Music Broadcast Limited IPO: Should you invest?

According to reports, Radio City is ranked No. 1 in terms of number of listeners

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#LATEST | The initial public offer (IPO) of Music Broadcast Limited (MBL) that owns FM radio channel, Radio City, opens today for subscription. The issue consists of equity shares of face value of Rs 10 each for cash at a premium consisting of a fresh issue of up to Rs 400 crore and an offer for sale up to 2,658,518 equity shares. The price band for the offer is fixed from Rs 324 to Rs 333 per equity share.

The issue proceeds will be used to repay most of its Rs 300 crore debt, thereby reducing its interest cost and improving the overall cash flow. Last week, Music Broadcast Limited finalised allocation of 44,01,158 equity shares to anchor investors at Rs 333 per equity share, aggregating Rs 146.56 crore.

According to reports, Radio City is ranked No. 1 in terms of number of listeners, total 49.6 million listeners across top 23 cities, followed by Entertainment Network India Ltd (ENIL) with 40.5 million listeners. Even in the metro cities like Mumbai, Bangalore and Delhi, Music Broadcast owned Radio City enjoys a leadership position.

So, should you invest in this IPO? Here is what leading brokerages across the country suggest?

ANGEL BROKING

Radio City operates 20 markets, while ENIL operates a total of 38 markets. Despite this, Radio City has 23% revenue share compared to 24% share of ENIL. We attribute this to its dominant position in listenership and ability to charge premium advertising rates.

Radio City, with ~19% CAGR in revenue, has outperformed its closest peer ENIL, which reported ~14% CAGR in revenues over FY2013-16. In profitability too, Radio City, with ~54% CAGR in profit after tax (PAT) over FY13-16, has performed much better than ENIL (~17% CAGR in PAT over FY2013-16).

  • ANTIQUE STOCK BROKING
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