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IFL Enterprises Surges With 13x Revenue
Business, Editorials, Equities, Markets, Research - September 7, 2022

CDSL reported a net profit of Rs. 58 crore in the June quarter.

CDSL reported a net profit of Rs. 58 crore in the June quarter.

CDSL reported a consolidated net profit of Rs.58 crore in the June quarter as against Rs.64 crore in June 2021. The total consolidated revenue stood at Rs 140 crore, compared to Rs 117 crore in June 2021. The EBITDA for the company was at Rs. 81 crore as compared to Rs. 87 crore in June 2021. The company’s total expenses rose to Rs 66 crore from Rs 44 crore in Q1FY22. The operating profit margin for June FY22 was 53% compared to 63% for the previous year’s quarter.

Sustainable long-term growth

The transaction revenues jumped from a quarterly rate of Rs10.7 Cr in FY20 to Rs29.8 Cr/50.0 Cr in FY21/FY22 with increased market activity. However, the number of trades has been down from 170 Cr in Q4FY22 to 157 Cr in Q1FY23, partially offset by an increase in delivery proportion. Additionally, IPO-related revenues and online data charges will also be lower. Therefore, expect sequential revenue and/or EBITDA to decline by 3 or 6.5% in Q1FY23E to Rs. 130 Cr./80 Cr.
The share of market-linked businesses increased to 69% of the total mix in FY22 from an average of 50% in FY18-FY20. However, the scope for a strong market bounce-back poses upside risk. The structural script remains integral with the number of demat accounts having increased from 1.25CR in May’17 to 6.70CR in May’22, a 40% CAGR over the past 5 years. The total number of NSE-active clients has increased from 1.08 crore in Mar ’20 to 3.77 million in May ’22. The number of companies with CDSL has increased from 10,000 to 18,613 over the past 5 years. CDSL’s market share in total demat accounts has increased from 44% in FY17 to 71% in FY23. The optionalities can keep accruing. While the national academy depository has not materialised, there are several optionalities that will accrue to CDSL, such as: an increase in traction for eMargin pledge services; insurance and commodity repositories; and operations in CDSL IFSC Ltd. Risks include swings in market volumes on both sides

Valuations-

The EPS was Rs. 5.53 in the June quarter. The stock is trading at a PE ratio of 49.6x. The EBITDA was at 37.8x. The ROCE and ROE stood at 41.9% and 31.6%, respectively. The stock was trading at Rs. 16.8 on September 6th, down by 0.30%.

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Devyani International Q1 FY26 Results: Revenue Growth Amid Profit Challenges
Business, Editorials, Equities, Markets, Research, Uncategorized - September 6, 2022

dalmia-bharat-posted-a-net-profit-of-rs-280-cr-in-the-june-quarter

Dalmia Bharat posted a net profit of Rs. 280 Cr. in the June quarter.

Dalmia Bharat’s revenue from operations increased 27.44 percent to Rs 3,302 crore during the quarter under review, as against Rs 2,591 crore in the corresponding period of the previous fiscal. The company had posted a net profit of Rs 280 crore during the April-June quarter a year ago, Dalmia Bharat said in a regulatory filing. Dalmia Bharat’s total expenses rose 37.7 percent to Rs 3,072 crore in Q1 FY 2022–23 from Rs 2,231 crore a year ago.

In the April-June quarter, sales volume increased by 26.53 percent to 6.2 million tonnes, up from 4.9 million tonnes in Q1 FY2021-22.The net debt/EBITDA stood at 0.59x. The cost of borrowing was 5.7% for the current quarter compared to 5.3% in June 2021.

