Rajat Sharma-promoted India TV posts net profit of Rs 55.7 cr in FY19

Rajat Sharma-promoted Independent News Service Pvt. Ltd. (INSPL), which owns and operates Hindi news channel India TV, has posted a net profit of Rs 55.7 crore for the fiscal ended 31st March 2019. In the previous fiscal, the company’s net profit stood at Rs 54.86 crore.

The company’s PBILDT for the fiscal was Rs 92.87 crore as against Rs 92.24 crore in FY18. There was a slight decline in the PBILDT margin on account of an increase in professional charges (part of production expenses) from Rs. 10.21 crore in FY18 to Rs. 16.80 crore in FY19.

Total operating income of the company achieved a CAGR of 12.61% for the period of FY16-FY19 and annual growth of 4.40% in FY19, which stood at Rs. 316.22 crore for FY19. More than 90% of the company’s revenue comes from ad sales since India TV is a free to air (FTA) channel.

The company has been generating healthy cash accruals and has strong liquidity. The company has free cash & bank balance amounting to Rs. 188.03 crore as on March 31, 2019 (PY: Rs. 129.88 crore) majorly held as FD.

The company has earned an interest income of Rs. 12.20 crore in FY19 (Rs. 7.42 crore of interest income in FY18). The average working capital utilization of the company also remains low and stood at 7.99% for 12 months period from December’18-November’19.

With zero long term debt, low utilisation of working capital limits and healthy liquid investments, the company has sufficient gearing headroom for CAPEX/ acquisition.

INSPL has continued to register healthy growth in advertisement and penetration in tier II and tier III markets. Further established market position of INSPL’s news channel (India TV) and its increasing reach has enabled the company command healthy ad rate hikes and resulted in sustained growth in revenues.

The company has undertaken consistent measures to upgrade and modernise its facilities to create better content and improve the viewership experience, along with broadcasting various shows to enhance the brand image of the channel. PBILDT Margin of the company stood at 29.37% in FY19 against 30.45% in FY18.

CARE Ratings has reaffirmed INSPL’s long-term and short-term bank facilities worth Rs 19 crore. The reaffirmation of the ratings assigned to the bank facilities of INSPL continues to drive strength from the strong position of ‘India TV’ channel in the Hindi news genre with an established brand image, along with experienced promoters & management team.

The ratings further factor in consistent growth in revenue, healthy profitability and comfortable capital structure marked by zero long term debt, healthy debt-service coverage indicators, and strong liquidity.

The above strengths are, however, partially offset by high dependence on advertisement revenue entailing revenue fluctuation risk linked to the movement in corporate advertising budgets, concentration on HSM (Hindi Speaking Market), competitive industry in the news broadcasting space and highly regulated industry environment.