Table of Contents
Business Introduction:
Incorporated in 2005, TV18 is a subsidiary of Network 18 which is a subsidiary of Reliance Industries. Network 18 is the largest Regional News network in India. Especially the business news. TV18 Includes channels & media networks such as News18, MoneyControl, Firstpost, CNBC, Forbes India, Colors, History channel, Better Interiors, and Better Photography, basically, they got everything under one roof.
The company has 16 channels in 15 languages with over 60 crores of unique viewers.
Fundamental Analysis:
The media industry is a dynamic business where those with constant innovations grasp the market. The competition from the peers is extremely high!
TV18 has done a tremendous job in regards to diversifying its media portfolio. Thus, the company went on to become one of India’s largest networks with over 5,500 crores in revenue and with an operating margin in double digits.
The company also has a comfortable cash position. With no long-term debt obligation. And some amount short-term debts. Also, since Reliance Industries is the parent company of TV18, we can expect any and all kinds of financial support from Reliance.
TV18 has shown a very good improvement in profitability especially post FY 2021. The company is also venturing into many other businesses including OTT platform VOOT and the merger of sister concerns.
Financially speaking, TV18 has low debt and good cash flow. If they manage to grasp a bigger audience, this will be one of your finest investments. And as of now, I’ll most certainly consider the company undervalued.
Technical Analysis:
TV18 Broadcast is trading lower than both 50 days & 200 days’ moving averages. The stock took a big hit on the last week of April 2022 just after Reliance Industries and Viacom18 announced a strategic partnership with Bodhi Tree Systems. The worries are mainly regarding equity dilution.
Since then, the stock price has dropped over 50%. The current trend suggests that the stock will not fall any further. With a stop loss of 32 per share, we can expect the company’s share price to have a trend reversal soon.
SWOT – Risk Analysis:
Opportunity & Strength
Strong Promoter Backing
TV18 is the subsidiary of Network18 which is owned by Reliance Industries. Reliance Industries has shown full support in terms of reviving the company. So, we can expect more from Reliance.
Diversified Portfolio
As said earlier, Network18 Group has both general & business news channels, they have entertainment both regional & international, infotainment with websites, as well as the content-asset monetization business. Basically, a well-diversified business portfolio.
Market leader
Network 18 is also a market leader in many sub-segments of the Indian Television Industry. They are also one of the largest media houses in India. One way or the other, each and every Indian will be at the consumer end of Network 18. Such is their presence.
Weakness & Threat
Short Term Debt
TV18 has more short-term debts. If the company isn’t able to generate steady cash flow. Then, such debt will not only affect its operation but also its future ability to raise debt.
Need Investment
Although TV18 has shown improvements in its profitability, the company still needs a lot of investments and innovations to grasp a bigger share of the market. With the help of Reliance Industries, the company is investing in a lot of other entities, and the fruitfulness of such investments is yet to be seen.
Vulnerable to Economic Slowdown
A major part of Media house’s revenue comes from its advertisement. And, we know for a fact that at times of economic slowdown, at times of recession, each and everyone will cut down on their spending, this applies to adv spending too. Thus, in case of an economic slowdown, the company’s revenue will take a hit.
Conclusion:
TV 18 is the fastest-growing network in India. With over 140 crores population, the consumer end of media is extremely strong. If the company is able to merge all its entities and focus on one major organization Network 18, then, it will for sure take over the market.
Right now, the media industry is unorganized and even some of the organized players have internal issues. It is the right time for Network 18 to take over.
Although business growth may be slow. The media industry is a competitive one with a lot of entry barriers. So, established players will grow bigger and TV18 is one such established entity.
TV18 is a long-term investment. Once it merges into Network 18, I hope to see some better improvements. Until then, keep observing the stock. I have invested in the company with 1% of my portfolio weightage.
As per the current valuations and considering other factors, I‘ll give it 8/10.
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