Music Broadcast IPO: Run up to IPO and Brokerage Views

This post on Music Broadcast IPO tries to bring out consolidated brokerage views opinions, IPO Review / Analysis, Note/ reports and recommendation of brokerages , Analyst, Business New papers, Management views, information on Anchor investors, Subscription etc on Music Broadcast IPO and shall be updated continuously till the closure of the issue The information collated from various sources and reports in public domain can  help investors to decide whether they should subscribe to Music Broadcast IPO. )
Related Posts:
1) Music Broadcast Ltd IPO : Peer Analysis
2) Music Broadcast IPO Review

Allotment Status :

Music Broadcast IPO / Radio City IPO Allotment Status is out 

Check Allotment Here

Subscription Figures

Fantastic subscription figures at close of Day 3 see Grey Market Premium og Music Broadcast IPO jump to Rs. 70+ levels.
Decent subscription on Day 2 has seen Music Broadcast IPO Grey Market Premium inch up to Rs. 55+ from  Rs. 50 a day earlier.

Subscription No.of Application wise is  about 8.05x

Anchor Investors

Music Broadcast IPO has raised about Rs 146.56 crore from anchor investors on Friday ahead of its Rs 500 crore initial public offer. MBL has issued to the anchor investors such as HSBC, Nomura, Franklin India, Morgan Stanley, DSP Blackrock, Reliance MF, HDFC MF, Birla Sunlife MF and UTI MF among others. Click to See Anchor List

Consolidated Views of Brokerages, Analysts, Business New Paper, Management Views on Music Broadcast IPO

