Angel Broking and IIFL Wealth have given their thumbs up to the upcoming public offer of Music Broadcast Ltd, which operates the Radio City FM station.
The company has fixed a price band of Rs 324-333 a share for its initial share sale to raise up to Rs 400 crore in primary capital, while existing investors will sell shares worth about Rs 88.5 crore through an offer for sale. The offer is open from March 6-8.
“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. Moreover, MBL has a better margin and ROE profile than its comparable peers.
“Hence, considering its strong leadership position in large markets, ability to charge premium advertising rates, volume growth outperforming peers as well as industry, coupled with attractive valuations, we recommend a subscribe on the issue,” Angel Broking said in a note to investors.
Compared to its peer Entertainment Network India Ltd, Music Broadcast will be trading at 26.7x P/E of FY16 (pre-listing) on adjusted PAT compared to the former’s 39.8x, a research note by IIFL said.
“Our long-term outlook on the radio industry of the M&E space remains positive, which is likely to grow at 16.9 per cent CAGR over CY15-20E,” the note added. “Based on its popular content, strong sales capability, the advantage of the existing JPL relationship with advertisers, and expansion into new geographies, we are upbeat on the IPO. Long-term investors seeking to add weight in the M&E sector should subscribe to the issue.”