Music Broadcast expects to maintain premium ad rates, outgrow industry, as IPO sees sustained retail interest

By: | Published: March 6, 2017 4:12 PM

Music Broadcast Ltd, in news for its live IPO which opened for bidding today, expects to maintain its outperformance in advertisement revenue growth over its peers given its national presence and leadership position in its operational markets.

The company’s IPO opens on Monday, March 6, and closes on Wednesday, March 8 at a price band of Rs 324-333. It hopes to raise Rs 400 crore fresh funding through the issue, with another Rs 86-89 crore being offer for sale. (Image: PTI)

Music Broadcast Ltd, in news for its live IPO which opened for bidding today, 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 an 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 added.

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 today 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. The IPO closes on March 8.

As at 3.50 pm, the IPO was subscribed over 41%, with the retail investor portion subscribed over 82%. The issue had so far not received any bids in the institutional category.

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Speaking to CNBC TV18, Purohit said the company expects to sustain its premium on advertising rates, which is about 30% higher than most of its peers. “We have demonstrated it over the last four-five years and again they are backed by two-three reasons. One… we have been listenership leader in most of the markets that we operate in,” Purohit said, adding, “Second, as compared to television and print, radio as an industry is at a far lower cost per thousand (CPT). So (given) the differential pricing between television and prints there is a fair amount of headroom to grow there.”

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.

“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.

 

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