The Hindu Business Line : Entertainment Network: Invest at cut-off

INVESTORS should bid for shares in Entertainment Network (India) Ltd, which owns and operates radio networks under the popular Radio Mirchi brand, as it is likely to be the premier listed play in the FM radio space for some years to come.

The FM radio business is poised for attractive growth over the next five years. With a footprint that will cover 15 promising locations over the next 12-18 months, there is likely to be a substantial scaling up of revenues and earnings.

The background and strength of its promoter - Bennett, Coleman & Co, the publishers of The Times of India - is also likely to be a major positive that will influence the stock valuation. While the event management business is a growth opportunity, it may be a drag on profitability in the near term.

Entertainment Network also has a fledgling presence in the growing out-of-home market (promotion of products and services on sites such as bus shelters, hoardings, metro rail networks, facades of buildings and in airports/railway stations).

With a portfolio of nascent businesses that have substantial growth potential, the prospects for Entertainment Network appear encouraging. The offer should also attract significant institutional investor interest, as it is one of the superior exposures to the entertainment sector.

Invest with a two-to-three year perspective, as only over such a time-frame will the business initiatives translate into earnings growth.

The price band for the offer is Rs 144-162. We believe the pricing offers scope for capital appreciation, linked to fundamentals as well as liquidity flows that couldgravitate towards the Entertainment Network stock.

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