Music Broadcast Ltd’s Rs 489 crore IPO closed on Wednesday with overwhelming response across all categories, getting subscribed by as much as 39.23 times of the issue size.
At the close of Wednesday’s bidding, the portion reserved for QIBs (qualified institutional bidders) was subscribed by a whopping 39.78 times, while retail investors bid for nine times of the portion reserved for them, the stock exchanges data showed. However, non-institutional high-networth individuals’ showed special interest in the issue, with the category getting subscribed by a mind-boggling over 109 times of the reserved size.
Music Broadcast Ltd operates FM radio stations Radio City and Radio Mantra in key indian markets. The company’s IPO (initial public offer) for sale of shares opened on Monday for bidding at Rs 324-333 per share. The company hopes to raise Rs 400 crore fresh funding through the issue, with another Rs 86-89 crore being offer for sale.
Earlier last week, Angel Broking recommended investors to “Subscribe” to the IPO of Music Broadcast Ltd, citing attractive valuations, and better margin and ROE (return on equity) profile than its comparable peers, given its market leadership position, premium pricing, higher revenue share and healthy financial performance.
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“In terms of valuations, 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 (ENIL is trading at 79.5x its annualised 1HFY17 earnings),” Angel Broking said in a research note. “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,” it added in the note.
The company itself expects to maintain its outperformance in advertisement revenue growth over its peers given its national presence and leadership position in its operational markets.
“It is because there are some strategic choices we made way back in 2006 that have resulted in this kind of outperforming numbers and some of these strategic choices for example are the kind of markets we selected,” Music Broadcast Ltd’s Director Apurva Purohit told CNBC TV18 in a recent interview.
“We have been in the leadership position as far as listenership is concerned in each of the market for the last five years and that has indeed translated into getting the kind of over performed advertising revenue numbers,” she had said.
Purohit had also said the company expects to sustain its premium on advertising rates, which is about 30% higher than most of its peers.