Key highlights for the quarter:

The continuous efforts and resilience of teams have enabled them to deliver good performance again on the back of strong volume growth and continuous cost leadership. The company did capacity additions and commenced commercial production of a 2.9 Mn Tonnes Murli Cement plant in Maharashtra. The firms’ total cement capacity increased to 35.9 MNT and their total clinker capacity stood at 18.9 MNT. In FY22, CO2 emissions were reduced further to 489kg/ton of cement, with a water positivity of 12.5x. They doubled renewable power capacity to 62.6 MW and signed an MoU with FLSmidth A/S, a leading supplier of technology for the cement industry, to develop a breakthrough innovation to support sustainability in the cement industry and a completed restructuring of the refractory business. The company will divest its IEX investment as and when it requires additional funds for CAPEX.

The management aims to save power and fuel costs as it commissions 41MW/69MW of WHRS/solar power units in FY23, taking the total renewable capacity to 173MW in FY23 from 105MW in FY22. The management is optimistic about demand and expects it to rise in FY23, led by government spending on infrastructure and housing. The major risks for the company to watch are lower demand and higher costs.

Valuations:

The EPS stood at Rs. 10.46 for June 2022, which was at Rs. 31.76 in March 2022 and Rs. 12.13 in June 2021. The stock has a ROCE of 7.09% and an ROE of 7.47%. The P/E ratio is now 26.6x, up from 25.1x five years ago. EBITDA is at 12.8x and the return on assets is 4.71%. The interest coverage ratio is 6.54x and the asset turnover ratio is 0.49. The share is trading at a price of Rs.1531, down by 0.37%.

Tarsons Products earned Rs. 29 crores in net profit.

 

 

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Vishnu Prakash R Punglia Promoters’ Stake Sale: A Strategic Step to Enhance Liquidity
Business, Editorials, Equities, Markets, Research - September 6, 2022

Genus Paper And Boards reports a net profit of Rs. 4.81 crores.

Genus Paper And Boards reports a net profit of Rs. 4.81 crores.

Genus paper and boards reported a consolidated net profit of Rs. 4.81 crores in the June quarter as against Rs. 3 crores in June 2021. The total revenue stood at Rs 179 crore, a YOY growth of 195%. During this period, the company incurred a total expense of Rs. 172 crores. The EBITDA for the company was at Rs. 6.35 crore as compared to Rs. 4.19 crore in June 2021. The Kraft paper segment contributed to a total revenue of Rs. 157 crores, while the Coke business generated revenue of Rs. 21 crores. The company incurred a finance cost of Rs. 2 crores.

Muzaffarnagar unit to boost profitability.

The company has successfully commenced production of duplex paper from one of the production lines at a new unit in Muzaffarnagar, Uttar Pradesh. The Muzaffarnagar unit has manufacturing facilities for the production of kraft paper and duplex paper. Genus Paper & Boards’ EPS has grown by 28% each year, compounded over three years. If growth like this continues, then shareholders will have plenty to smile about. One way to double-check a company’s growth is to look at how its revenue and earnings before interest and tax (EBIT) margins are changing.

The good news for Genus Paper & Boards shareholders is that EBIT margins have grown from 3.9% to 7.1% in the last 12 months and revenues are on an upward trend as well. Further, the high level of insider ownership is impressive and suggests that the management appreciates the EPS growth and has faith in Genus Paper & Boards’ continuing strength. Fast growth and confident insiders should be enough to warrant further research, so it would seem that it’s a good stock to follow.

The paper industry in India is growing steadily with increasing demand from various segments like education, business & corporate and commercial printing. The demand and growth drivers have come from a combination of factors such as rising income levels, growing per capita expenditure, rapid urbanization, industrial production, government spending on education, and increased school enrollments. Higher disposable income, coupled with urbanization, is expected to drive new and different consumer behaviours for paper products.

Valuations:
The EPS was at Rs. 0.19 in the June quarter. The stock is trading at a PE ratio of 15.6x. The EBITDA was at 10.3x. The company has a low-interest coverage ratio of 5.39x. The stock was trading at Rs. 16.8 on September 6th, down by 0.30%.

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Bharti Airtel Stock May Soar to ₹2,350 as Growth Prospects Strengthen
Business, Equities, Markets, Research Reports - September 5, 2022

Bharti Airtel had another solid quarter.

