My Investment Idea No. 9 & 10: TV18 Broadcast and Network18 Media and INvestments Limited

Long Term Investment Idea No. 9 & 10

TV18 Broadcast
&

Network18 Media and Investments Limited

General Overview 

1.   Reliance Industries holds 75% stake in "Network 18 Media and Investments Limited" via "Independent Media Trust" and thus it is a 100% owned Subsidiary. Now it has been decided "Hathway Broadband and Digital Cable TV", "Den Network" and "TV18 Broadcast" would be merged with "Network 18 Media and Investments Limited". Post merger, the stake of Reliance Industries would come down to 64%, which would still be a controlling stake. My opinion is that "Network 18 Media and Investments Limited" is going to become a new Multi-Billion dollar business as it would be a subscription based services business.

2.   Various businesses of Network 18 are going to be DIGITAL NEWS, BROADCASTING and PRINT & DIGITAL MAGAZINES. The details of each business is as given below:-


(a)    DIGITAL NEWS:
Finance: 
www.moneycontrol.com is a part of Network 18 Media and Investments Limited and slowly it has become one of the top business sites and many of its key services are available only to the paid subscribers.

  

News & Opinions:
www.news18.com and www.firstpost.com are also part of Network 18.

Infotainment:
www.in.com and www.cricketnext.com are also part of Network 18 Company.

(b)    BROADCASTING: 

News: 
TV18 Broadcast is also a subsidiary of Network 18 Media and Investments Limited in which it hold 51% stake. It appears that the huge investments in TV18 Broadcast has started paying rich dividends as it has posted Net Profit of Rs 416.71 Cr for FY 2020 as compared to Rs 210.40 Cr for FY 2019 (Jump of more than 100%). Moreover, TV 18 Broadcast has tie up with CNBC, which provides then global foot print.

Entertainment: 
Viacom 18 is a subsidiary of TV18 Broadcast, in which it hold 51% stake.

Infotainment: 
"History TV 18" Channel is also part of this group.



(c)    PRINT AND DIGITAL MEDIA:
Forbes & Overdrive Magazines: 
These magazines are managed in India by Network 18 Media and Investments Limited.

Better Photography & Interiors Magazines: 
These are also part of Network 18 Media and Investments Limited. 


(d)    INVESTMENTS BY NETWORK 18: 
Network 18 has 39% Stake in ww.bookmyshow.com

3.    Huge amount of investments have been made by Network 18 Media and Investments Limited to increase its TV Channels and associated businesses and the list of Channels and businesses is as given below:

    General News Channels: 
    CNN News 18
    News18 India
    News18 Lokmat
    News18 Urdu
    News18 Rajasthan
    News18 Uttar Pradesh Uttarakhand
    News18 Madhya Pradesh Chhattisgarh
    News18 Bihar Jharkhand
    News18 Gujarati
    News18 Bangla
    News18 Odiya
    News18 Kannada
    News18 Kerala
    News18 Tamil Nadu
    News18 Assam/ NorthEast
    News18 Punjab Haryana Himachal

    Entertainment Channels:
    Colors
    Colors Bangla
    Colours Cineplex
    Colours Cineplex HD
    Colours Gujarati

    Colours Infinity
    Colours Kannada
    Colours Kannada Cinema
    Colours Marathi
    Colours Odiya
    Colours Rishtey
    Colours Super
    Colours Tamil
    Comedy Central
    MTV Beats
    MTV
    Nickelodeon
    Nick Jr
    Nickelodeon Sonic
    VH 1
   
    Business  News Channels: 
    CNBC TV 18
    CNBC Awaaz
    CNBC Bazaar
    
    Some Other Channels:
    History TV 18
    FYI TV 18
    Home Shop 18
    Topper TV

    Websites:
    www.firstpost.com
    www.in.com
    www.moneycontrol.com
    www.cricketnext.com
    www.forbesindia.com
    www.overdrive.in
    www.betterphotography.in
    www.betterinteriors.in etc 

App/ Website for Subscription based video on demand Services:
    VOOT (Similar to Netflix or Amazon Prime)
     

4.   A decision has been taken to merge TV 18 Broadcast with Network 18 Company with a swap ratio of 100 shares of TV 18 Broadcast would be converted to 92 shares of Network 18.

