Entertainment Network soars 14%, nears 52-week high on improved earnings

Thus far in March, the stock has outperformed the market by surging 21% after CRISIL Ratings reaffirmed its ratings on the bank facilities

Shares of Entertainment Network (India) soared 14 per cent to Rs 214.75 on the BSE in Thursday's intra-day trade on the back of heavy volumes. The stock of the company, which operates India's FM radio channel Radio Mirchi, traded close to its 52-week high of Rs 226.95 hit on August 2, 2021.

For October-December quarter (Q3FY22), ENIL had reported 70 per cent year-on-year (YoY) jump in its earnings before interest, taxes, depreciation, and amortization (ebitda) to Rs 35.6 crore on tight cost control measures. The company posted profit after tax (PAT) of Rs 11 crore against loss of Rs 2.7 crore in Q3FY21. Revenue grew 17 per cent YoY to Rs. 98.9 crore, driven by 23 per cent growth in core FM radio revenues.

Thus far in the month of March, the stock has outperformed the market by surging 21 per cent after CRISIL Ratings reaffirmed its 'CRISIL AA+/Stable/CRISIL A1+' ratings on the bank facilities and Rs 350 crore debt programmes of ENIL. The S&P BSE Sensex was down 1.8 per cent during the period.

"The ratings continue to reflect the sequential improvement in revenue in the second and third quarters of fiscal 2022 as radio advertisement (ad) volumes grew. The Ebitda improved to Rs 35.6 crore in the third quarter against loss of Rs 18.7 crore incurred in the second quarter on account of tight cost-control measures and improvement in ad volumes," CRISIL said in its rationale.

However, the company is launching Mirchi Digital Platform in the international and domestic markets, which will weaken Ebitda margin in fiscal 2023.

CRISIL added: The ratings also continue to reflect the market leadership of ENIL in the FM radio broadcasting industry, comfortable financial risk profile backed by strong liquidity, and support of the parent, Bennett Coleman and Company Ltd (BCCL). These strengths are partially offset by significant dependence on ad revenue and exposure to intense competition.