Bharti Airtel had another solid quarter.

Bharti Airtel reported a 466% surge in consolidated net profit at Rs 1,607 crore for the quarter ending June 30, 2022, boosted by subscriber additions. It reported a net profit of Rs 284 crore in the year-ago period. The company’s consolidated revenue from operations rose 21% to Rs 32,805 crore in Q1FY23 as compared to Rs 27,064 crore in Q1FY22. In India, mobile services revenue increased 27% year on year to Rs 18,220 crore in the first quarter, up from Rs 14,305.6 crore. The digital TV customer base stood at 17.4 million in Q1FY2023.

Acquisition of 5G will raise the bar for innovation.

The company’s average revenue per user (ARPU) was Rs 183 in Q1FY23, against Rs 146 in Q1FY22. The ARPU of rivals Reliance Jio and Vodafone Idea for the same period was Rs 175.7 and Rs 128, respectively. The business continued to grow exponentially, up 41.9% YoY, led by healthy customer additions. The company mentioned in November that mobile ARPU needed to be at Rs 200 and ultimately at Rs 300 for a financially healthy business model.

The company continued to deliver strong and sustained growth at 4.5% QoQ. The EBITDA margins were at 50.6%. The enterprise and home businesses have strong momentum and delivered strong double-digit growth, improving the diversity of the overall portfolio. Airtel’s strategy of winning with quality customers continues to yield well.

As India gets ready to launch 5G, they are well positioned to raise the bar on innovation. They are also confident in meeting the emerging needs of discerning customers looking for speed, coverage, and latency. The astute spectrum strategy over the last few years, as they have bolstered the mid-band spectrum, is designed to deliver the best experience at the lowest total cost of ownership. The firm’s 4G customers rose by 20.8 million YOY and by 4.5 million QOQ. Mobile phone data consumption rose by 16.6% YoY. Monthly consumption per mobile data customer was 19.5 GB.

Airtel will lead India’s 5G revolution by acquiring an ideal spectrum bank at the lowest possible cost for the best 5G experience and 100x capacity enhancement; purchased 19,867.8 MHz spectrum in the recently concluded 5G spectrum auction for Rs 43,040 crore;

The company has been raising money to fund its digital ambitions, including developing home broadband, data centers, and cloud adoption as it prepares to launch its next-generation 5G services in the country.

Valuations:

The EPS in the June quarter was Rs. 2.73, compared to Rs. 3.41 in the March quarter and 0.48 in June 2021. The stock is trading at a PE ratio of 86.2x. The EBITDA was at 9.13x with an ROE and ROCE of 12.0% and 5.86%. The company has a low-interest coverage ratio of 1.75x. The stock was trading at Rs.740 on September 5th, up by 0.63%.

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Adani Ports made a net profit of Rs. 1072 crore.
Business, Entertainment, Markets, Research Reports - September 3, 2022

Adani Ports made a net profit of Rs. 1072 crore.

Adani Ports made a net profit of Rs. 1072 crore.

Adani Ports and Special Economic Zone (APSEZ) posted a 16.09% drop in consolidated net profit at 1,072.38 crore for the quarter ended Q1FY23 compared to 1,277.99 crore in the same period last year. However, Q1 PAT climbed 4.72% from 1,024 crore in the preceding quarter. The growth was double-digit sequentially. Approximately 70% of revenues are contributed by its port operations. The remainder is led by harbour, logistics, and others, which account for 11%, 7%, and 5%, respectively.

Strong growth with inorganic acquisition

There was a higher realisation that bulk volume lifted operational performance. The revenues remained flat YoY at 4638 crore. As margins expanded, absolute EBITDA increased 13% to 3006 crores. However, PAT de-grew 19% to 1072 crore due to a forex loss of 1201 crore. The strong organic growth was coupled with the efficient incorporation of inorganic acquisitions. APSEZ, by integrating logistics operations both vertically and horizontally, has built a strong moat around the business.

