Rating Rationale
March 26, 2021 | Mumbai
TV Today Network Limited
Rated amount enhanced
 
Rating Action
Total Bank Loan Facilities RatedRs.100 Crore (Enhanced from Rs.75 Crore)
Long Term RatingCRISIL AA/Stable (Reaffirmed)
Short Term RatingCRISIL A1+ (Reaffirmed)
1 crore = 10 million
Refer to Annexure for Details of Instruments & Bank Facilities

Detailed Rationale

CRISIL Ratings has reaffirmed its ‘CRISIL AA/Stable/CRISIL A1+’ ratings on the bank facilities of TV Today Network Limited (TVTN).

 

The reaffirmation reflects the maintenance of healthy accruals in the nine months through December 2020, despite a volatile economic environment. This was driven by the leadership position of the company in the Hindi news segment, while maintaining a strong financial risk profile because of a robust liquidity and an unleveraged balance sheet.

 

The company benefits from the strong market position of its flagship channel, Aaj Tak, along with healthy growth in its digital business. This resulted in revenue registering a compound annual growth rate of 14% over the seven fiscals through 2020. Moreover, driven by cost-control measures, operating margin sustained at 26% in the nine months through December 2020 as compared to the same period in the previous fiscal. Liquidity remained above Rs 570 crore as on January 31, 2021, while balance sheet remains debt-free.

 

Living Media India Ltd (LMIL; ‘CRISIL A-/Stable/CRISIL A2+’), whose digital operations business TVTN acquired in fiscal 2018, became net debt-free in December 2019. CRISIL Ratings does not expect TVTN to extend any substantial financial support to group entities over the medium term. The reaffirmation also factors in the revenue diversification arising from strong growth in digital operations which has led to the digital business contributing around 17% to the operating income in the nine months through December 2020 compared with about 13% in fiscal 2020.

 

The ratings continue to reflect the market leadership of TVTN in the Hindi news segment and robust financial risk profile because of strong liquidity and negligible debt. These strengths are partially offset by significant dependence on flagship channel (Aaj Tak) for revenue, and modest profitability of other businesses.

Analytical Approach

For arriving at its ratings, CRISIL Ratings has combined the business and financial risk profiles of TVTN and its subsidiaries, together referred to as TVTN. All the entities are under a common management and have strong business and financial linkages.

 

Please refer Annexure - List of entities consolidated for details of the entities considered and their analytical treatment for consolidation.

Key Rating Drivers & Detailed Description

Strengths:

 

  • Robust financial risk profile: Steady improvement in revenue and operating profit till fiscal 2020 has helped the company to build a strong liquidity while having negligible debt. Despite a high dividend payout of about Rs 160 crore (including dividend distribution tax) in fiscal 2020, liquidity stood at Rs 464 crore as of March 2020. It improved further to above Rs 570 crore as on January 31, 2021. Financial risk profile should remain robust in the long term, driven by healthy cash accrual, moderate capital expenditure (capex), and strong liquidity.

Weakness:

  • Significant dependence on Aaj Tak: TVTN has taken steps such as merger of the Mail Today publishing business and acquisition of the digital business from LMIL to diversify revenue. However, the flagship channel, Aaj Tak, continues to generate significant portion of the revenue and majority of operating profit as other businesses remain in the early stages of growth. Although digital operations have witnessed healthy growth, dependence on Aaj Tak will continue over the medium term. Steady revenue growth in other businesses will be a key monitorable.

 

  • Modest profitability of other businesses: Despite healthy revenue growth and cost rationalisation in other businesses, TV broadcasting (primarily Aaj Tak) continues to contribute majorly to the profit (90% segmental profit before tax in the nine months through December 2020). With increasing revenue contribution from other businesses, overall profitability has moderated. However, the digital business is ramping up and should start contributing meaningful operating profit over the medium term. Its impact on operating profitability remains a monitorable.

Liquidity : Superior

The business risk profile of TVTN will continue to be supported by the dominant position of Aaj Tak in the Hindi news segment. In the absence of any debt-funded capex, financial risk profile should remain strong in the long term.

Outlook: Stable

The business risk profile of TVTN will continue to be supported by the dominant position of Aaj Tak in the Hindi news segment. In the absence of any debt-funded capex, financial risk profile should remain strong in the long term.

