Music Broadcast Limited (Radio City) - Debt Free, good liquidity and low valuations

@nav_1996 it is counter intuitive but radio listenership has actually been increasing over the past few months, even in the metros. Radio is the widest reaching medium in the country, so much so that Modi ji does his Mann Ki Baat via radio and not via television. MBs strategy of getting into tier 3 and tier 4 towns is bringing them fresh listenership form people who may have never had a radio channel apart from AIR in their towns.

3 Likes

But you have to pay 100 rs for the preference share upfront to get 120. Not a great deal in my opinion. If share price reduces from 21 to 19, you won’t get any returns in this arrangement.

1 Like

U don’t have to pay . It’s bonus , please read notice again it’s self explanatory

2 Likes

I stand corrected. But my next question is, will the company be able to pay approx 100 crores(.25x34crx.1x120rs) in 3 years time? Cumulative profits in last three years is 140 crores. In the next three years, 2021 is most likely a wash out. Cash in hand is 12 crores. I’m unable to convince myself how the company will honor this arrangement. Any rebuttals welcome. I don’t have any doubts on promoter quality. I just feel this is little over ambitious.

1 Like

So I’m sharing below pretty much verbatim from the press release posted yesterday:

  1. Whether bonus NCRPS is out of free reserves created out of profits or share premium account?
    The bonus NCRPS will be issued out of Other Reserves and General Reserves

  2. Free reserves and/ or share premium available for capitalization and the date as on which such balance is available?
    As on March 31, 2020, Other Reserve available for capitalization is ₹ 141.97 Crores, General Reserve available for capitalization is ₹ 49.09 Crores and the security premium available for capitalization is ₹ 340.02 Crores.

  3. Whether the aforesaid figures are audited?
    Yes, the figures provided are audited

I do not expect ValuePickrs to either be so lazy or be spoon fed at this level.

Disc: Invested (mainly thanks to Marcellus publicly revealing their Little Champs PMS)

7 Likes

they have 244 cr of spare cash…generally for calculating cash = cash + bank balance + investments…so they can easily give 107 cr of cash 3 years down the line…they have enough cash to pay it immediately also

I second Ajay. They have good coverage considering spare cash. I bought these yesterday.

Can some body please confirm my assumption regarding ncprs.
Lets suppose I own 10 shares at 20 rupees each (cost price 200)
I would receive 1 ncprs which is worth 100 rupees.
and I will get 0.1% coupon every year and 20 rupees premium at the end.

year 0 : -200 (Investment)
year 1 : 0.1 coupon
Year 2: 0.1 coupon
Year 3: 0.1 coupon + 100 + 20 =120.1
and company shares will remain in my account.

is this correct?

Yes u are right . If u buy 100 shares @21 ei on 2100 u will get ncp of 1200

1 Like
  1. Can someone confirm that will there be any adjustment in share price bcoz of the additional bonus shares issued or not?

  2. On the face of it, wat I understand is that basically the co. is giving Rs.12 on every Rs. 21 share held today. That works out to be 25% CAGR in 3 yrs keeping aside any appreciation on the regular shares. Not sure if this is the case or am I missing out something here?

  3. Will these bonus shares be listed separately?

Pardon me if sm of the questions seem basic. Jst trying to sniff out an arbitrage here, if any.

Disc: Not invested currently. Have held trading positions in the past 1 yr.

Hi Shardhr,

Let me explain. So, say at present, the stock is trading at 21. The management has agreed to give Rs 12 for every equivalent non promoter share only. So the promoter holds 75% and remaining is held by non promoters. If 12 is given for every non promoter share, then effectively the rational market has to tank the stock to 21-(25% of 12) = 18. So rationally, Rs 18 would be the stock price on the day the issue is allotted. But markets are not always rational.

1 Like

But when the news came the share was trading at 18 and that’s why the price has increased to 21 since non-promotors will get bonus shares at a future date, and so the markets re-adjusted present value of the shares.

Please correct me if I’m wrong.

1 Like

How NCRPS will be taxed when we sale it upon listing?

Issue price: 100
Cost value :?
Sale price : 95
Gain: ?
Tax rate: ?
.
or at maturity ?

1 Like

I think that is the way the arb opportunity would work. Although the time to invest would be when the record date is declared (somwhere in March 21). Otherwise, you run the risk of a massive depreciation in the current share price.

I like the business and i see value in the core business (esp with ad vols coming back during this quarter). March quarter could be a dampner since that is the slow quarter for the business.

(Disc Invested)

4 Likes

Any update on this pending issue, as I know hearing to be done on 1st week of Nov. If this passthrough it will effect negatively to radio companies such as music broadcast and effect positively for publishing companies such as tips, saregama etc.


Disclosure: Not invested in Music Broadcast, Invested in Saregama

I don’t thisnk there’s been any update on this.

Has there been any clarification offered on the large selling by Apurva Purohit and Rajendra Aggarwal in August?

Also can anyone locate the transcript of the Q2 conference call that happened on 23rd october? I can’t find it on the website or on trendlyne

1 Like

Any information on when the offer would be floated for NCRPS?

It’s a long drawn process. First of all an application will have to be filed with the National Company Law Board post which shareholders to give their approval and then, the preference shares will be issued. Imo, will take anywhere between 3-5 months.

There was no question on the recent concall about Ms Purohit selling a large part of her stake in the company. Is there any update / reasoning that anyone is aware of for why she has pared her stake so much?

1 Like

Music Broadcast Ltd announced Q3-FY21 results yesterday.

Link to the investor presentation here: http://www.bseindia.com/xml-data/corpfiling/AttachLive/f6f69506-e81a-49d0-ba04-a30c57081a42.pdf

Highlights from today’s concall (apologies if my recollection of the call is not 100% accurate):

  1. Bonus NCRPS process is at SEBI level now. NCLT approval is the next step. Expected to be completed by April
  2. Current ad volumes are at 60% of capacity (9 mins being sold now vs 15 mins ad slot per hour available)
  3. Mgmt expects lower ad rates to continue for 2 more quarters till volume utilisation picks up
  4. From a category perspective, govt is pretty weak. Mgmt does not expect govt business to go back to pre-Covid levels any time soon
  5. Q4-21 topline will be close to Q4-20 topline (i.e ~41-44Cr). It will take another 4-6 quarters to get back to FY19-20 full revenue run-rate
  6. Company has undertaken sustainable fixed cost reduction of ~25 Cr per year
  7. Company does not expect any impact from the new royalty rates post the IPAB order (royalty for broadcasting music) [Note: ENIL had issued a release with the same conclusion on this topic]
  8. Radio operators are not allowed to broadcast terrestrial radio content on the internet due to royalty issues. The royalty for online streaming is very high and does not make sense. Radio City’s online radio offering is completely separate from the regular FM radio broadcast
  9. Mix between national vs local (city level) advertisements is 35:65 now vs 45:55 pre-covid
  10. Cash balance at ~235 Cr vs ~220 Cr at 31st March 2020
  11. Monthly topline split: 14 Cr in Oct, 14 Cr in Nov and 12.5 Cr in Dec. Oct & Nov revenues higher than Dec due to festive season in those months

Disc: Invested

6 Likes