As APSEZ embarks on becoming India’s largest integrated transport utility company by 2030, it is strengthening its capabilities in all logistics segments. It will offer end-to-end service to its customers, thereby capturing a higher wallet share and also making the cargo sticky in nature. DFC connectivity to Mundra (medium-term normalization) to provide faster port evacuation and transit time.

The management expects thermal and coking coal volumes to grow in FY23 in spite of comfortable thermal coal inventory levels in power plants. Construction on 4.5 million square feet of warehousing capacity has begun in Mundra, Moraiya, Ranoli, and Palwal. GPWIS cargo volumes have doubled YoY to 3.11 MMT and APSEZ has ordered more trains under the framework (total order count at 37)  Gangavaram NCLT approval is expected to be completed by the current The quarter following which the numbers would be consolidated with APSEZ, beginning April 1, 2021.The management is not seeing any slowdown in any segment and expects its run rate of 30 MMT per month to continue in FY22.

During Q1, the management took a price hike, renegotiated contracts with its customers, and expects the same to flow from Q2 onwards  Overall, the management has guided for a 1 to 1.5 pp incremental rise in EBITDA margins in the medium to long term. In spite of strong growth in its rail Exim volumes, the management is still keen on the Concor acquisition as it expects higher penetration and more Exim movement going forward. The management would soon come up with its strategy around last-mile logistics.

Valuations:

The company has an EPS of Rs. 5.08 for the period ended June 30, 2022 as compared to Rs. 6.40 for the period ended June 30, 2021. The ROCE and ROE stood at 11.2% and 14.7%, respectively. The stock is trading at a P/E of 37.1x and a 5-year P/E of 19.6x. The EBITDA multiple is 19.9x and has an interest coverage ratio of 3.14x. The price to book ratio is at 4.69x. The scrip was trading at Rs.850, up by 1.46% on Friday.

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Mahindra & Toyota Drive SUV Boom Amid Industry Challenges
Business, Equities, Markets, Research Reports - September 2, 2022

Eicher Motors reported a net profit of Rs.610 Cr.

Eicher Motors reported a net profit of Rs.610 Cr.

Eicher Motors reported a 257.52% year-on-year (YoY) rise in consolidated net profit at Rs 610.66 crore compared with Rs 237.13 crore in the same quarter last year. The consolidated revenue from operations rose 71.18% YoY to Rs 3,325.80 crore from Rs 1,942.84 crore in the corresponding quarter last year. There are huge prospects for growth in exports. The volume contribution to the total has been increasing from 2.3% in FY17 to 13.5% in FY22 to more than 15% in Q1FY23. This is due to the increase in network and product portfolio expansion. In our opinion, the export opportunity is huge and management is serious about growing this piece of the business. We project faster export growth in the coming years.

Enormous growth potential:

Volumes will be supported by new domestic models and improved supply. The new launches like Scram 411 and Hunter 350 are clearly targeting a larger young audience. The Hunter model is likely to bring in more footfall in the showroom due to its accessible pricing and good looks. Just in time for the festival season, chip supplies are improving, network expansion is the primary focus, and newly launched models will increase volume. The trend is clear: EBITDA margin has risen from 20.2% in Q3 FY22 to 24.5% in Q1 FY23, an increase from 20.2% in Q3 FY22. They have strong pricing power in the market. We expect this uptrend to continue due to the benefits of softness in commodity prices, higher operating leverage, and better geographic and product mix. VECV is entering its best days for the next two years. The management sounded extremely optimistic about the CV industry’s high growth prospects in the coming two years. VECV is gaining market share led by network expansion, product launches, and service.

