Raj Television Network Limited — Credit Ratings, 19-11-2024: Credit Rating- Revision

Raj Television Network Limited has announced a board meeting.

Consolidated financial results indicate revenue growth, with FY24 revenues at ₹1,064.6 million (INR 106.46 crore), up from ₹847.88 million (INR 84.79 crore) in FY23, reflecting an increase of approximately 25.5%. This growth can be attributed to increased advertising revenue, particularly boosted by general elections, and the proliferation of OTT and digital channels.

However, the net profit declined, resulting in an Earnings Per Share (EPS) of ₹0.53, compared to ₹0.67 in FY23. The drop in profitability is linked to rising operational costs, especially after launching two new channels, leading to an EBITDA margin contraction from 6.73% in FY23 to 4.55% in FY24.

Operational costs surged, with EBITDA declining to ₹48.45 million (INR 4.84 crore), down from ₹57.05 million (INR 5.71 crore) in the previous year. This 15.5% decrease underscores the challenges in managing costs, particularly the expenses related to content production and up-linking charges.

The balance sheet reflects stretched liquidity with a cash flow decline to ₹12.88 million (INR 1.29 crore), from ₹277.21 million (INR 27.72 crore) in FY23. The working capital cycle remains lengthy at 109 days, limiting financial flexibility. The company's net leverage increased to 4.18x in FY24, raising concerns regarding financial stability.

Strategically, RTNL must focus on enhancing operational efficiency and exploring revenue diversification to mitigate dependence on fluctuating advertisement revenue while navigating the competitive media landscape.

Overall, with mixed signals on profitability and persistent operational challenges, maintaining a cautious outlook is advisable for investors.