ABP News Network’s FY19 net profit dips 17.1% to Rs 40.61 cr

News broadcaster ABP News Network’s net profit for the fiscal ended 31st March has dropped 17.1% to Rs 40.61 crore compared to Rs 48.99 crore in the previous fiscal.

Profit before interest lease depreciation and tax (PBILDT) dropped 29.63% to Rs 66.3 crore as against Rs 94.22 crore. PBILDT level has declined y-o-y mainly on account of increase in investment in sales promotion, content expenses mainly on account of six state elections and digital properties.

Total operating income increased 3.5% to Rs 482.65 crore from Rs 466.20 crore. The company’s ad revenue has registered a lower y-o-y growth of 3.5% in FY19 compared to 7.1% in FY18.

The company’s major source of income is through advertisements contributing around 99% of the total revenues in FY19 as against 98% in FY18.

However, the company is also expanding on other platforms like web portals, mobile applications, etc. The share of subscription income has remained low due to the conversion of its two paid channels to Free to Air Channel.

ABP News Network’s total operating income and profitability improved in Q1FY20 in view of the increase in advertisement revenue due to the Lok Sabha elections coupled with the increase in advertisement rates for all the channels.

CARE Ratings has reaffirmed ABP News Network’s long-term bank ratings worth Rs 85 crore. The rating derives strength from experienced promoters, established market position of the company news channels in their respective genres, moderate financial performance in FY19 with improvement witnessed in Q1FY20, improvement in capital structure and debt protection metrics.

The agency noted that the above strengths are, however, partially offset by ABP News Network’s dependence over advertisement revenue, risks associated with the implementation of ongoing projects and high competitive intensity in the news broadcasting space.

Going forward, the ability to improve its profitability, capital structure and maintain its liquidity position as envisaged and maintain its market share in the current genres amidst intense competition are the key rating sensitivities.

The news broadcaster has expansion plans and also plans for technology upgradation which requires significant capital expenditure. The size of the CAPEX is large vis-à-vis net-worth of the company as on 31st March 2019. Successful implementation of the same is a key rating sensitivity.

CARE further stated that adequate liquidity characterised by sufficient cushion in accruals of about Rs.56 crore vis-à-vis nil debt repayment obligation. Apart from this, the cash balance stood at Rs. 56 crore as on 31st August 2019 (Rs. 14.64 crore as on 31st March 2019).

Its CAPEX requirements are high and are expected to be funded in debt-equity ratio of 1:2 over the period of next three years. Its average utilisation of bank limits stood at 1% in the last 12 months ended Aug-2019, providing cushion to meet its incremental working capital needs. The operating cycle was stable and stood at 42 days in FY19 vis-à-vis 40 days in FY18.

ABP News Network currently broadcasts four news channels i.e., ABP News (Hindi), ABP Ananda (Bengali), ABP Majha (Marathi), ABP Asmita (Gujarati) and one news channel i.e., ABP Ganga (Hindi) launched in April’19 targeted towards Uttar Pradesh & Uttarakhand markets. Apart from this, the company also operates a Punjabi news channel ’ABP Sanjha’ in Canada. Besides, there is a presence of all the properties through web based and mobile based services.