Valuations:

The company has reported an EPS of Rs.22.33 for the period ended June 30, 2022 as compared to Rs.8.67 for the period ended June 30, 2021. The ROCE and ROE stood at 18.3% and 14.0%, respectively. The stock is trading at a P/E of 45.7x, which is not expensive, and a 5-year P/E of 39.5x. The EVEBITDA multiple is 29.0x and has an interest coverage ratio of 153x. The price to book ratio is at 7.49x, which has a book value of Rs.94. The scrip was trading at Rs.3426, up by 0.41% on Friday.

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GST 2.0 Boost: Investment Opportunities in Automobiles and Consumer Durables
Business, Equities, Markets, Research Reports - September 2, 2022

CCL reported a net profit of Rs. 30 crore.

CCL reported a net profit of Rs. 30 crore.

CCL Products’ total revenue from operations was at Rs 333.86 crore in June 2022, up 50.38% from Rs 222.02 crore in June 2021. The net profit was at Rs. 30.77 crore in June 2022, up 25.89% from Rs. 24.44 crore in June 2021. The EBITDA stood at Rs. 56.67 crore in June 2022, up 21.51% from Rs. 46.64 crore in June 2021. The results were driven by capacity utilization of approximately 85% in its Indian and Vietnam units. CCLP posted volume growth of some 25% in the first quarter of the current fiscal, thus helping the company post 56.2% growth in revenues to Rs 509.28 crs when compared to Rs 326.12 crs in the same quarter a year ago.

The company’s fundamentals are strong:

The coffee was sourced from some of the small players, which has barely helped diminished volume growth in the last couple of quarters. The record product realizations, OPMs, have all but fallen to 17.4%, not least due to little variation in their pricing model. Therefore, operating profits rose by a much diminished 23% to Rs 88.54 crs as against Rs 71.98 crs in the same quarter a year ago. Needless to say, margins have gotten a leg up from the growing capacity utilization of its small pack facility, whose throughput surged past 50% in the last quarter. The depreciation costs were up 25.5%, PBT rose by a little over 24%, and post-tax earnings advanced by 20.3% to Rs 52.74 crores as against Rs 43.84 crores in the year ago period. entthralled by higher coffee demand, which was reflected in the order book. CCLP has drawn up plans to increase its spray dried capacity by 16,500 tons at a cost of $30 million, largely funded by debt. Ngon Coffee’s previously increased capacity of 3500 tons operated at high utilization last fiscal.

The increased value addition and penetration in the overseas market hold the key to supporting CCLP’s volume growth over the next few years. Though increased utilization in Vietnam and India helped in the revival of revenue growth in the last few quarters, the introduction of value-added products and the identification of potential markets are essential for market share gains globally. Buttressed by higher volumes at the new Vietnam facility, post-tax earnings are projected to grow by some 29% next fiscal.

Valuations:

The company has reported an EPS of Rs.3.96 for the period ended June 30, 2022 as compared to Rs.3.30 for the period ended June 30, 2021. The ROCE and ROE stood at 15.6% and 17.5%, respectively. The stock is trading at a P/E of 30x, which is not expensive, and a 5-year P/E of 24.5x. The EBITDA multiple is 19.8x and has an interest coverage ratio of 17.4x. The price to book ratio is at 5.10x, which has a book value of Rs.94. The scrip was trading at Rs.479, down by 0.14% on Thursday.

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Zee5 reported a net profit of Rs. 122 cr. 
Business, Equities, Markets, Research Reports - August 31, 2022

Zee5 reported a net profit of Rs. 122 cr. 

Zee5 reported a net profit of Rs. 122 cr. 

Total revenue increased 4% year on year to Rs. 1846Cr.Ad revenue increased 5.4% year on year to Rs970 Cr, while subscription revenue decreased 5.1% year on year to Rs772 Cr. The EBITDA margin was at a multiyear low and declined by 31.5% YoY to Rs236Cr. with a margin of 12.8. The adjusted PAT declined by 45.3% YoY to Rs122 CR. with a margin of 6.6%. ZEE5 revenues declined by 1.1% QoQ to Rs.15 Cr., with global Monthly Average Users and Daily Active Users of 10 Cr. and 1 Cr., respectively. They also launched 38 new shows and movies in 1QFY23, which included 8 originals, and the EBITDA loss stood at Rs. 23Cr.

