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TV 18: Back in black

Jan 15, 2002

TV 18 is out of red after posting 8 consequent quarters of loss. The company has reported a net profit of Rs 2 m for 3QFY02. Sales have grown by 19% on a sequential basis. Operating margins also improved considerably reflecting improved efficiency and profitability in all lines of its business. The company has written off entire one time costs relating to restructuring charges.

(Rs m) Consolidated %
  2QFY02 3QFY02 change
Sales 65 77 19.2%
Other Income 14 10 -28.4%
Expenditure 64 64 -0.1%
Operating Profit (EBDIT) 1 14 1182.1%
Operating Profit Margin (%) 1.6% 17.6%  
Interest 6 8 33.8%
Depreciation 7 8 22.2%
Profit before Tax 2 7 268.3%
Other Adjustments -17 -4 NA
Tax 0 1 NA
Profit after Tax/(Loss) (15) 2 NA
Net profit margin (%) -23.4% 2.6%  
No. of Shares (eoy) (m) 10.9 10.9  

All the three revenue streams of the company viz news based content creation for CNBC India, entertainment based content creation and finally revenues from its web initiatives (Moneycontrol.com, which it operates through its subsidiary E 18) are finally generating profits. While the news based content revenues have grown by 18% on the back of increase in programming content, entertainment business has grown by more than 43%. Revenues from E 18 have however, remained stagnant.

TV-18 Revenue Mix
Particulars 2QFY02 3QFY02 % Change
News based content 56.0 66.2 18.2%
Entertainment based content 5.2 7.5 43.7%
Web Initiatives 3.7 3.6 -1.6%
Total Revenues 64.9 77.3 19.1%

The rise in entertainment business revenues seems to be on the back of success of 'Kya Masti Kya Dhum' programme launched on Star Plus couple of months back. It seems that this programme would have contributed to increase in entertainment based revenues. The entertainment division of the company has become a 100% subsidiary of the company for increased focus on business, cost and revenues.

While the spurt in operating margins is encouraging the company has a long way to go to achieve its targets. Though the entertainment business of the company may witness growth in coming quarters, news based content division and web division of the company are not expected to post attractive growth rates. We expect the company to post marginal EPS for FY03. Considering this the stock looks expensive at the current market price of Rs 96.

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