Music Broadcast Ltd IPO plans to raise Rs 400 crore through a fresh issue and an offer for sale of about 2.66 million shares. Music Broadcast Ltd (MBL) will be the second radio operator to list on the bourses after Times Group-controlled Entertainment Network India Ltd, which runs the country’s top FM radio business under Radio Mirchi label. Music Broadcast Ltd IPO is opening on 6th March 2017 and is priced at Rs. 324-333. Music Broadcast Ltd IPO issue size is Rs. 488.5 crore. Music Broadcast Ltd peer analysis attempts to assess its financial strengths vis a  vis its major competitor Entertainment Network India Ltd. (ENIL).

About Music Broadcast Ltd IPO

Music Broadcast Ltd (MBL) brand Radio City is one of the fastest growing FM Networks in India and has witnessed strong sales.
There are good prospects for radio industry which has been growing at rate of 14-15% for last five years. Radio City is the first private FM radio broadcaster in India. MBL operates its  radio stations under the brand “Radio City”. Music Broadcast Ltd  has grown its presence from four cities in 2001 to 29 cities. MBL also have sales alliances in two cities. MBL has won bids under Phase III Policy to expand its presence to 11 additional cities across India which are primarily located in tier-I, tier-II and tier-III cities. Also, its Existing Radio Stations have a license period of 15 years commencing from April 1, 2015 and the New Radio Stations have a license period of 15 years commencing from the date of their going operational. Through Planet Radio City, MBL also operates 31 web radio stations in six languages.

Comparison of Major FM radio Operators in Metros*
Share of FM radio operators in Major cities (RAM report Week 41, 2016)
  Radio city Radio Mirchi Big FM Fever FM Red FM Oye Radio nasha Radio one
Mumbai 14.7 13.3 14.9 14.7 11.7 3.3 7.5  
Delhi 10.4 13.2 9.1 17.4 10.1 4.6 10.7  
Kolkata   20.9 17.1 16.1 8.8 10.1   6.4
Bengaluru 23.9 17.7 19.7 13.5 5.5     3.9

The figures are for a particular week. However they may be  fairly representative.

Music Broadcast IPO advertising volumes radio players

Radio City’s advertising volumes have grown at a CAGR of ~12.5% over the five year period FY2011-16, while Radio Mirchi (ENIL) reported ~9% CAGR in advertising volumes during the same period. Radio City’s advertising volumes  are only slighly lower than ENIL while ENIL has a much higher revenue base. 

Post Issue Equity & Promoters holding :

As per government directives while allocating FM stations, the  promoters cannot dilute their holding below 51% at least for three years from the start of broadcasting. 

Music Broadcast Post Issue Equity & Promoter Holding
Pre issue equity 45.04 cr  
IPO new share size in crores 400 cr  
Estimated IPO Price 333 rs.  
New Equity added 12.012 cr  
Total Equity 57.052 cr  
equity in offer for sale 2.658518 cr  
Total Equity sold in IPO 14.6705 cr  
promoters holding pre issue 96.34% 43.39154 cr
Promoter holding aft IPO   40.7330  
% Promoter Holding post IPO   71.40%  


Peer Analysis:

Entertainment Network India Ltd (ENIL), which belongs to Bennett Coleman group & operates its FM services under Radio Mirchi is the largest listed company in this space. Half year 2017 and FY 2016 Results of two companies have been compared

Rs. Crore
  Radio Broadcast ENIL
  HY 2017 FY 2016 H Y2017 FY 2016
Revenue 136.89 232.33 240.41 508.61
Other Income 1.32 13.18 9.93 25.11
Total Income 138.21 245.51 250.33 533.72
Expenditure 91.38 153.74 -187.83 -349.26
Interest 8.07 18.96 -4.41 -0.04
PBDT 32.37 51.64 58.09 184.46
Depreciation 9.009 16.724 -22.45 -36.27
PBT 29.76 56.08 35.64 148.19
Exceptional Items 0 13.58    
PB excep. Items & Tax 29.76 42.51 35.64 148.19
Tax 0 0 -11.25 -48.17
Net Profit 29.76 42.51 24.39 100.02
Equity 45.04 42.04 47.67 47.67
FV 10 10 10 10
EPS  6.61 9.95 5.12 20.98
OPM % 28.58% 24.71% 21.87% 31.34%
NPM % 21.74% 18.30% 10.15% 19.67%
Networth 140.16 110.4   768.92
NAV 31.12 26.26   161.3
RONW % 21.23% 38.51%   12.17%
CAGR sales 1 yr   15.68%   15.98%
CAGR sales  3 yr   18.95%   14.55%
CAGR PBT  1 yr   19.17%   2.46%
CAGR PBT 3 yr   69.00%   18.32%
CMP /  IPO Price 333 333 774.2 774.2
PE Ratio (ann) 25.19 33.47 75.61 36.9
Post issue equity 57.052 57.052    
EPS (Post Issue Eq) 5.22 7.45    
PE ( Post Issue Eq -ann) 31.9 44.7    
P/BV   13.04   5.12
Market Cap   1899.832 cr 3690.6114
Market Cap/Sales Ratio   8.18   7.26

The Music Broadcast IPO peer analysis shows that overall it is reasonable stacked against Entertainment Network India Ltd (ENIL), the largest listed company in this space. While for FY16 ENIL has enjoyed better OPM of  31.34 % than MBL’s OPM   24.87, MBL has stolen a lead in H1FY17 with OPM of 28.58  % against ENIL’s OPM 21.57%. Music Broadcast  FY 2016 Net profit has been impacted by one time exceptional items, else its PE ratio based on 2016 figures would have been lower than the indicated value. For this reason CAGR PBT has been considered in place of CAGR NP to compare the two companies. Music Broadcast also has better RONW% as compared to ENIL. P/BV ratio of MBL shall also be in range of ENIL after  IPO due to issue of shares at premium. However Marketcap/sales ratio for Music Broadcast appears bit steep than ENIL though it is enjoying better growth

I am not a SEBI registered analyst. I may have vested interest in every stock I discuss. Please do your own due diligence as stock market investments have high degree of inherent risk.

2 thoughts on “Music Broadcast Ltd IPO : Peer Analysis

    1. Promoters holding in Music Broadcast at present is 96.34% ( Rest i believe is employees). If Rs. 333 issue price holds true, promoters holding post issue will be 71.4% in a equity of approx 57.04 crore. mcap of Music Broadcast will be about 1900 crore. Will update this in peer analysis also. Thanks for the same.

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