Radio City is the first private FM radio broadcaster in India. Co operate its radio stations under the brand “Radio City”. Co have grown its presence from four cities in 2001 to 37 cities as on February 15, 2017. These radio stations include the eight “Radio Mantra Stations” transferred from SPML pursuant to the Scheme of Arrangement and nine out of eleven New Radio City Stations. The remaining two New Radio City Stations is expected to be operationalised by March/ April 2017. All co's Phase II Radio City Stations which were under Phase II Policy have been migrated to the Phase III Policy. These include Radio City stations which are present at Bengaluru, Lucknow, Mumbai, New Delhi, Chennai, Pune, Hyderabad, Ahmedabad, Surat, Nagpur, Jaipur, Vadodara, Coimbatore, Vizag, Ahmednagar, Sholapur, Sangli, Nanded, Jalgaon and Akola and the Radio Mantra Stations which have been transferred to Company pursuant to the Scheme of Arrangement which are located at Agra, Bareilly, Gorakhpur, Varanasi, Jalandhar, Ranchi, Hissar, and Karnal (together the “Existing Radio Stations”). Under the Phase III Policy, new cities were opened up for auction, pursuant to which company acquired 11 additional radio stations i.e. the New Radio City Stations. The New Radio City Stations which have been operationalised are located at Kanpur, Ajmer, Kota, Udaipur, Patiala, Jamshedpur, Nasik, Kolhapur and Madurai. The remaining two New Radio City Stations namely Bikaner and Patna are expected to be operationalised by March/ April 2017.Co is bringing offer for sale of 26,58,518 eq shares & fresh issue worth of Rs 400 Cr.
Company intends to use the net proceeds from fresh issue for redemption of Listed NCDs worth of Rs 200 Cr; early redemption of the JPL NCDs and repayment/pre-payment of JPL ICDs worth of Rs 98.2 Cr.
Reasons to "Subscribe"
Co is present in 12 out of the top 15 cities in India by population (Source: Census 2011). As on March 31, 2016, co's radio stations reached out to over 49.60 million listeners in 23 cities covered by AZ Research (Source: AZ Research Report). Co's financial performance is strong as co has consistently posted net profit margin of more than 15% while it has consistently posted operating profit margin of more than 25% during last 3 years.
At price band of Rs 324-333, p/e multiple will turn out to be 31-32 on post issue annualized H1FY17 eps of Rs 10.43/share of company. Looking at after strong fundamentals & financial position of company, issue looks reasonably priced at current level. Hence we recommend "Subscribe" on issue
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