Strategy:The company is the only listed fluid coupling play in the bourses.A fluid coupling in a company is what an underwear(read page industries),lunch plates(Read La opala),pressure cookers,(read ttk and hawkins) is to us in our daily life.Company got a ROE of 30% with nearly a monopoly business.Management is sound and paid a sound dividend of 2.5rs this fiscal.Company has been very consistent on its numbers over the last several years.Fluidomat trades at a low single digit PE.Company is about to bag huge orders from Petronas which would take the company in the top global league.One of the very few companies which got a tremendous pricing power.Promoters stake have gone from 30% to nearly 53% in the last five years.Accumulate slowly for a 70-80% yearly return.Its kinda a safe compounder too.Company got all the potential to be a massive multibagger.At 30 crs marketcap its an amazing bargain.Personally I do own a heavy position in the stock.At some point of a time expect a research note on the counter.
2)Scripscan:Eicher motors ltd
Strategy:The Royal Enfield maker is doing wonders in the bourses.A lot of HNI activity is slated to happen in the counter.Scrip is in very strong momentum.Though the price is bit high but stock market is a place where quality counters are often treated with abnormal valuations.I ain't bothered about its long term potential.But for someone looking to rake in cool moolah in a large cap masterpiece can consider it at present levels.
A high conviction bet for my beloved readers:-
Scripscan:Tv Today network Ltd
Target:10% in short term,20% in medium term and 40-60% in a year's time
Long term target:30-40% CAGR for coming 5 years
Note:AS you all are aware,through my VC vehicle I own the MOSL(Motilal oswal)franchise but never in my services have resorted to use their stock tips.The logic been simple-my unique way fits into the tiny micro cap category whereas MOSL only pens on known mid or large caps with yearly target return of 20-25% .Now for the first time a couple of things gonna happen.I am going to recommend a media stock assimilating mosl's research logic.Digitisation is certainly a windfall gains for broadcasters and hence don't want to miss the inevitable run in the scrips related to the sector.TV today at present prices is one heck of a medium bet.At 7x fy15 earnings,the company deserves a place in your portfolio.
About the company:TV Today Network Ltd is a company engaged in news broadcasting operations.The company is a part of India Today group and operates a network of TV news channels,namely Aaj Tak, Headlines Today,Tez and Dilli Aaj Tak.They are first Indian broadcaster to uplink from India, a 24 hour Hindu news channel.The company also has also made strategic investment worth Rs 45 Crore during FY12 in Mail Today Newspaper (Private) Limited, which publishes a news paper called Mail Today.The company has one subsidiary, namely TV Today Network (Business) Ltd.
Digitisation,a windfall gains for broadcasters:Broadcasters are likely to enjoy windfall gains as digital cable opens up the under declared pay-TV revenues. Digitisation will also ensure increase in cable capacity, which will lead to reduction in carriage cost paid by broadcasters to erstwhile analog cable oparators. The power of bargaining will shift from distribution networks to content. In such a scenario, we believe broadcasting networks will grow their profit at CAGR of 35-40% during FY13-FY17 just because of increase in subscription revenue, which will flow entirely to bottom line.
News Content's double whammy: News channels suffer double whammy as they need to pay high carriage fee on top of low subscription income as compared to General Entertainment Channels (GECs) to get their channels carried on analog networks. Carriage fee is the single largest cost item in P&L of news channels at ~30-35% of revenues. This has lead to financial bleeding of almost all news channels.Two of the three listed players are barely profitable and one is loss making for a long period of time. Digitisation will reduce the carriage fee, which will ensure better financial performance from news broadcasters.
TV Today Network, a turnaround:Surge in revenues with not much increase in associated cost will ensure a huge turnaround in operational performance of the company.The company will likely report life high profit at the end of FY14, which will also ensure RoE of ~20%.We expect revenues to grow at CAGR of 23% during FY13-15E vs 10% growth during FY06-13. This will lead to disproportionate growth in PAT at CAGR of 171% during FY13-15E vs PAT CAGR of -11% during FY06-13.
Numbers:Company reported 313crs of revenues in fy13 with PAT of 12crs.The same is set to inch up to 415crs and 69crs respectively in fy14.In fy15,company to post revenues of around 480crs on an expected PAT of 88-90crs.At around 12 times fy15,you get your target price.Company only commands a marketcap of 700 odd crs at present prices.
Valuations and View:TV Today is play on turnaround of news broadcasting business as well as general theme of digitization in media space. The stock offers attractive risk reward at ~9x FY14E EPS with ~4% dividend yield in FY14E. Historically , the company has traded at median PE of 21x and lowest PE of 9x since listing in FY04.Therefore, we believe there is a decent upside to stock in 1 year time frame even if we take 30% discount to median valuations.
My personal take:The company came with its IPO 11 years back at 95rs.Even the Sensex was at 3000 levels then.Sensex moved over 7 times,many companies became 100 baggers but TV today remained a laggard.As India transitions to become the worlds fifth largest consumer market by 2025, its middle class will swell by over ten times its current size of 50 million to 583 million people.We have the leading Hindi news channel in our hand which will benefit massively from that.Digitization would do wonders for the company.Not to forget the expected 4-5% dividend yield.Even on historical valuations its quoting at its lowest over a period of 10 years.Tv today as we all know owns channels like Aj Tak and headlines today.AJ tak brand is even superior to that of biggies like ICICI bank and HDFC bank.Company is terribly under owned inspite of all the multibagger ingredients.Present price offers a great chance to opt for the only recommended pure media play.Buy it for any term members.
Conclusion:High ROE+High Dividend Yield+Brand play+Hindi news market leader+Digitization+Nearly zero debt+Ethical visionary management+Under owned stock from a boring sector+A laggard for the last 11 years with no capital appreciation+Content Owner+High entry barriers+Amazingly cheap valuation+I own it too.Lolz ignore the last+.TV today over the next 8-10 years will create massive wealth for the shareholders.Go for it.
Btw:People looking for midcap/smallcap positional call professional service may rush a mail at my mail id email@example.com to know more about it.