Hindi genre leadership drives outperformance

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TVTN continued to outperform on ad growth versus peers due to its strong brand recall over peers in the Hindi news genre. This was despite black-out of BARC data in the news genre. We believe, growth momentum may continue near term, led by festive season demand. Aaj Tak has posted 28% higher growth in the TV segment versus pre-COVID levels despite reviving normalcy and unlock unfurling. This proves the resilience of its business model. TVTN’s TV segment is estimated to post 15% revenue growth in FY22E, higher than the industry averages. Digital segment too remains strong with 36.5% YoY growth, despite video OTTs not displaying news channels due to revised digital regulations. Third-party social media apps, YouTube and Aaj Tak’s in-house apps have been driving growth in the digital segment. We continue to believe that a platform-agnostic model will augur well for Aaj Tak to scale up digital revenues. EBITDA margins should likely be in a narrow band of 26-27% as growth in digital and lower losses in radio segment are the only tailwinds, near-to-medium term.

Valuation

TVTN is trading at inexpensive valuations of 8.8x/7.6x based on FY23E/24E earnings. We raise FY23E/24E PAT estimates 7.9%/12.7%, factoring in better growth and roll-over to September 2022 TP of INR 400 from INR 370 based on 10.5x (unchanged) one-year forward P/E.