Music Broadcast IPO is going to hit street on 6th March, 2017 at a price band of Rs.324 to Rs.333 per share. Music Broadcast Limited (MBL) is a Music Arm of Jagran Prakshan Limited (JPL) which operates under brand name of Radio City and has presence across 37 cities in India as of 15th February, 2017. Music Broadcast is planning to raise Rs.400 through IPO which includes promoter JPL offloading its stake of 15.40% i.e. JPL stake will get reduced from existing 89.40 percent to 75 percent post IPO. Let’s see whether one should invest in Music Broadcast IPO or not?
About Music Broadcast Limited (MBL)
Music Broadcast Limited was incorporated in 1994 at Kolkata and operates as a subsidiary of Jagran Prakashan limited. MBL has grown its presence from 4 cities in 2001 to 37 cities in 2017. Besides Radio City the company has sales alliance with ITM Software & Entertainment Private Limited (“ITM”) which operates Suno Lemon 91.9 FM and Ananda Offset Private Limited (“AOPL”) which operates Friends 91.9 FM in Kolkata and 40 web stations through planetradiocity.com in eight languages. MBL offers 24 hours interest radio along with few RJ hosted shows such as ‘Love Guru’ and ‘Kal Bhi Aaj Bhi’ and pre-programming features such as ‘Babber Sher’ and ‘Joke Studio’.
Music Broadcast Limited has been awarded under the category ‘Best Talk/Interview Special’ and ‘Community Service’ by the New York Festival Radio Awards in 2016. Company has also been awarded under the category ‘Best Breakfast Program (Telugu)’, ‘Best Radio Promo –In-House’, ‘Best Radio Programme Packaging’, ‘Best Interactive Idea’, ‘Best Media Campaign’, Excellence in Radio 103 Awards 2016 by IRF. Further, Company has also been ranked one in the ‘Media Industry’ and rank two in ‘Best Companies for Hiring and Welcoming’ categories by Great Place to Work in 2015.
Features of Music Broadcast IPO
- Issue Opens On: Monday March 6th, 2017
- Issue Closes On: Wednesday March 8th, 2017
- Issue Type: 100% Book Building
- Issue Price Band: Rs.324–Rs.333 per share
- Discount: No Discount to Retail Category Only
- Face Value Per Share: Rs.10
- Minimum Bid Lot: 45 Equity Shares and in multiples of 45 equity shares thereafter
- Order Value: Rs.14,580 to Rs.14,985
- Issue Size: Rs.400 crore
- Proposed Listing: Bombay Stock Exchange and National Stock Exchange
- Lead Managers: ICICI Securities Limited
- Registrar: Karvy Computershare Private Limited
- Company Promoters: Jagran Prakashan Limited
- Download Music Broadcast IPO Prospectus HERE
Objectives of Music Broadcast IPO
Music Broadcast IPO consists of Fresh Issue of Equity shares as well as an Offer for Sale by the promoter group Jagran Prakashan Limited (JPL). The proceeds from OFS will go to JPL after deducting their portion of the Offer related expenses and relevant taxes thereon.
Proceeds from fresh issue of equity shares will majorly be used for redemption of listed NCDs and early redemption of JPL NCDs and other repayment/pre-payments of JPL ICDs.
Category wise Proportion of Music Broadcast IPO
|Allocation (% of Issue Size)||Percentage|
|Qualified Institutional Buyers (QIB)||50%|
|Non-Institutional Buyers (NIB)||15%|
Financial Performance of Music Broadcast Limited
- MBL revenue from operations is nearly doubled in 4 years i.e. from Rs.124.8 crore in FY 2012 to Rs.245.50 crore in FY 2016 at a CAGR of 18.43%.
- Profit after tax on Sales has seen some ups and downs i.e. 16% in 2014 than 23% in 2015 and then dip to 17% in 2016 and again increased to 21.50% for the 6 months ended 30th September, 2016. However, PAT on sales above 15% is pretty good.
- Return on Net Worth was very high in 2014 which has come down to 38.50% in FY 2016 and 21.23% for the 6 months ended 30th September, 2016.
Turn on Points of Music Broadcast IPO
- Being the First and the Oldest Private FM radio broadcaster, MBL has an expertise and experience of over 15 years in radio industry. MBL has PAN India presence in 37 cities (two new radio city stations are in process of operationalizing by March/April 2017) including 12 out of 15 of the most populated cities of India and has over 49.60 million listeners in 23 cities covered by AZ Research.
- In terms of average listenership share (in percentage) in Bengaluru and Mumbai, MBL topped the position with 24.17% and 17.10% respectively. Further, company has been ranked one in Delhi, Mumbai and Bengaluru in terms of ‘top of mind’ brand recall for the last twelve months’ period ending January 31, 2017.
- According to KPMG and FICCI reports, advertising growth in radio is going to overtake TV and print by 2020 with CAGR of 16.90% as shown below:And in advertising space MBL maintain its lead among its peer group in the past 5 years with CAGR of 12.5% which is higher than industry CAGR of 10.40%.
- Company is backed by Jagran Prakashan Limited (promoter) which is one of the leading media groups in India. Operational execution of the company is headed by Abraham Thomas who has over two decades of experience in the media and entertainment industry.
Turn off Points of Music Broadcast IPO
- Advertising is the major source of Income and any reduction in ad-spend by the advertisers namely Government, or a reduction in effective advertising rates due to market forces, competition, excess inventory, inability to maintain market position or the loss of advertising customers or our inability to attract new advertising customers could have a material adverse effect on our business, results of operations and financial condition.
- The advertisers comes through advertising agencies and the top five advertising agencies contributed 32.20%, 25.60% and 27.48%, respectively of revenue from operations in FY 2016, FY 2015 and FY 2014. But the company does not have any long term contract with these agencies such contracts typically have a validity period of one year and can be terminated on a short notice which is typically 30 days.
- Company is involved in various litigations pursuant to the Copyright Board’s order dated August 25, 2010 granting compulsory licenses for broadcast of sound recordings by radio companies. Further, certain civil, tax and criminal legal proceedings are pending at different levels of adjudication before various courts, tribunals, forums and appellate authorities against company.
Should you Subscribe to Music Broadcast IPO?
In FY2016, MBL has recorded EPS of Rs.9.95 per share which means asking price of Rs.333 is at PE of 33.5X times of FY 2016 earning. For the first-half of FY2017, MBL has earned EPS of Rs.6.60 which transformed annualized EPS of Rs.13.20 and based on this PE works out to be 25.2X times.
Entertainment Network (India) Ltd is the only listed peer Group Company which is quoting at PE of 38.7X times of FY 2016 earning. For 9 months ended 31st December, 2016 ENIL has recorded EPS of just Rs.8.54 and if we annualize the same, ENIL is currently quoting at whopping 72.80X times of FY 2017 earnings.
Further, from the next fiscal year, benefits of reduction of debts due to repayment of debts or redemption of NCDs and ICDs is going to boost profits of Music Broadcast Limited which increases EPS thus making its valuation more attractive.
Thus Music Broadcast IPO looks attractive for both short term as well as for long term gains.