Rating Sensitivity factors

Upward Factors

  • Significant revenue growth with operating profitability sustaining above 30%
  • Increased revenue diversity while maintaining strong financial risk profile

 

Downward Factors

  • Decline in revenue, and profitability sustaining below 25%
  • Significant debt-funded capex or investment or any large dividend impacting capital structure

About the Company

TVTN is promoted by the India Today group. The company broadcasts 24-hour news channels Aaj Tak, Tez, and Aaj Tak HD in Hindi; and India Today Television in English. It also runs radio station (Ishq 104.8 FM) in Delhi, Mumbai, and Kolkata. TVTN acquired LMIL’s digital operations business in fiscal 2018. The digital business comprises Aaj Tak and India Today websites along with various social media and popular online video channels.

 

The India Today group, founded in 1975, has diverse business interests, including news channels, radio stations, a newspaper (Mail Today), a classical music label (Music Today), own publications (India Today and Business Today), publications under licence (Reader's Digest, Cosmopolitan), marketing and distribution of international publications (TIME), and book publishing and printing.

 

For the nine months through December 2020, profit after tax (PAT) was Rs 95 crore on revenue of Rs 568 crore, against Rs 113 crore and Rs 648 crore, respectively, for the corresponding period previous fiscal.

Key Financial Indicators

As on/for the period ended March 31

Unit

2020

2019

Revenue

Rs crore

860

749

PAT

Rs crore

139

131

PAT margin

%

16.2

17.5

Adjusted debt/adjusted networth

Times

--

0.004

Interest coverage*

Times

90.9

247.25

Note: These are numbers adjusted by CRISIL Ratings and may not match the numbers reported by the company

*The Company has adopted Ind AS 116 effective fiscal 2020, hence the numbers are not comparable to the previous years

Any other information: Not applicable

Note on complexity levels of the rated instrument:
CRISIL complexity levels are assigned to various types of financial instruments. The CRISIL complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL complexity levels for instruments that they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific instruments.

Annexure - Details of Instrument(s)

ISIN

Name of instrument

Date of allotment

Coupon

rate (%)

Maturity date

Issue size

(Rs.Crore)

Complexity Level

Rating assigned with outlook

NA

Cash Credit

NA

NA

NA

27

NA

CRISIL AA/Stable

NA

Cash Credit*

NA

NA

NA

30

NA

CRISIL AA/Stable

NA

Letter of Credit**

NA

NA

NA

7

NA

CRISIL A1+

NA

Proposed Working Capital Facility

NA

NA

NA

36

NA

CRISIL AA/Stable

*Interchangeable with letter of credit, bank guarantee, and working capital demand loan

**Interchangeable with bank guarantee

Annexure – List of entities consolidated

Names of entities consolidated

Extent of consolidation

Rationale for consolidation

 TV Today Network (Business) Ltd

Fully consolidated

Strong financial and business linkages

 Mail Today Newspapers Pvt Ltd

Fully consolidated

Strong financial and business linkages

Vibgyor Broadcasting Pvt Ltd

Fully consolidated

Strong financial and business linkages

 

Annexure - Rating History for last 3 Years
  Current 2021 (History) 2020  2019  2018  Start of 2018
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund Based Facilities LT 93.0 CRISIL AA/Stable   --   -- 31-12-19 CRISIL AA/Stable 31-03-18 CRISIL AA-/Stable CRISIL AA-/Stable
      --   --   -- 29-06-19 CRISIL AA-/Stable   -- --
Non-Fund Based Facilities ST 7.0 CRISIL A1+   --   -- 31-12-19 CRISIL A1+ 31-03-18 CRISIL A1+ CRISIL A1+
      --   --   -- 29-06-19 CRISIL A1+   -- --
All amounts are in Rs.Cr.
 
 
Annexure - Details of various bank facilities
Current facilities Previous facilities
Facility Amount (Rs.Crore) Rating Facility Amount (Rs.Crore) Rating
Cash Credit 27 CRISIL AA/Stable Cash Credit 17 CRISIL AA/Stable
Cash Credit* 30 CRISIL AA/Stable Cash Credit* 30 CRISIL AA/Stable
Letter of Credit** 7 CRISIL A1+ Letter of Credit** 7 CRISIL A1+
Proposed Working Capital Facility 36 CRISIL AA/Stable Proposed Working Capital Facility 21 CRISIL AA/Stable
Total 100 - Total 75 -
*Interchangeable with letter of credit, bank guarantee, and working capital demand loan
**Interchangeable with bank guarantee
Links to related criteria
CRISILs Approach to Financial Ratios
CRISILs Bank Loan Ratings - process, scale and default recognition
Rating criteria for manufaturing and service sector companies
CRISILs Criteria for Consolidation

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