ABP Group FY19 net profit declines 68% to Rs 31.9 cr

MUMBAI: Media conglomerate ABP Group’s net profit for the fiscal ended 31st March 2019 has dropped 68% to Rs. 31.90 crore as against Rs. 99.87 crore in the previous fiscal.

Profit before interest lease depreciation and tax (PBILDT) declined 53.52% to Rs. 107.12 crore as against Rs. 230.50 crore. However, the PBILDT margin of the group has declined from 17.62% in FY18 to 8.12% in FY19.

In FY19, the total operating income remained flat at Rs. 1319.52 crore compared to Rs. 1308.21 crore in the previous fiscal. The group reported gross cash accruals of Rs. 78.26 crore against term debt repayment (prepayment) of Rs. 26.99 crore in FY19.

In Q1 FY20, the group has reported a net profit of Rs. 15.70 crore on a total operating income of Rs. 365.55 crore.

CARE Ratings has reaffirmed ABP Group’s total bank facilities worth Rs 279 crore. The ratings assigned to the bank facilities/instruments of ABP continue to derive strength from the experienced promoters of ABP with established track record, professional management team, diversified portfolio of newspapers, magazines & news channels, strong position in the print and electronic media segment, adequate liquidity and comfortable capital structure and debt protection metrics.

The ratings, however, are constrained by moderation in financial performance in FY19 & Q1FY20, susceptible of profitability to newsprint prices, forex fluctuation risk, regional concentration, significant dependence on advertisement revenue and risks associated with the implementation of ongoing projects.

The rating agency noted that the ability of the group to achieve growth in its advertising revenue, improve its profitability, sustain its capital structure & debt coverage indicators and efficient management of working capital is the key rating sensitivities.

The ratings draw comfort from the fact that the newspapers and news channels enjoy a strong position in their respective genres. Anandabazar Patrika, a Bengali daily, is the leading newspaper in West Bengal with a daily circulation of 11 lakh. However, the print media presence is mostly concentrated in Eastern India.

The group currently broadcasts six news channels- ABP News (Hindi), ABP Ananda (Bengali) ABP Majha (Marathi) and ABP Asmita (Gujarati) and recently launched ABP Sanjha (Punjabi) and ABP Ganga (Hindi).

Forex fluctuation risk

ABP is subjected to forex fluctuation risk, as it imports around 70%-75% of its NP consumption. However, the forex risk is partially mitigated as the company hedges its exposure at an opportune time. However, ABP incurred a forex loss of Rs. 1.92 crore in FY19 vis-à-vis Rs.0.49 crore in FY18.

Ad revenue dependency

The growth in the revenue & profitability of ABP Group are linked to the economic cycles, as the advertisement revenue is directly linked to the growth of the economy. However, ad spends on a particular channel/newspaper depends on its market reach and popularity it enjoys among the consumers. ABP has a strong regional focus which helps it to compete effectively with its much larger competitors having national content.

Strong market position and large client base, from all the sectors, are also expected to contribute to its revenue growth, going forward. Increasing literacy levels is helping widen and extend the country’s readership base.

Risks associated with implementation of ongoing projects

ABP is planning to shift its unit at Barjora to Barasat unit and also plans to refurbish its 10-year-old plant at Barasat. The estimated cost of the project is around Rs. 35 crore which is expected to be funded from internal accruals.

Apart from this, one of its subsidiaries, ABP News Network (ANN) has expansion plans and also plans for technology up-gradation which requires significant capital expenditure. The size of the CAPEX is large vis-à-vis net-worth of ANN as on Mar 31, 2019. Successful implementation of the same is a key rating sensitivity.

CARE has taken a consolidated view of ABP and its wholly-owned subsidiaries ABP News Network Pvt. Ltd, Swarnakshar Prakasani Pvt. Ltd and ABP Eventures Pvt Ltd (formerly ABP Digital Pvt. Ltd.) [hereinafter referred to as group] as it operates in a similar industry and has financial linkages.

ABP is one of the leading print media companies in Eastern India. It was formed in 1922 with the launch of its four pages Bengali daily – ‘AnandaBazar Patrika’. Currently, ABP’s publication portfolio includes Ananda Bazar Patrika (Bengali daily), The Telegraph (English daily), TTIS and other Bengali periodicals. ABP has state-of-the-art printing infrastructure in Kolkata and Barasat, both in West Bengal (WB).

Besides this, it has printing facilities in two other towns in WB – Barjora, and Baharampur. ABP also has tie-ups with printers in Ranchi, Patna, Bhubaneswar, Siliguri, and Guwahati, who execute printing orders as per ABP’s requirement.

Besides print media, ABP has a presence in electronic media via its wholly-owned subsidiary ANN, which owns six news channels.

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