• Apurva Purohit, Director, Music Broadcast Network and President Jagran Prakashan: “Currently, Music Broadcast FM covers only about 40 per cent of urban India. The Phase III policy will see a major increase in the coverage area with close to 60 per cent of urban India coming under its folds. We expect a radio listenership base to grow significantly”
• Capital Market:  Score 44/100 “At the lower price band of Rs 324 per equity share of Rs 10 face value, the P/E works out to 31.2 times the annualized EPS of Rs 10.4(on post-IPO equity) for half year ended September 2016 and the P/E works out to 33.2 times the EPS of Rs 9.8 (on post-IPO equity) for the financial year ended March 2016 . At upper band of Rs 333, P/E works out to 31.9 times the annualized EPS of Rs 10.4 (on post-IPO equity) for half year ended September 2016 and the P/E works out to 33.9 times the EPS of Rs 9.8 (on post-IPO equity) for financial year ended March 2016. The only comparable listed company Entertainment Network (India) (ENIL) is trading at P/E of 80.97x on the annualized EPS for the half year ended September 2016 and 36.87x on the EPS for financial year ended March 2016.Given the short-to-medium term prospects, valuations of both ENIL as well as Radio City seem to be high.”
• Nirmal Bang: Over FY12- FY16 the company sales has grown at a CAGR of 17.4% however Ebitda has grown at a CAGR of 31.9%. Ebitda to Cash flow from operations is consistently higher at around 85% indicating lower working capital requirement by the company. Going forward, expansion in different geographies, playing music as per audience preferences and attracting listeners, will help in attracting advertisers and in turn fuel in growth to the company. Company enjoys ROE of 39.6%. On the valuation front, at the given upper price band of issue of Rs 333, as per our estimates, Music Broadcast is offered at PE of 33.4x its FY17E EPS of Rs 10 and FY17E EV / Ebitda of 19.3x which is lower to its peer. We recommend subscribing to the Music Broadcast IPO issue.
• Arihant Capital Markets:”The issue has been offered in a price band of Rs 324-333 per equity share. At the upper price band of Rs 333 the stock is available at P/E of 30.5 (x) based on FY 16 financials. The issue looks fairly valued against its competitor. We have 3 star” rating for the Music Broadcast IPO issue.
• SPA Securities: MBL is the first and oldest private FM radio broadcaster in India
  with over 15yrs of expertise in the radio industry. The radio industry has registered CAGR of 14.5% between CY11-15 and it is likely to grow at CAGR 16.9% (ahead of TV -15.1%, Film -10.5 and music industry -13.8%) for the next five years. We believe that MBL is in a sweet spot to ride the growth in radio industry due to its Pan India presence, strong leadership position in most populated cities in India, strong brand recall, improving margins as new stations get mature and parentage & brand equity of the promoter. Fresh issue of INR 400 crores would majorly be used for debt repayment. At the upper end of the price band, the stock will trade at PE multiple of 25.3x based on FY17E earnings, which is lower compared to its peer ENIL (expected to grow at 60% CAGR over next 2 years) trading at 80.5x. Addition of new stations in MBL’s portfolio will drive its topline and bottomline going forward. We recommend SUBSCRIBE to the Music Broadcast IPO issue with long term perspective.
• India Infoline: “Compared to its peer Entertainment Network India Ltd, Music Broadcast will be trading at 26.7x P/E of FY16 (pre-listing) on adjusted PAT compared to the former’s 39.8x.  Our long-term outlook on the radio industry of the M&E space remains positive, which is likely to grow at 16.9 per cent CAGR over CY15-20E. Based on its popular content, strong sales capability, the advantage of the existing JPL relationship with advertisers, and expansion into new geographies, we are upbeat on the IPO. Long-term investors seeking to add weight in the M&E sector should subscribe to the Music Broadcast IPO issue.”
• BP Wealth : The outlook of radio business like Music Broadcast in India is expected to remain positive due to lower penetration level as it is a consolidated market. The company is charging its clients at a premium of 30% compared to its competitors which is expected to prevail over a long time in which it is market leader. The company has been valued in line with its peer listed ENIL. The company at present has a band price of Rs.324-333/- with a Yearly PE multiple of 33.5x. We recommend to “Subscribe” to Music Broadcast IPO  for listing gains only. 
• Monarch Networth Capital: “At the upper band of Rs 333, the stock is valued at 34x FY17E and 27x FY18E EPS which is at a significant discount to its major listed peer ENIL which trades at ~52x despite similar return ratios. Although recent capex and equity dilution will keep return ratios depressed, ROE and margins would bounce back from FY18 onwards as the capex bears fruit. Although there are some concerns regarding the sustenance of radio over the long term, we believe the randomness of songs and its inherent aspect of it being a live local companion to listeners will help it to sustain in the long term. We believe MBL is a niche high quality play in the growing radio space and could be viewed as an effective investment avenue for long term investors and hence recommend “SUBSCRIBE” to the Music Broadcast IPO issue. “
• Way2Wealth: “At the offer price band of `324-333/- the issue is available at P/E of of ~32x its FY17 estimated diluted EPS. When ENIL came out with an IPO in 2005 it commanded a similar valuation of 30-34x and laster moved to PE of 38-39x. As compared to its competitor in the listed space MBL seeks public listing when it’s financial performance is more stable.. When ENIL came out with an IPO in 2005, it was not out of losses while MBL has reported steady performance for the last 2 years. But we believe this debt reduction will help the company maintain a decent debt equity mix(preferably at ~1x). We advise investors with a long term horizon to SUBSCRIBE to Music Broadcast IPO.
• Angel Broking: The pre-issue P/E works out to 25.2x its annualised 1HFY2017 earnings (at the upper end of the issue price band), which is lower compared to its peers. Also, MBL’s EV/sales multiple 6.2x, works out to be at discount to ENIL’s 8.2x. On EV/EBITDA front too, Radio City’s issue appears to be attractive 18.7x v/s. ENIL’s
  37.4x. Moreover, MBL has a better margin and ROE profile than its comparable peers. Hence, considering the above positives coupled with attractive valuations,we recommend a SUBSCRIBE to Music Broadcast IPO
• SP Tulsiyan: “Thus, based on pure play listed peer comparison, pricing is fair. Expected double digit growth, Jagran group pedigree, growth trajectory of radio industry and current market fancy for new ideas due to dearth of opportunities in the secondary space, market being just 4% off all-time highs, share looks promising and one may apply in the issue.”
• INDSEC : At the upper price brand of Rs 333 the stock is valued at 21.9x FY16 on EV/EBITDA (Pre issue). Its nearest comparable, ENIL, is trading at 25.9x EV/EBITDA FY16. We have considered EV/EBITDA multiple for comparing the valuations as ENIL is on a expansion spree with spends towards adding new stations as well as increased marketing spend for boosting add revenues,” it said in a report. It recommends subscribing the Music Broadcast IPO issue with medium to long term investment horizon.
• Business Standard: “Music Broadcast IPO: High-margin, high-growth business. Foray into new cities will drive revenue growth but valuations leave little room for immediate gains”