Stocks To Buy: Buy This Debt Free Stock For 34% Potential Gains, Says ICICI Direct

At the current hour, when the RBI thinks it all wise to go by the rate hike and already in an off-cycle move has hiked key policy rate by 40 bps, lending rates are on an increase. So, in such a case among the listed stocks, debt free stocks are in a far better situation and can be good bets considering their financials and fundamentals.

Likewise, brokerage firm ICICI Direct is bullish on the counter of TV Today which is another debt free stock and has given it a 'Buy' for 12-18 months for potential gains of up to 34%. The target price set out for the media and entertainment stock is Rs. 375. Let's check how the brokerage views TV Today counter.

About TV Today Network:

TV Today is the leading news entity engaged in broadcasting operations. Part of the India Today Group, the company operates mainly in three segments-digital, television and radio broadcasting. As per the brokerage, the company has sustained its leadership in Hindi news for the last 20 years.

Q4Fy22 Results: Performance during the review period was weak

Topline came in at Rs. 242.3 crore, up 13% YoY. TV and other media (clubbed segment of broadcasting and digital) revenues came in at Rs. 236.1 crore (up
11.5 % YoY. The brokerage noted that ad inventory at 14.5 minute/hour was cut down (from 17.5 min/hr) to improve viewership experience. Radio revenues
were at Rs. 6.1 crore, up 152% YoY growth on a washout base.

Reported EBITDA came in at Rs. 48.8 crore, down 1.9% YoY while EBITDA margins came in at 20.1% (down 307 bps YoY), impacted by higher programming costs (up 34% YoY) and other expenses. The brokerage further mentions that costs were higher by around Rs. 15 crore due to UP election & war coverage. Adjusted for the same, margins were healthy at 26.3%, up 300 bps YoY. PAT at Rs. 35.9 crore was flattish YoY with lower margins dragging the bottomline.

 

Brokerage's take on TV Today Network:

The brokerage underlines that the stock has underperformed with just 8% returns over a 5-year period. "We upgrade from HOLD to BUY post sharp decline of 33% in last month.

We believe that with stable double digit growth, healthy return ratio and operating leverage, current valuations (at 7.4x FY24 P/E) provide a margin of safety." The brokerage values the stock of TV Today at Rs. 380 i.e. 10x FY24E P/E.

Key triggers that will serve the company's stock price well

-Viewership trend over medium term, as this will drive the ad revenue growth trajectory
-Digital segment expansion with new properties/inorganic acquisition.

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