X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2019 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Balaji FY01: Read between the lines - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Balaji FY01: Read between the lines

Jun 29, 2001

The net profit growth for Balaji Telefilms in FY01 has been flat compared to 143% growth in revenues. However, this was because the company changed its method of accounting with respect to write off of its serials' production costs. Previously, the company used to write off 60% of its production cost on sponsored programs, while the balance 40% was written off over a period of 3 years. This was viewed negatively by investors and analysts. The company has now changed the method of accounting and has provided for entire production expenses in the year in which it is incurred.

(Rs m) FY00 FY01 Change
Sales 201 489 143.3%
Other Income 1 8 1359.4%
Expenditure 134 412 207.6%
Operating Profit (EBDIT) 67 76 14.3%
Operating Profit Margin (%) 33.3% 15.6%
Interest 5 7 37.7%
Depreciation 1 3 230.4%
Profit before Tax 62 74 20.7%
Extraordinary Expenses (7) (17)
Tax 12 14 21.7%
Profit after Tax/(Loss) 43 43 1.0%
Net profit margin (%) 21.3% 8.9%
No. of Shares (eoy) (m) 1.0 10.3  
Diluted Earnings per share 42.9 4.2  
P/E (at current price) 4.9 49.7  

The profit for the year would have been higher by Rs 53.5 m but for this change in accounting policy, which would have resulted in a net profit growth of 126%. This is marginally above market expectations of 117% growth in net profit.

Balaji Telefilms continues to maintain its niche in providing high quality, multi-lingual content which has helped in creating a strong bargaining power for the company. Balaji has 4 out of the top 10 serials on air, in all C&S (cable and satellite TV) homes. The company's most popular soap 'Kyunki Saas…' tops the TRP chart with a rating of 12.5 in June 2001.

The company's weekly programming output of 31.5 hours across 10 different channels compares favourably with other prominent content providers. The revenue mix of the company is changing in favour of commissioned programs, which are expected to account for around 45-50% of the total revenues. The company earns assured margins of around 35% on commissioned programs but has to part with the IPR of the content. Apart from Hindi, other linguistic soaps of the company also figure in the top TRP list.

The company has been re-negotiating terms with Star TV for a favourable price so as to continue airing its soaps on the channel. Balaji Telefilms has also lined up three prime time shows and an afternoon-band soap. It is in the process of making a soap on behalf of Sony TV which is expected to be aired from August. Balaji already has a rich content library of around 1,800 hours. The company can utilise this library by re-adapting and re-making its successful Hindi serials in other regional languages (where it has a strong presence) with lower extra cost.

In a related development, Balaji Telefilms recently called off its merger with Nine Network Entertainment (NNE). The merger would have enabled Balaji to become a preferred vendor to DD Metro’s Nine Gold, supplying atleast 7 hours of television software every week on prime time slots. However, with Channel Nine finding it difficult to renew its contract with Doordarshan for the prime time slot it didn’t make sense for Balaji to part with 20% stake to NNE. This news was taken positively by the market.

Balaji remains amongst the highest margin mopper in the industry. The operating margins may inch up a bit further, as utilisation of IPO funds is likely to result in cost savings. However, the company's diversification in the past into areas like event management and film production remain a cause for concern. The company needs to maintain its content quality to maintain its leadership position in the industry.

At the current market price of Rs 209, the stock is trading at 50 times its FY01 earnings. The sudden jack up in the P/e multiple is because of the change in accounting policy. Though on one hand the conservative approach adopted is for the better, in the immediate term the stock might see a de-rating.


Equitymaster requests your view! Post a comment on "Balaji FY01: Read between the lines ". Click here!

  

More Views on News

BALAJI TELEFILMS Announces Quarterly Results (3QFY19); Net Profit Down 10.0% (Quarterly Result Update)

Feb 13, 2019 | Updated on Feb 13, 2019

For the quarter ended December 2018, BALAJI TELEFILMS has posted a net profit of Rs 273 m (down 10.0% YoY). Sales on the other hand came in at Rs 963 m (up 47.9% YoY). Read on for a complete analysis of BALAJI TELEFILMS's quarterly results.

BALAJI TELEFILMS 2017-18 Annual Report Analysis (Annual Result Update)

Jan 1, 2019 | Updated on Jan 1, 2019

Here's an analysis of the annual report of BALAJI TELEFILMS for 2017-18. It includes a full income statement, balance sheet and cash flow analysis of BALAJI TELEFILMS. Also includes updates on the valuation of BALAJI TELEFILMS.

BALAJI TELEFILMS Announces Quarterly Results (2QFY19); Net Profit Down 211.5% (Quarterly Result Update)

Nov 27, 2018 | Updated on Nov 27, 2018

For the quarter ended September 2018, BALAJI TELEFILMS has posted a net profit of Rs 154 m (down 211.5% YoY). Sales on the other hand came in at Rs 1 bn (up 8.5% YoY). Read on for a complete analysis of BALAJI TELEFILMS's quarterly results.

BALAJI TELEFILMS 2017-18 Annual Report Analysis (Annual Result Update)

Aug 20, 2018 | Updated on Aug 20, 2018

Here's an analysis of the annual report of BALAJI TELEFILMS for 2017-18. It includes a full income statement, balance sheet and cash flow analysis of BALAJI TELEFILMS. Also includes updates on the valuation of BALAJI TELEFILMS.

GTPL Hathway Ltd. (IPO)

Jun 21, 2017

Should one subscribe to the IPO of GTPL Hathway Ltd?

More Views on News

Most Popular

Stocks that Could Be Out of Reach Post Elections(The 5 Minute Wrapup)

Apr 9, 2019

It's a matter of time before the stocks catch the fancy of the markets and big investors.

3 Indian Stocks with Amazon-Like Potential(Profit Hunter)

Apr 10, 2019

We have identified 3 stocks with huge wealth building potential which meet our 'Click of a Button' criteria.

This Company is Making a Big Comeback and You Can Now Profit from Its Example(The 5 Minute Wrapup)

Apr 10, 2019

How Dell got its mojo back.

This is Why the Stock of Jubilant FoodWorks Went Up 1,160%(The 5 Minute Wrapup)

Apr 12, 2019

This critical business strategy has enabled companies to scale their operations faster.

Pocketing Massive Gains with HDFC And HDFC Bank(Profit Hunter)

Apr 12, 2019

Here's how one could have generated gains of Rs 59,250 in 10 days by trading HDFC and HDFC Bank with a capital of Rs 4 lakh.

More

Get the Indian Stock Market's
Most Profitable Ideas

How To Beat Sensex Guide 2019
Get our special report, How to Beat Sensex Nearly 3X Now!
We will never sell or rent your email id.
Please read our Terms

BALAJI TELEFILMS SHARE PRICE


Apr 18, 2019 (Close)

TRACK BALAJI TELEFILMS

  • Track your investment in BALAJI TELEFILMS with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks

MORE ON BALAJI TELEFILMS

BALAJI TELEFILMS 5-YR ANALYSIS

COMPARE BALAJI TELEFILMS WITH

MARKET STATS