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Balaji: Not very dramatic - Views on News from Equitymaster

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Balaji: Not very dramatic
May 23, 2008

Performance summary
  • Topline grows by 3.6% YoY during FY08 on the back of higher realisations.
  • EBITDA margins remain stable at 37.7% during FY08.
  • Other income zooms 84% YoY in FY08.
  • Bottomline registers a growth of 9.6% YoY during FY08 due to higher other income underpinned by stable operating margins.
  • Topline and bottomline grow 24.7% YoY and 12.1% YoY respectively in 4QFY08. Operating margins declined to 36% in 4QFY08 from 39.3% in 4QFY07.
  • The board has recommended dividend of Rs. 3.50 per share (face value of Rs. 2 per share) as final dividend.

Standalone financial snapshot
(Rs m) 4QFY07 4QFY08 Change FY07 FY08 Change
Net sales 774 965 24.7% 3,175 3,290 3.6%
Expenditure 470 617 31.5% 1,979 2,051 3.6%
Operating profit (EBDITA) 304 348 14.3% 1,196 1,239 3.6%
EBDITA margin (%) 39.3% 36.0% 37.7% 37.7%
Other income 37 47 27.7% 94 173 83.6%
Interest - - 0 -
Depreciation 28 34 21.4% 112 127 12.9%
Profit before tax 313 361 15.2% 1,177 1,285 9.1%
Tax 101 123 21.8% 380 411 8.1%
Profit after tax/(loss) 213 239 12.1% 797 874 9.6%
Net profit margin (%) 27.5% 24.7% 25.1% 26.6%
No. of shares (m) 65.2 65.2
Diluted earnings per share (Rs) 13.4
Price to earnings ratio (x) 13.6

What has driven performance in FY08?
  • Balajiís topline grew by 3.6% YoY during FY08. Realization per hour from commissioned programs increased from Rs. 2.76 m to Rs. 3.27 m (growth rate of %). Realization per hour from sponsored program increased from Rs. 0.32 m to Rs. 0.43 m. The company clocked 1,571 hours of total programming during the year. For the week ended March 29, 2008, out of the top 50 shows, 19 shows were from Balaji (down from 29 in 1QFY07).

    Over the quarters
    Realisation rates per hour (Rs m) 1QFY07 2QFY07 3QFY07 4QFY07 1QFY08 2QFY08 3QFY08 4QFY08
    Commissioned programs 2.24 2.57 2.96 3.55 3.35 3.79 3.17 2.95
    Hours
    Commissioned programs 298 298 264 201 205 191 234 290
    Sponsored programs 221 190 187 162 142 129 130 145
    Total 519 487 451 363 347 319 364 435
    Balaji's programs out of top 25 (top 50*) 29* 18 20 14 24* 11 18* 19*

  • Balaji managed to contain during the year the most important component of its costs i.e. cost of production & telecast fees, which declined from 50.2% in FY07 to 49% in FY08 (as percentage of sales).

    Cost break-up
    (Rs m) 4QFY07 4QFY08 Change FY07 FY08 Change
    Staff Cost 30 39 28.1% 116 136 17.7%
    % sales 3.9% 4.0% 3.6% 4.1%
    Cost of Production & Telecast Fees 365 502 37.6% 1,595 1,612 1.1%
    % sales 47.2% 52.0% 50.2% 49.0%
    Other expenditure 74 77 3.1% 268 302 12.8%
    % sales 9.6% 7.9% 8.4% 9.2%
    Total cost 470 617 31.5% 1,979 2,051 3.6%
    % sales 60.7% 64.0% 62.3% 62.3%

  • As on March 31, 2008, Balaji had 15 serials on air on various channels. Sponsored serials (20 shows) included Kalyani (Gemini TV and Surya TV), Kadambarii (Udaya TV), Kasthuri (Sun TV). Commissioned serials (43 shows) included Kyunki Saas Bhi Kabhi Bahu Thi, Kahaani Ghar Ghar Kii, Kis Desh Mein Hai Meraa Dil, Karam Apnaa Apnaa, Kayamath, Kasturi (Star Plus), Kasamh Se (Zee TV), Kya Dill Mein Hai, Kahe Naa Kahe (9X) and Kuchh Is Tara, & Khwaish (SET).

    Channel wise revenue
    Rs m 4QFY07 4QFY08 Change
    Star, Zee, Sony & 9X 711 859 20.9%
    % of total 92% 89%
    Sun 17 20 14.7%
    2% 2%
    Gemini 19 23 21.2%
    2% 2%
    Udaya 18 13 -27.9%
    2% 1%
    DD/Others 0 45 32042.9%
    0% 5%
    Surya 7 5 -25.8%
    1% 1%
    Total 772 965

  • Balaji Motion Pictures, a wholly owned subsidiary, released 3 movies during the year. Four new film projects i.e. Sarkar Raj, EMI, C Kkompany and Mission Istanbul, are ready for release in next 4 months. The Company achieved turnover of Rs. 365.32 Mn. And Profit after tax of Rs. 54.91 Mn. in its first full year of operation.

What to expect?
At the current price of Rs 182, the stock is trading at a multiple of 13.6 times its trailing 12 months earnings. We shall soon update the research report of the company.

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