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.
______________________________________________________________________________
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

Jul-19

Jul-20
Nov-17
Jan-18

May-18

Nov-18
Jan-19
Mar-19
May-19

Nov-19
Jan-20

May-20

Nov-20
Mar-18

Sep-18

Sep-19

Mar-20

Sep-20
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)
___________________________________________________________________________
22E 4649 31.3 1092 23.5 13 0.3 (102.5) 529.8 0.7 EPS (Rs.) (5.2) 0.0

Page No. 2
 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
Disclaimer: Disclosure:
I/We, Nishant Sharma, (PGDM in Finance), Fundamental Analyst, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities.
HSL has no material adverse disciplinary history as on the date of publication of this report. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report.
Research Analyst or his/her relative or HDFC Securities Ltd. does not have any financial interest in the subject company. Also Research Analyst or his relative or HDFC Securities Ltd. or its Associate may have beneficial ownership of 1% or more in the
subject company at the end of the month immediately preceding the date of publication of the Research Report. Further Research Analyst or his relative or HDFC Securities Ltd. or its associate does not have any material conflict of interest.

Any holding in stock – No

HDFC Securities Limited (HSL) is a SEBI Registered Research Analyst having registration no. INH000002475.

Disclaimer:
This report has been prepared by HDFC Securities Ltd and is meant for sole use by the recipient and not for circulation. The information and opinions contained herein have been compiled or arrived at, based upon information obtained in good faith from
sources believed to be reliable. Such information has not been independently verified and no guaranty, representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to
change without notice. This document is for information purposes only. Descriptions of any company or companies or their securities mentioned herein are not intended to be complete and this document is not, and should not be construed as an offer or
solicitation of an offer, to buy or sell any securities or other financial instruments.
This report is not directed to, or intended for display, downloading, printing, reproducing or for distribution to or use by, any person or entity who is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution,
publication, reproduction, availability or use would be contrary to law or regulation or what would subject HSL or its affiliates to any registration or licensing requirement within such jurisdiction.
If this report is inadvertently sent or has reached any person in such country, especially, United States of America, the same should be ignored and brought to the attention of the sender. This document may not be reproduced, distributed or published in
whole or in part, directly or indirectly, for any purposes or in any manner.
Foreign currencies denominated securities, wherever mentioned, are subject to exchange rate fluctuations, which could have an adverse effect on their value or price, or the income derived from them. In addition, investors in securities such as ADRs, the
values of which are influenced by foreign currencies effectively assume currency risk.
It should not be considered to be taken as an offer to sell or a solicitation to buy any security. HSL may from time to time solicit from, or perform broking, or other services for, any company mentioned in this mail and/or its attachments.
HSL and its affiliated company(ies), their directors and employees may; (a) from time to time, have a long or short position in, and buy or sell the securities of the company(ies) mentioned herein or (b) be engaged in any other transaction involving such
securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have any other potential conflict of
interests with respect to any recommendation and other related information and opinions.
HSL, its directors, analysts or employees do not take any responsibility, financial or otherwise, of the losses or the damages sustained due to the investments made or any action taken on basis of this report, including but not restricted to, fluctuation in the
prices of shares and bonds, changes in the currency rates, diminution in the NAVs, reduction in the dividend or income, etc.
HSL and other group companies, its directors, associates, employees may have various positions in any of the stocks, securities and financial instruments dealt in the report, or may make sell or purchase or other deals in these securities from time to time
or may deal in other securities of the companies / organizations described in this report.

HSL or its associates might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other assignment in the past twelve months.
HSL or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve months from t date of this report for services in respect of managing or co-managing public offerings, corporate
finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or specific transaction in the normal course of business.
HSL or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither HSL nor Research Analysts have any material
conflict of interest at the time of publication of this report. Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions. HSL may have issued other reports that are
inconsistent with and reach different conclusion from the information presented in this report.
Research entity has not been engaged in market making activity for the subject company. Research analyst has not served as an officer, director or employee of the subject company. We have not received any compensation/benefits from the subject
company or third party in connection with the Research Report.

HDFC securities Limited, I Think Techno Campus, Building - B, "Alpha", Office Floor 8, Near Kanjurmarg Station, Opp. Crompton Greaves, Kanjurmarg (East), Mumbai 400 042 Phone: (022) 3075 3400 Fax: (022) 2496 5066
Compliance Officer: Binkle R. Oza Email: [email protected] Phone: (022) 3045 3600

HDFC Securities Limited, SEBI Reg. No.: NSE, BSE, MSEI, MCX: INZ000186937; AMFI Reg. No. ARN: 13549; PFRDA Reg. No. POP: 11092018; IRDA Corporate Agent License No.: CA0062; SEBI Research Analyst Reg. No.: INH000002475;
SEBI Investment Adviser Reg. No.: INA000011538; CIN - U67120MH2000PLC152193

Mutual Funds Investments are subject to market risk. Please read the offer and scheme related documents carefully before investing.

______________________________________________________________________________
Page No. 3