5.   Results Overview: TV18 Broadcast 

 
     Face Value = Rs 2
     Equity = 342.87 Cr (Qtr Ending Mar 20)

     Price = Rs 19.8 

     52 Weeks Low/High = Rs 11.85 / 33.19 

     Market Cap = Rs 6857 Cr

 
     Total Income

     FY 2019: Rs 4978.17 Cr

     FY 2020: Rs 5256.51 Cr

     Total Expenditure

     FY 2019: Rs 4862.25 Cr

     FY 2020: Rs 4778.72 Cr

     EBIDTA
     FY 2018: Rs 60.92 Cr

     FY 2019: Rs 151.64 Cr

     FY 2020: Rs 516.98 Cr

     Net Profit

     FY 2019: Rs 210.40 Cr

     FY 2020: Rs 416.71 Cr

     EPS

     FY 2019: Rs 1.227 Cr

     FY 2020: Rs 2.43   Cr

  Price to Earning Ratio (PE) wrt FY 2020 Results

     7.4 When the stock is trading at Rs 18 

     8.2 When the stock is trading at Rs 20

     Long Term Debt

     FY 2019: Rs 221.6 Cr

  FY 2020: Rs 1.04 Cr Very Very Good Indication

     Short Term Debt

     FY 2019: Rs 1364.39 Cr

     FY 2020: Rs 1772.56 Cr

     Debt to Total Equity Ratio

     FY 2019: Rs 0.37 

     FY 2020: Rs 0.38 

6. Results Overview: Network 18 Media and Investments Ltd

     Face Value =  Rs 5
     Equity = 517.68 Cr (Qtr Ending Mar 20)

     Price = Rs 23

     52 Weeks Low/High = Rs 14.85/ 34.15 

     Market Cap = Rs 11400 Cr 

     

     Total Income

     FY 2019: Rs 5068.49 Cr

     FY 2020: Rs 5392.18 Cr

     Total Expenditure

     FY 2019: Rs 5244.82 Cr

     FY 2020: Rs 5150.73 Cr

     EBIDTA
     FY 2019: Rs 230.65 Cr (Loss)

     FY 2020: Rs 193.20 Cr

     Net Profit

     FY 2019: Rs 197.62 Cr (Loss)

     FY 2020: Rs 5.81     Cr (Loss)

     EPS

     Minus (Zero)

     Price to Earning Ratio (PE) wrt FY 2020 Results

     Not Applicable

     Long Term Debt

     FY 2019: Rs 221.6 Cr

     FY 2020: Rs 1.04 Cr Very Very Good Indication

     Short Term Debt

     FY 2019: Rs 2789.91 Cr

     FY 2020: Rs 3262.59 Cr

     Debt to Total Equity Ratio

     FY 2019: Rs 0.93 

     FY 2020: Rs 1.01 

     Why Loss; When EBIDTA was at Rs 193.20 Cr Profit
     Share of P/ (L) of Associates & Joint Ventures : Rs 48.25 Cr
     (Paid to Them, Probably for Investments)

     Exceptional Items: Paid Rs 50 Cr

     Tax: Paid Rs 87.06 Cr



7.  Comparison with Other Media Companies:

     Market Cap (As on 25 Apr 2020)

     Zee Entertainment:
     Rs 13927 Cr

     Sun TV:
     Rs 14851 Cr

     T.V. Today Network:
     Rs 1187 Cr

     TV 18 Broadcast:
     Rs 6858 Cr

     Network 18 Media and Investments Limited:
     Rs 11400 Cr


     Sales (9 Months FY 2020 As on 25 Apr 2020) 

     Zee Entertainment:                                       
     Rs 6178 Cr (Rs 7934 Cr FY 2019)

     Sun TV:                                                         
     Rs 2762 Cr (Rs 3782 Cr FY 2019)