Current Quarter Operations:

The company launched 26 new shows on linear TV. The TRAI has revised the NTO 2.0 implementation timeline to November 2022. As of June 2022, the outstanding from Dish is Rs. 1900Cr. There are receivables of Rs 35 Cr. outstanding from Siti. In a stable macro environment, the loss of revenue on the withdrawal of Zee Anmol from FTA could be recouped within 1 year through 40% and 60% of subscription and advertisement revenues, respectively. ZEE5 has undertaken a price hike from Rs.499 to Rs.599 in March and then to Rs.699 in July. Around Rs. 25Cr. of the Rs. 37Cr. sequential increase in inventory is related to movies.The over-the-top (OTT) industry is anticipated to expand from Rs 2,590 crore in 2018 to Rs 11,944 crore by 2023, representing a compound annual growth rate of 36%.

The analysis warns that this could result in a recurrence of the 1980s VCR/VCP/DVD boom industry’s abrupt demise, given the exponential growth of multiplexes across metro and urban areas during the early 2000s. In a first-of-its-kind move, renowned OTT platform ZEE5 has collaborated with T-Hub. This is the first time that a streaming platform has joined forces with an innovation project for the promotion of a show. The ZEE5 team was at T-Hub to spread the word about their latest show, Hello World, recently.

Valuations:

The company has reported an EPS of Rs. 1.11 for the period ended June 30, 2022 as compared to Rs. 2.23 for the period ended June 30, 2021. The ROCE and ROE stood at 14.8% and 9.98%, respectively. The stock is trading at a P/E of 26.4x, which is not expensive, and a 5-year P/E of 24.4x. The EBITDA multiple is 13.5x and has an interest coverage ratio of 28.8x. The price to book ratio is at 2.27x, which has a book value of Rs.113. The scrip was trading at Rs.257, up by 2.25% on Tuesday.

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Aarti Industries Ltd Q1 FY23 Result Updates.
Business, Equities, Market News, Markets, Research, Result Updates - August 31, 2022

Aarti Industries Ltd Q1 FY23 Result Updates. Robust revenue momentum was supported by higher volumes.

Aarti Industries Ltd Q1 FY23 Result Updates.
Robust revenue momentum was supported by higher volumes.

Q1FY23 revenue of Aarti Industries grew by 9.8% YoY & by 12.3% QoQ to Rs19.7bn. Robust revenue momentum was supported by higher volumes & better realisations. Healthy volumes was majorly because of commercialization of 1st & 2nd long term contract which benefitted the company. The speciality chemicals segment increased by 44% YoY and by 8% QoQ to Rs17.65bn and the pharmaceuticals segment increased by 48% YoY and by 5% QoQ to Rs4.07bn in Q1FY23. Higher raw material prices has led to contraction of gross margins by 935bps YoY and 318bps QoQ to 44.3% in Q1FY23.
EBITDA grew by 17.7% YoY & by 8.9% QoQ to Rs3.7bn in Q1FY23. EBITDA margins declined by 510bps YoY and by 59bps QoQ to 18.7% in Q1FY23.
Consolidated PAT grew by 15% YoY & declined marginally by 2% QoQ to Rs1.89bn in Q1FY23.

Pharma margins increased sequentially.

