Radio City - Bajate Raho... Khareedte jao...

I should have done this first. But I was more excited about the D-Mart IPO that this one went on the backburner and I couldn’t come around until now to review this one. The IPO opened today and will close on 08-Mar giving it a couple of days to apply, if found to be a good opportunity. Music Broadcast Limited (MBL) has come out with their IPO that opened today. The application shall be made in a lot of 45 shares or multiples thereof. The IPO is priced in the range of Rs. 324 to Rs. 333 per share and aims to collect about INR 4.88 Billion.

The IPO involves issuing fresh shares to the tune of INR 4 Billion while the rest of the issue is offer for sale by the promoters. The proceeds from the issue will be used to pay of all the debt of the company making it debt free. This is excellent news from the company’s perspective and will also reduce interest costs of the company.

The company operates radio stations under the brands Radio City and Radio Mantra in 37 cities. Though this is a national player, it is still behind its listed competitor, Entertainment Network India Limited (ENIL) which operates in 43 cities. The company is starting radio stations in 2 other cities in the near future taking its tally to 39 cities. The company’s radio channels have a total of 4.9 million listeners in 23 different cities. The company also has the highest viewers in the top cities that include Mumbai, Delhi and Bengaluru.

This business has a very strong retail connection and its shows are very popular amongst the audiences. The company is also trying to move into core radio broadcasting business by creating events like ‘Gig City’, ‘Radio City Super Singer’ and ‘Radio City Freedom Awards’. This has helped the company tackle competition well especially since Radio Mirchi moved to these segments earlier.

It would have been a problem for the company had the outlook for the industry been weak. However, the forecast for the radio broadcasting industry is also optimistic. The revenue growth is expected to be a healthy 17% CAGR up to 2020. This is excellent news for MBL and its competitors. They have a bigger share of the pie to fight for. The company has also been performing well financially. Their revenue has grown at a CAGR of 18.43% between 2012 and 2016. And given that the industry is expected to grow at 17%, we can expect better times for the company. The profit has grown 54.14% in the 3 years ending March 31, 2016. There was a slight dip in the year ending March, 2016. The numbers are expected to be better in the coming years especially with the interest component removed from the P&L. For the six months ending Sep 30, 2016, the company recorded a profit of INR 297 Million which translates into a Net Margin of 21.50%. This is better than the 17.30% realized in March 2016.

Music Broadcast’s consolidated financial performance (in INR Million)
Details	FY2012	FY2013	FY2014	FY2015	FY2016
Total revenue	1248.00	1405.00	1573.00	2075.00	2455.00
Total expense	1265.00	1289.00	1329.00	1604.00	1894.00
Profit after tax	-22.00	116.00	243.00	471.00	425.00
Net margin (%)	-1.8%	8.3%	15.4%	22.7%	17.3%

The company’s EPS stood at Rs. 9.95 for the FY ending March 2016. Looking at the 6 months results for FY 2017, the full year EPS is expected to be Rs.13.20. With these numbers the PE, at the higher band of the IPO price, using the 2016 EPS stands at 33.5 and 25.2, while considering the 2017 EPS. When we compare this with the only listed rival (which is also a bigger one), ENIL is currently trading at a PE of 39.40 on the basis of 2016 earnings. However, ENIL has better margins than MBL. Considering that, the PE at which the stock is being issued sounds about right (considering it should be at a discount for lower margins.).

Considering all these factors, MBL looks a safe bet to invest in. The listing bonus might not be huge (I still expect the stock to list at a premium) but this will be a good company to stay invested in for long term.

D-Mart IPO - Invest with what you saved in there...

The company that owns the D-Mart supermarket retail chain, Avenue Supermarts, is coming out with its IPO next week. The IPO opens on 08-Mar and closes on 10-Mar with an issue price range of INR 295 – INR 299 aiming to raise a total of INR 18.70 Billion. This has been most awaited IPO of 2017. The promoter of the company Radhakishan Damani is one of the best stock pickers and a veteran stock market investor. Even the venerable Rakesh Jhunjhunwala considers him a mentor.

This IPO is the second to come out next week. The first being the Radio City IPO, which opens on 06-Mar. Will this cause lesser demand for D-Mart? I don’t think so. The IPO is already trading in the grey market which indicates the interest levels from investors. But is the IPO priced right? Let us review the company and figure out if this is something that one must invest in.

