ABP News Network’s net profit improves amid revenue growth in H1 FY18

MUMBAI: News broadcaster ABP News Network has seen an improvement in its net profit on the back of a revenue growth during the first half of fiscal 2018.

In H1FY18, the company’s net profit jumped 17% to Rs 22.76 crore compared to Rs 19.48 crore in H1FY17. The total operating income increased 6.49% to Rs 219.6 crore compared to Rs 206.2 crore in the same period last fiscal.

For the full fiscal FY17, the company’s net profit remained flat at Rs 61.6 crore as against Rs 60.52 crore in FY16.

Net sales grew by 9% to Rs 441.28 crore compared to Rs 409.99 crore on the back of higher ad revenue.

ABP News Network owns and operates four news channels including ABP News (Hindi), ABP Majha (Marathi), ABP Ananda (Bengali) and ABP Asmita (Gujarati).

The company’s profit margins remained healthy during FY17 and H1FY18 as the channels continue to enjoy an established position in respective genres. The loss from the new channel ABP Asmita is being offset by healthy profitability from other established channels.

The cash accrual of the company remained satisfactory at Rs 76 crore vis-à-vis debt repayment obligation of Rs 12.75 crore in FY17.

With the improvement in the profitability level of the company, the net worth position, which eroded as a result of the amalgamation of one of the loss-making group company in FY16, has improved in FY17.

Strong cash-flow from established channels (ABP News and ABP Ananda) and surplus liquid funds as on 1 April 2016 supported the loss from newer ventures and repayment of term debt obligation with a reduction in loans and advances from ABP by Rs 73 crore in FY17. In H1FY18, the company repaid Rs 20 crore advance from promoters.

As on September 30, 2017outstanding, the company had a comfortable liquidity position outstanding cash balance of Rs 34 crore. For the fiscal ended 31 March 2017, the company had a cash balance of Rs 17.1 crore.

According to a report by a rating agency, the interest coverage ratio of the company also improved and stood at 33x in FY17 and 80x in H1FY18. Total debt to GCA also improved to 2.15x as on March 31, 2017, from 3.20x as on March 31, 2016, on the back of lower debt.

Given the strong brand image, sound financial and liquidity position, ANNPL is well placed to venture into Capex plan to retain its market position, the report stated.

The rating agency noted that the company’s major source of income is through advertisements contributing around 98% of the total revenues in FY16-FY17.

The share of subscription income has remained low due to slack regulation and non-disclosure of the actual number of subscribers resulting in leakage of income.

However, the established market position of ANNPL’s news channels have enabled the company command healthy ad rate hikes and resulted in sustained growth in ad revenues and healthy operating margin.

Meanwhile, the rating assigned to the bank facilities of ABP News Network has been revised taking into account the growing revenue, healthy profitability and cash accruals in FY17 and H1FY18 coupled with improved debt coverage indicators.

The rating continues to derive strength from the strong promoter group and experienced promoters with a long track record in the media industry, established market position of the company’s news channels in their respective genres, comfortable liquidity position and initiatives for diversification into digital media platform to support future revenue growth.

ABP News Network was incorporated on 30 May 2002 as Media Content & Communications Services India (MCCS), part of Star Group. MCCS was a content provider to Star News Broadcasting.

Subsequently, ABP became the majority partner with 74% stake in ANNPL through its fully owned subsidiary, ABP TV.

In April 2012, Star News Broadcasting exited MCCS and sold its remaining 26% stake to ABP TV. MCCS was renamed ABP News Network. In FY16, pursuant to a scheme of amalgamation, ABP TV was merged with ABP News Network and the company is now a 100% subsidiary of ABP.