​Muted ad environment may mar growth: Elara Capital  

MSO blackout due to NTO implementation plays spoilsport for TV

Q4 has been a relatively muted quarter with revenues declining both sequentially and yearly due to MSO issues as NTO 3.0 implementation led to a blackout. Also, new age/e-commerce companies posted lower ad spends and FMCG segment saw muted growth due to RM inflationary pressures and weaker consumer demand. TV advertisement/subscription revenues are expected to decline 10%/2% YoY on an average. The Radio medium has been growing slowly compared with other forms of media, while consumers have significantly shifted towards digital. Expect ENIL/MBL to report a revenue growth of 27%/10% YoY.  

Footfall recovery, a challenge

The Hindi box office (BO) is expected to recover 75% in Q4FY23 against 85% recovery in Q3FY23 (vs pre-Covid levels of Q3FY20). Pathaan and Tu Jhoothi Mein Makkar were the only two films that reported healthy BO. Films such as Shehzada and Selfie performed below expectations. Post the merger with Inox, expect PVR’s BO revenues to decline 20% sequentially due to likely dismal BO performance leading to lower footfalls. Expect other metrics such as ATP/SPH to decline 4%/12% sequentially whereas both may grow 11%/24% versus pre-Covid levels. Footfalls are expected to decline 16.7% sequentially.

Volatile macro headwinds hurt Affle’s growth

Affle is expected to report an overall revenue of INR 3,610mn in Q4FY23E, a growth of 14.6% YoY (4% QoQ dip). March is a seasonally weak quarter for Affle, which with growing pressure in the developed markets may lead to sequential revenue dip in Q4, although the business in the emerging markets is performing well. CPCU pricing is expected to be flat sequentially, but the number of converted users may dip 3%.

Our top picks in the Media space are Zee Entertainment Enterprises, Sun TV and PVR, and in the internet space is Affle India.