The big positive about this IPO is that there are no Offer For Sale from the existing shareholders. This means that the promoter Radhakishan Damani will continue to own the 100,000 shares in the company. All shares that are being issued are new and the proceeds will be used to partially repay some debt and NCDs (Non Convertible Debentures) while at the same time build some new stores. D-Mart currently has 118 stores across Maharashtra and Gujarat and planning to expand to other states. The focus of D-Mart has been to identify and build a story in a densely populated location and cater to lower middle, middle and aspiring upper middle class audiences. They have built a reputation of a company with tight cost controls and low priced products in the retail space. They have also been aggressively working on their margins and have been improving it year on year. They have improved the margin from 2.70% to 3.70% in 4 years from 2012. Retail is not a margin-intensive industry and runs on real tight margin. Therefore to improve the margin by 100 basis points (which is a 37% increase compared to the 2012 numbers).

Avenue Supermarts’ consolidated financial performance (in INR Millions)
Details	FY2012	FY2013	FY2014	FY2015	FY2016
Total revenue	22,224.0	33,551.0	47,023.0	64,577.0	86,061.0
Total expenses	21,340.0	32,142.0	44,574.0	61,343.0	81,139.0
Profit after tax	604.0	939.0	1,614.0	2,117.0	3,212.0
Profit margin	2.70%	2.80%	3.40%	3.30%	3.70%

The revenues have grown from 22 Billion to 86 billion in 4 years (CAGR of 40.28%) while profits have increased from 0.6 Billion to 3.2 Billion in the same period (CAGR of 51.86%). The EPS for the period ending 31-Mar-2016 stood at INR 5.86. With that EPS, the company is valued at a PE of 52.60 at the price at which it is being offered. It does seem a tad high especially given that the margins are pretty tight. However, when we look at the likely annualized EPS for FY 2017 (INR 9.20), the PE reduces to 32.50. There is only one listed company, Future Retail, which can be looked at for comparing D-Mart’s PE and this company trades at a whopping 393.2 PE (looking at 2016 EPS) but this comes down to a decent but still expensive PE of 37.50 when we consider the expected 2017 annualized EPS. Another thing to consider is that the margins of Future Retail are half of what D-Mart is achieving. All of this makes D-Mart or Avenue Supermarkets an incredible buy. But there is likely to be a lot of demand for this IPO and the chances of being allotted are slim. But still, go for it. You may get lucky. :)

Not All Men! But Yes All Women!!!

Ok, this is the first thing I am writing about in 2017. This is definitely not the first thing I wanted to write about this year but here I am writing about this! But the internet has been talking of nothing else for the past 48 hours or more. The trigger, of course, was the 2 incidents in Bangalore. One where there was mass molestation in CBD and the other where a woman was molested close to her house and was captured in CCTV.

There has been a lot of talk post these incidents. Women calling out challenges that they face and how they have been molested/groped/raped by men. Men defending themselves by saying that only a few are black sheep while the vast majority are not molesting/raping/groping women. They, in fact, went ahead and created a hashtag #NotAllMen to just prove their point. Thankfully, many men were sane enough to call out the immaturity of the hashtag. They failed to understand that  what the women were talking about was not about men. But what they have been going through every single day.

To counter the #NotAllMen, women started their own hashtag #YesAllWomen to talk about how all women have been molested/groped/raped at least once in their life. It killed me to read their experiences. So. Many. Of. Them. After having read those experiences all that I wanted to do was to sit in a corner and cry. Nothing else.

There were notes from 2016, 2006, 1996 and backwards as well. This is not a new phenomenon. This is how it has been all the time. This is how it will be for the foreseeable future as well. Instead of being defensive and saying I don’t do this. Why not stand up with the women and acknowledge the challenges that they go through, day in and day out? Why not stand by and support them unconditionally? Why not take the lead and bring the guilty ones to justice?

Why not take the lead and bring about a change? Why not take the fight to the street? Why not educate the kids so that the future is secure for the women? But no, we can’t do any of this! Because we are busy defending ourselves! Defending ourselves that we are not like a few! Well, guess what? It is not just a few people! It is a whole lot of us!

Most times, it is men that are familiar to the women like the fathers, uncles, in-laws, cousins! All the so called decent people! People who are educated! People who are family! Worst are the family members who don’t want to rake up the issue! How can they just ignore such acts when the victim comes and shares it with them! Where the fuck is the support?! How can we expect things to change if we don’t stand by the victim and confront the predator? Is the family tradition/respect/or whatever fuck it is called more important than the victim’s pain? Is that more important than the victim’s peace of mind? Is that more important than saving the several other victims?

If this is our culture, then we are better off without this fucking culture! If these are our traditions, we are better off without our fucking traditions! If this is how we should live, we are better off not living at all!