November 12, 2020

Entertainment Network
(India) Ltd
Result Update Note
Q2FY21
Note: CMP is as on 11 November 2020. Please refer to Disclaimer and Disclosure on the last slide.
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Entertainment Network (India) CMP: Rs.149
Key highlights of the quarter:
 Entertainment Network (India) Ltd (ENIL) reported a weak set of results for Q2FY21. Revenue fell by 58.1% YoY, impacted by
Covid-19 related weakness in the economy. The company reported an EBITDA loss of Rs.63 mn vs a profit of Rs.280 mn in Key Details
Q2FY20 and a loss of Rs.247 mn on the bottom line compared to a PAT of Rs.1.9 mn in Q2FY20.
 Revenue fell by ~57% YoY in core radio business and by ~63% YoY in Non-Radio business (Solution business). However, the
company reported a 30% QoQ growth in overall revenue, led by 132% QoQ growth in Radio business and 67% QoQ growth in
52 week H/L(Rs) 276/101
digital products (a part of solution business).
Market Cap (Rs. Bn) 7.2
 Decline in Radio revenue on YoY basis was mainly due to sharp decline in ad-time inventory utilization and ~30% YoY fall in
pricing due to bonus slots provided to advertisers during the quarter. Book Value (Rs) YTD 178
 The management highlighted that states which are less affected with Covid-19 cases have done well with some of them like
Rajasthan, Himachal Pradesh, Chattisgarh have reported positive growth on YoY basis. However, bigger states which are affected FV (Rs) 10.0
severely by Covid-19 infections are grappling to recover and reported a sharp fall in revenue during the quarter. However, the
management expects to see further sequential recovery and less than 30% decline in revenue on YoY basis in Q3FY21. PE (X) (TTM) NA
 Solutions business revenues were impacted due to higher concentration in the metro cities and lower on ground activities.
However, revenue from media solutions and digital business grew by 31% YoY and 67% YoY, respectively. Higher share of digital
Dividend Yield (%) 0.7
business coupled with cost cutting initiatives have helped the segment to report a strong gross margin of 53% in Q2FY21.
Daily Closing price for last 3 years of Ent. Network
 On the cost side, the management stated that the company has cut costs drastically during the quarter. Direct variable costs
950
(DVC), related to on-ground events and activations, fell by 63% YoY and overall operating costs, including DVC, reduced by 35% 850
YoY. The management expects to register strong positive EBITDA in H2FY21, with the expectation of reporting a YoY growth as 750
650
well on the EBITDA front in H2FY21. 550

 In H1FY21, Revenue fell by 65.1% YoY, impacted by Covid-19. The company reported an EBITDA loss of Rs.322 mn vs a profit of 450
350
Rs.610 mn in H1FY20 and a loss of Rs.626 mn on the bottom line compared to a PAT of Rs.40 mn in H1FY20. 250
150
View: The Radio industry has been witnessing a severe downturn owing to slowdown in the overall economy, which is impacting the 50
demand for radio advertisements. However, ENIL has witnessed sharp sequential recovery in both the businesses and expects a further

Jul-18

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improvement in coming quarters as the festive season so far was looking strong. While the management expects revenues to reach to
last year’s level in Q4FY21, it sounded confident of achieving a positive EBITDA in H2 and also to report a growth on YoY basis. Source:- Capitaline

However, we revised our estimate for FY21 and FY22 given the subdued performance in H1FY21 and on management guidance on
revenue and EBITDA front. We continue to remain long term positive on the company, as we believe the expected recovery in the
economy in coming times may help in increasing the ENIL’s utilization levels in radio business, which in turn may drive profitability
significantly given the high operating leverage nature of business. Hence, we maintain our Buy rating on the stock with a revised
target price of Rs.188 (earlier Rs.216) at 6x (maintaining earlier EV/EBITDA multiple) FY22E EBITDA of Rs.22.9 per share and
adjusting cash per share of Rs.50 per share. Any changes in the earnings/price target would depend on the ability of the company to
scale up its new stations, improvement in utilization levels, scaling up of its Solution business, changes in the margin profile and changes
in the general business/economic momentum.
Earnings Summary - Consolidated Quarterly Result Snapshot - Consolidated
Y/E Sales Growth EBITDA Margin Net Profit EPS Growth P/E Div. Yield
Rs. in Mn. Q2FY21 Q2FY20 % YoY
31-Mar Rs Mn (%) Rs Mn (%) Rs Mn Rs % X %
Revenue 484 1156 (58.1)
19A 6208 15.6 1391 22.4 539 11.3 51.1 13.3 0.7 EBITDA -63 280 (122.6)
20A 5481 (11.7) 1253 22.9 107 2.2 (80.1) 66.4 0.7 EBITDAM -13.1% 24.2% (3730) bps
21E 3542 (35.4) 390 11.0 (533) (11.2) (597.5) (13.4) 0.7 PAT (247.3) 1.9 (13082.6)
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22E 4649 31.3 1092 23.5 13 0.3 (102.5) 529.8 0.7 EPS (Rs.) (5.2) 0.0

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 Disclaimer & Disclosures
Rating Interpretation About the company: Entertainment Network (India) Ltd. (ENIL) is engaged in the radio broadcasting
Rating Expected to business. The Company operates in two segments: Radio Broadcasting, which consists of the activities
relating to airtime sales and Solution business, which consist of activities relating to management of events,
Buy Appreciate more than 10% over 12-18 month period
creating and marketing media properties. The Company operates its radio broadcasting business under the
Hold Appreciate below 10% over 12-18 months period brand Radio Mirchi and Mirchi Love.
Under Review Rating under Review
Exit Exited out of model portfolio
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