     T.V. Today Network:                                     
     Rs 648 Cr   (Rs 742 Cr FY 2019)

     TV 18 Broadcast:                                           
     Rs 3750 Cr (Rs 5175 Cr FY 2019)

     Network 18 Media and Investments Limited:
     Rs 3892 Cr (Rs 5116 Cr FY 2019)


     Net Profits (9 Months FY 2020 As on 25 Apr 2020)

     Zee Entertainment:                                       
     Rs 1290 Cr (Rs 1567 Cr FY 2019)

     Sun TV:                                                         
     Rs 1140 Cr  (Rs 1434 Cr FY 2019)

     T.V. Today Network:                                     
     Rs 111 Cr    (Rs 131 Cr FY 2019)

     TV 18 Broadcast:                                           
     Rs 164 Cr    (Rs 242 Cr FY 2019)

     Network 18 Media and Investments Limited:
     Rs - 194.76 Cr Loss (Rs - 302.9 Loss FY 2019)


     Net Profit Margins (9 Months FY 2020 As on 25 Apr 2020)

     Zee Entertainment:                                         
     Approx 21%    (Approx 20% FY 2019)

     Sun TV:                                                         
     Approx 41%    (Approx 38% FY 2019)

     T.V. Today Network:                                     
     Approx 17%    (Approx 17% FY 2019)

     TV 18 Broadcast:                                           
     Approx 4.37% (Approx  4.67% FY 2019)

     Network 18 Media and Investments Limited:
     Approx NA %  (Approx NA % FY 2019)


     Price (As on 25 Apr 2020)
   
     Zee Entertainment:                                         
     Rs 145.00

     Sun TV:                                                           
     Rs 376.00         
                                                          
     T.V. Today Network:                                       
     Rs 199.00

     TV 18 Broadcast:                                             
     Rs 19.80

     Network 18 Media and Investments Limited: 
     Rs 23.00

8.  Conclusion: To conclude, I would just say that the Investments made by Network18 and TV18 have started to yield positive results as it is visible from 100% plus growth in Net Profits (YoY). Even at EBIDTA Levels, TV18 Broadcast grew 148.9% in FY 2019 as Compared to FY 2018 and grew 240.2% in FY 20 as Compared to FY 2019. Even Network18 Media and Investments Limted EBIDTA grew by 184.2% in FY 2020 as Compared to EBIDTA in FY 2019.

9.  From the above analysis, it is also evident that other media companies are enjoying Net Profit Margins of around 18% to 41%. With the Annual Sales of around Rs 5100 Cr, I presume that the day is not very far away when TV18 Broadcast and Network18 Media and Investments Limited would also enjoy atleast 18-20% Net Profit Margins and that with Net Sales of around Rs 5000 Cr Plus, works out to be around Rs 1250 Cr. In addition, as the Sales rise, the Net Profit is also bound to rise accordingly. I am very bullish on these Stocks as I believe that this Company would do well under the leadership of Mr. Mukesh Ambani, who is the Promoter of this Company. The Stock of the Company like Zee entertainment (whose Yearly Sales are around Rs 8000 Cr and enjoys around 20% Net Profit Margin) touched life time high of Rs 600 Plus before its crashed to around Rs 150 due to selling of Pledged shares by some Fund Houses and then due to Corona Virus concerns.

10.  Corona Virus Pandemic has changed the dynamics of doing business. While all other business activities are severely affected, digital businesses are least affected. I think going forward such businesses would be one of the best investment themes in times to come.

Happy Investing😊  

Disclaimer:

11.   The information provided above has been taken from the internet, which may or may not be correct. Therefore, do your own research before investing. 

12.   The post written above is not to be taken as a 'Buy Recommendation' from the author on TV18 Broadcast and Network18 Media and Investments Limited and no one should take decision to invest in TV18 Broadcast and Network18 Media and Investments Limited based on the information provided in this blog. The blog is written only to express the views of the author, which could be right or wrong. You must consullt your financial adviser before investing in TV18 Broadcast and Network18 Media and Investments Limited.