Analysts` corner- NDTV - Multibagger

NDTV
Reco price: Rs 385
Current market price: Rs 373.75
Target price: Rs 267
Downside: 28.6%
Brokerage: MF Global Sify Securities India

New Delhi Television Ltd (NDTV) reported a consolidated cash operating loss of Rs 104.4 crore in Q1 FY09, after posting a consolidated cash operating loss of Rs 106.9 crore in Q4 FY08. Consolidated revenues grew to Rs 119.4 crore on the back of NDTV Imagine.

Revenues are expected to be higher in the coming quarters, as NDTV Imagine programmes have improved ratings in the past month, with Ramayan making it to the Top-50 programmes in Hindi general entertainment channels.

But, performance on ratings although impressive, needs viewing in the context of expenses incurred for the same; revenue from NDTV Imagine unlikely to exceed Rs 210 crore in CY09, but the company has spent Rs 88.2 crore in marketing the channel in H1 CY08.

The company has decided to utilise the funding from NBC Universal’s 26 per cent stake purchase to set up art infrastructure and further other growth plans. On the core operations, the company would continue to find it difficult to monetise its supposedly higher quality viewership.

Significant ad-rate gaps already exist in the English news space. The company’s positioning is weak in the Hindi news and business news space as well. The company’s growth plans are rather aggressive, considering that the company lacks a cash cow to finance these. Maintain Sell with a target price of Rs 267.

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