we believe even if multiplexes
were operational in 1QFY21, surpassing NBOC of 1QFY20 would have been a
difficult task. While there are near term challenges with respect to fixed cost &
liquidity management we continue to maintain our positive stance on the multiplex
space (low ticket consumer discretionary play) and recommend a staggered buying
approach. We have an ACCUMULATE on both PVR/Inox with a TP of
Rs1,107/Rs256 respectively.

Education space: Navneet is expected to report a fall in top-line in a seasonally

strong quarter as delay in start of academic year is expected to result in revenue
spill-over for publishing division (from 1QFY21 to 2QFY21) coupled with outright
loss of sales for domestic stationary division. For S Chand, we expect a 25% YoY
increase in top-line amid spill-over of revenues from preceding quarter (i.e
4QFY20). Given the renewed focus on cash flow management (OCF stood at
Rs486mn against expectation of >Rs1bn as lockdown impacted collection efforts
and led to inventory pile-up) and clearly outlined cost rationalization program,
performance over the next 2 quarters will be keenly eyed. We maintain
ACCUMULATE on Navneet and S Chand with TP of Rs89 and Rs57 respectively.

Luggage space: We expect discretionary spending post-COVID to be weak

resulting in a prolonged demand slump for luggage companies. Further, aggressive
discounting by players can’t be ruled out in the initial few months which can result
in heightened competitive intensity. Given that travel & tourism is worst hit by

Jinesh Joshi
jineshjoshi@plindia.com | 91-22-66322238
COVID-19 pandemic and 1Q is the strongest quarter for luggage companies (to be
worst hit) we have further cut our FY21E sales/EPS estimates for VIP by 26%/39%
respectively. However, we maintain our FY22E estimates. We now value the stock
at 25x Sep 22E EPS and thus revise our TP to Rs255 (earlier Rs229). Maintain
HOLD.

July 8, 2020 1
 Media, Education & Others

Q1FY21 Result Preview – Media

YoY gr. QoQ gr.
Company Name Q1FY21E Q1FY20 Q4FY20 Remark
(%) (%)
Sales 276 1,316 (79.0) 1,494 (81.5) Topline is expected to decline 79% YoY as ad-volumes in
traditional radio business are expected to be sub-optimally
EBITDA (644) 330 NA 225 NA low in April and May with gradual recovery in June. The
non-FCT revenue is expected to decline 90% YoY (~28%
Entertainment
Margin (%) NA 25.1 15.1 sales contribution in 1QFY20) as events, activations &
Network (India)
concerts have been postponed/cancelled due to
PBT (914) 74 NA (38) NA lockdown. Given the loss in operating leverage due to low
inventory utilization we expect EBITDA loss of Rs644mn
Adj. PAT (685) 48 NA (22) NA in 1QFY21.
Sales - 4,930 NA 3,716 NA With multiplexes being shut amid COVID-19 pandemic,
EBITDA (505) 1,501 NA 1,100 NA we expect footfalls & revenues to be NIL in 1QFY21. Inox
has taken various cost cutting initiatives and has reduced
Inox Leisure Margin (%) NA 30.4 29.6
the fixed cost obligation to Rs150-160mn per month
PBT (785) 415 NA (206) NA during lockdown. Consequently, we expect EBITDA loss
Adj. PAT (589) 270 NA (821) NA of Rs505mn in 1QFY21.
Sales - 8,804 NA 6,451 NA With multiplexes being shut amid COVID-19 pandemic,
EBITDA (1,344) 2,786 NA 1,727 NA we expect footfalls & revenues to be NIL in 1QFY21. PVR
has taken various cost cutting initiatives and has reduced
PVR Margin (%) NA 31.6 26.8
the fixed cost obligation to Rs400-450mn per month
PBT (1,834) 281 NA (701) NA during lockdown. Consequently, we expect EBITDA loss
Adj. PAT (1,192) 176 NA (745) NA of Rs1,344mn in 1QFY21.
Sales 174 698 (75.0) 459 (62.0) Topline is expected to decline 75% YoY as ad-volumes in
traditional radio business are expected to be sub-optimally
EBITDA (227) 224 NA (53) NA low in April (industry volumes were ~15% of the normal
levels) and May with gradual recovery in June. While MBL
Music Broadcast Margin (%) NA 32.1 NA has taken cost cutting initiatives and has reduced the
operating cost to Rs100-110mn per month during
PBT (309) 145 NA (121) NA lockdown, given the loss in operating leverage due to low
utilization we expect EBITDA loss of Rs227mn in
Adj. PAT (231) 84 NA (89) NA 1QFY21.

Source: Company, PL

Q1FY21 Result Preview – Education

YoY gr. QoQ gr.
Company Name Q1FY21E Q1FY20 Q4FY20 Remark
(%) (%)
Sales 3,312 7,950 (58.3) 2,072 59.8 We expect revenues to decline 58.3% YoY in a seasonally
strong quarter as COVID-19 has delayed the start of
EBITDA 258 2,314 (88.8) 327 (21.0) academic year. We thus expect publishing revenue to
Navneet Margin (%) 7.8 29.1 15.8 decline 75% YoY (there will be revenue spill-over from
Education 1QFY21 to 2QFY21). Further, lockdown is also expected
PBT 152 2,262 (93.3) 224 (32.0) to result in 70% YoY fall in revenue for domestic
stationary division. Amid poor top-line performance, we
Adj. PAT 114 1,474 (92.3) 162 (29.6) expect EBITDA margin to fall to 7.8% in 1QFY21.
Sales 766 613 25.0 3,318 (76.9) We expect revenues to increase 25% YoY in a seasonally
weak quarter amid spill-over from the preceding quarter.
EBITDA (230) (299) NA 1,547 NA Gross billing of Rs900-950mn has already been done in
S Chand and
Margin (%) NA NA 46.6 1QFY21 (can generate net sales of ~Rs800mn after
Company
taking into account sales returns). While S Chand has
PBT (396) (447) NA 1,374 NA outlined a cost reduction program for FY21, given sales in
1QFY21 are expected to be low due to seasonality, we
Adj. PAT (297) (374) NA 607 NA expect EBITDA loss of Rs230mn in 1QFY21.