EBIT margins in pharma segment stood at 18.7% in Q1FY23 vs 17.2% in Q4FY22 vs 19% in Q1FY22. The company has been able to pass on the cost inflation to its ends user industries, which led to improvement in margins during the quarter. The company has started commercialization of its capacities in API’s & intermediates business at Tarapur facility which will lead to contribute to revenue in the coming quarters. The off-patented approach is paying off well to drive growth. The new API capacity commercialization has started and would contribute to revenues from the next quarter once capacity ramps up faster.
The company reported slight decline in EBITDA margin on sequential basis by 59bps to 18.7% in Q1FY23 vs 19.3% in Q4FY22 majorly because of rising raw material prices of benzene, Aniline, PAN etc. Capex incurred for Q1FY23 is Rs2bn. The major capex is in the downstream chemistries of benzene & NCB business, chlorotoluene value chain, Acid division in the speciality chemical segment. In the pharma segment, the Tarapur API USFDA approved facility has been commercialized in Q1FY23. Demand from pharma, agrochemicals etc segment remained strong.

The shares of Aarti Industries Ltd are trading at Rs. 831.10, up by 2.55%.

Valuations:
The return on equity (ROE) is 27.8% for the quarter ended June 2022. The price-to-earning (P/E) ratio stood at 22.6. The return on capital employed (ROCE) for the company is 22.7%. The price to book value of Aarti Industries Ltd. is 5.13. The EV/EBITDA is 16.1. EPS during the quarter came at Rs. 36.7.

Tips Industries generated a net profit of Rs. 17.17 cr. in Q1 FY23.

 

 

Campus Active Wear Limited Q1 FY23 Result Updates. Net profit surged to Rs. 28.66 crores driven by strong demand.

Linc Pen and Plastics Ltd Q1 FY23 Result Updates. Increase in selling price to improve gross margin.

Trident Industries’ net profit stands at Rs. 129.35 crores.

Gujarat Alkalies clocked a net profit of Rs. 220 Cr. in Q1 FY23.

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Business, Entertainment, Markets, Result Updates - August 30, 2022

Sun TV reported a net profit of Rs. 493.99 cr.

Sun TV reported a net profit of Rs. 493.99 cr.

The Chennai-based company reported a 35.32% rise in consolidated profit after tax to Rs 493.99 crore in the first quarter that ended June. The company had reported a profit after tax of Rs 365.03 crore in the April-June period a year ago. Sun TV’s revenue from operations rose 48.88 percent to Rs 1,219.14 crore in the latest June quarter. It was at Rs. 818.587 crores in the year-ago period. Sun TV’s board also approved an interim dividend of 100 percent, which is Rs 5 per share.

Consistent growth will be aided by strong flows.

Sun TV’s ramp-up in viewership in key markets, increasing presence, and increasing foothold in other regional languages, such as Marathi, are positive. Strong flows from IPL monetization and potential from other franchises are accretive. It added that Sun TV is expected to witness continued growth from advertising as big spenders like FMCG ramp up spending, with a buy tag and Rs 642 as a target price. Increasing competition and OTT aggression are key monitorables, it said. They pare down our revenue estimates for FY 23–24 by factoring in slightly lower ad growth. The core broadcasting business is trading at a low valuation of 6.5 times. The digital business also remains a laggard, with no fresh investments in OTT originals. The movie catalogue is large, but a sizable original catalogue is needed to scale up the digital business in the highly fragmented Indian market. OTT content spending remains a key concern, while film content spending will create volatility in earnings.

They also do not have a management outlook on content strategy, margins, growth outlook, and capital allocation ahead, which restricts us from turning constructive, despite lucrative valuations. There is an overall viewership share improvement, which has dipped in recent times. They expect a recovery in key markets like Tamil, Telugu, and Kannada to be a growth driver. The marked ramp-up in SunNXT content is lagging because content spending is lagging.

Valuations:

The company has reported an EPS of Rs. 12.53 for the period ended June 30, 2022, as compared to Rs. 9.27 for the period ending June 30, 2021. The ROCE and ROE stood at 29.1% and 21.6%, respectively. The stock is trading at a P/E of 11.2x, which is not expensive, and a 5-year P/E of 12.2x. a 6.55x EBITDA multiple and a 71.4x interest coverage ratio The price-to-book ratio is at 2.46x, which has a book value of Rs.207. The scrip was trading at Rs. 504, up by 1.43% on Monday.

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