Did you know that TV Today garners 10.9 per cent of all TV news advertisements? Amazing fact, isn't it? Yes, Aaj Tak is still that popular.
TV Today operates four news channels - Aaj Tak, Headlines Today, Delhi Aaj Tak and Tez, the biggest of which is Aaj Tak, which garners a viewership of 18.5 per cent in the Hindi news segment.
Profitability. With a high viewership share, TV Today has pricing power to its advantage. It can get away with price hikes. Higher ad demand has seen the company increase its ad inventory from 16 minutes to 18 minutes per hour. Revenue and EBITDA are likely to grow at 15.5 per cent CAGR and 35.1 per cent CAGR, respectively, between FY14-16, says ICICI Securities, which estimates EBITDA margins at 35.7 per cent and 38.4 per cent, respectively, in FY15 and FY16. Further, reduction in carriage costs (20-25 per cent of total costs) is likely to boost margins further.
Outlook. TV Today's revenue driver is going to be the growing digitisation in the country. Further digitisation is expected to help TV Today consolidate its market share, especially in the Hindi news category. Hindi is the most widely spoken language in the country, with 41 per cent of the population speaking it. Aaj Tak will continue to dominate TV Today's revenues; it accounts for 90-92 per cent of the company's revenues today. TV Today is likely to report ad revenue growth of 16.4 per cent annually through FY14-16, according to ICICI Securities.
Valuations. TV Today trades at a P/E of 15.8. With earnings estimated to grow at 15 per cent and 20 per cent in FY15 and FY16, valuations appear reasonable. An improving economic activity will see companies increase ad spends, which will benefit TV Today. Buy.