Source: Company, PL

Q3FY20 Result Preview – Luggage

YoY gr. QoQ gr.
Company Name Q1FY21E Q1FY20 Q4FY20 Remark
(%) (%)
Sales 846 5,642 (85.0) 3,113 (72.8) We expect top-line to decline 85.0% YoY as volumes for
April & May are completely lost due to lockdown with
EBITDA (173) 1,251 NA 319 NA marginal recovery in June. However, we expect GM to
expand to 54.5% as sourcing from Bangladesh is expected
VIP Industries Margin (%) NA 22.2 10.2 to be sufficient to meet the requirement of 1QFY21. While
VIP has taken cost cutting initiatives to bring down the fixed
PBT (423) 1,032 NA 105 NA opex burn, we expect EBITDA loss of Rs173mn in 1QFY21
due to loss of operating leverage on the back of poor top-
Adj. PAT (317) 836 NA 95 NA line growth.

Source: Company, PL

July 8, 2020 2
 Media, Education & Others

Valuation Summary – Media

CMP Sales (Rs m) EBITDA (Rs m) PAT (Rs m) EPS (Rs) RoE (%) PE (x)
Company Names Rating TP (Rs)
(Rs) FY20 FY21E FY22E FY23E FY20 FY21E FY22E FY23E FY20 FY21E FY22E FY23E FY20 FY21E FY22E FY23E FY20 FY21E FY22E FY23E FY20 FY21E FY22E FY23E
Ent. Network (India) HOLD 133 157 5,406 3,931 5,769 6,659 1,235 354 1,425 1,964 146 -544 223 601 3.1 -11.4 4.7 12.6 1.6 -6.3 2.5 6.5 43.6 -11.7 28.4 10.6
Inox Leisure Acc 237 256 18,974 8,060 19,175 23,893 5,968 739 5,885 7,364 150 -1,459 1,581 2,297 1.5 -14.2 15.4 22.4 2.4 -31.3 25.8 27.6 162.4 -16.7 15.4 10.6
PVR Acc 1,073 1,107 34,144 14,724 33,817 40,497 10,766 1,448 10,408 12,245 273 -2,977 1,237 2,309 5.3 -58.0 24.1 45.0 1.4 -20.4 7.9 13.1 201.5 -18.5 44.5 23.8
Music Broadcast HOLD 17 17 2,478 1,715 2,636 3,214 571 129 751 1,109 282 -135 312 564 0.8 -0.4 0.9 1.6 4.5 -2.2 4.8 8.0 21.2 -44.2 19.2 10.6
Source: Company, PL

Valuation Summary – Education

CMP Sales (Rs m) EBITDA (Rs m) PAT (Rs m) EPS (Rs) RoE (%) PE (x)
Company Names Rating TP (Rs)
(Rs) FY20 FY21E FY22E FY23E FY20 FY21E FY22E FY23E FY20 FY21E FY22E FY23E FY20 FY21E FY22E FY23E FY20 FY21E FY22E FY23E FY20 FY21E FY22E FY23E
Navneet Education Acc 78 89 15,121 13,878 16,487 18,558 3,135 2,476 3,181 3,675 1,973 1,545 2,032 2,362 8.6 6.7 8.9 10.3 23.9 16.9 19.8 19.5 9.1 11.6 8.8 7.6
S Chand and Company Acc 51 57 4,294 6,395 7,199 8,415 -220 1,267 1,448 1,736 -1,013 446 565 867 -29.0 12.7 16.1 24.8 -11.6 5.3 6.3 9.0 -1.8 4.0 3.2 2.1
Source: Company, PL

Valuation Summary – Luggage

CMP Sales (Rs m) EBITDA (Rs m) PAT (Rs m) EPS (Rs) RoE (%) PE (x)
Company Names Rating TP (Rs)
(Rs) FY20 FY21E FY22E FY23E FY20 FY21E FY22E FY23E FY20 FY21E FY22E FY23E FY20 FY21E FY22E FY23E FY20 FY21E FY22E FY23E FY20 FY21E FY22E FY23E
V.I.P. Industries HOLD 258 255 17,183 10,419 16,623 19,394 2,913 1,095 2,768 3,297 1,602 1 1,262 1,625 11.3 0.0 8.9 11.5 18.6 0.0 18.8 20.5 22.7 NA 28.8 22.4
Source: Company, PL

July 8, 2020 3
 Media, Education & Others
Analyst Coverage Universe
Sr. No. Company Name Rating TP (Rs) Share Price (Rs)
1 Dish TV India NR - 74
2 Entertainment Network (India) Hold 157 159
3 Indian Railway Catering and Tourism Corporation BUY 1,428 1,292
4 Inox Leisure Accumulate 256 254
5 Music Broadcast Hold 17 13
6 Navneet Education Accumulate 89 79
7 PVR Accumulate 1,131 1,087
8 S Chand and Company Accumulate 57 45
9 V.I.P. Industries Hold 229 215

PL’s Recommendation Nomenclature

Buy : > 15%
Accumulate : 5% to 15%
Hold : +5% to -5%
Reduce : -5% to -15%
Sell : < -15%
Not Rated (NR) : No specific call on the stock
Under Review (UR) : Rating likely to change shortly

July 8, 2020 4
 Media, Education & Others

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