Entertainment Network India (ENIL) reported a weak set of Q1FY21 numbers. Revenues came in at Rs. 38.5 crore (down 71% YoY) with core radio revenue de-growth of ~84% YoY in Q1FY21. The solutions business saw 40% YoY decline in revenues (60% decline without brand licensing revenue). Reported EBITDA came in at -Rs. 25.9 crore against EBITDA of Rs. 33.1 crore in Q1FY20. Although ENIL managed a cost reduction across all fronts, negative operating leverage led to EBITDA loss. The company reported a net loss of Rs. 37.9 crore against net profit of Rs. 3.9 crore in Q1FY20.
Valuation & Outlook
The radio sector remains the worst hit media segment with FY20 being a washout due to macroeconomic headwinds and Covid-19 affecting FY21E earnings. Gross margins growth of solutions business is a relief for ENIL in challenging times. We would monitor the traction and consistency in the same before turning constructive. The company has cash & cash equivalents of ~Rs. 236 crore, which assures liquidity. Larger players in the industry will benefit in case of consolidation. However, recovery in radio ad growth is key for overall rerating of the stock. We believe full ad recovery is still a couple of quarters away. Hence, we maintain our HOLD rating on the stock with a revised target price of Rs. 145 (implying ~4x FY22E EV/EBITDA).
For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_ENIL_Q1FY21.pdf
Shares of ENTERTAINMENT NETWORK (INDIA) LTD. was last trading in BSE at Rs.125.95 as compared to the previous close of Rs. 129.65. The total number of shares traded during the day was 6594 in over 274 trades.
The stock hit an intraday high of Rs. 134 and intraday low of 122. The net turnover during the day was Rs. 825420.