TV 18: Growth wire

How far TV 18, following the CMW buyout, can compete with Bloomberg or Reuters remains to be seen.

With the acquisition of Crisil MarketWire (CMW), TV 18 will be reaching out to institutional customers complementing the retail audience that it already addresses with its television channels and the internet.

The new service-NewsWire 18""will be launched through a new platform, Tenfore Systems, which has a large corporate clientele and 45 re-distribution clients including Thomson Financial. With this alliance, TV 18 should be able to grow NewsWire18 though how far the service can compete with Bloomberg or Reuters remains to be seen.

Nonetheless, there is a huge market for real-time news as also analysis and an attractive price point could pull in customers because many of the available services are prohibitively expensive. Of course, the service would also add to the news generating capability of the channel.

TV18's consolidated revenue growth in the September quarter was 70 per cent y-o-y at Rs 53 crore with the internet ventures having contributed around 10 per cent and Awaaz at around 11 per cent.

This is the seventh consecutive quarter in which revenues have grown by over 50 per cent. However with Aawaz still posting losses, the operating profit margin dipped 830 basis points to 47 per cent.

The increase in bottom line by 42 per cent is on account of a lower tax outgo. The key growth drivers will be net ventures""finance, shopping, travel, jobs and sports""and also distribution revenues from the broadcasting business.

At the current price of Rs 858, the stock trades at around 28 times estimated FY07 earnings and while it may seem expensive, the company is effectively leveraging its strengths in the new business in the Internet space.

Triveni Engg: Bitter Sugar

Triveni Engineering & Industries' September 2006 quarter result was affected by lacklustre performance of it key sugar division, but it was partially offset by another quarter of sizzling performance in its steam turbines division.

Nevertheless, the company saw its operating profit (including off-season expenses) decline by 22 per cent y-o-y to Rs 52.8 crore in the last quarter, as compared to a 5.6 per cent decline in net sales to Rs 288.31 crore.

Also, its operating profit margin fell 390 basis points y-o-y to 18.3 per cent in the last quarter. In contrast, in the June 2006 quarter, Triveni saw its operating profit margin improve by 181 basis points y-o-y to 18.71 per cent.

In the sugar division, despatches fell by 31 per cent y-o-y to 81,400 tonne in Q2 FY07. The management highlighted lower opening inventory levels since the beginning of FY07, for this fall in despatches.

However, its realisations grew 3.2 per cent y-o-y to Rs 17.8 per kg in the last quarter, but that was not sufficient to offset the rise in sugarcane costs. As a result, segment profit of the sugar division fell 72.7 per cent y-o-y to Rs 14.54 crore in the last quarter.

Meanwhile, Triveni's steam turbines business, once again saw strong demand from user industries for its high and low pressure turbines. Segment profit of this division grew 129.8 per cent y-o-y to Rs 27.36 crore in the last quarter.

Going forward, the company is ramping up its sugar capacity from 40,500 TCD ( tonne crushed per day) to 61,000 TCD by the end of FY07.

However, international sugar prices have been sluggish over the last few weeks due to expanding global output and it could put pressure on the company's realisations.

However, its steam turbine is expected to continue growing aggressively. As a result, with the stock trading at 11.5 times estimated FY07 earnings, it leaves little room for further upside.

With contributions from Shobhana Subramanian and Amriteshwar Mathur