UTV Software has posted a significant y-o-y revenue growth of 142% to Rs1.4 billion. This was 35% above our expectations mainly due to the higher revenues booked from its film businesses, including the partial revenues booked for its films “Jodha Akbar” and “Race”, in the current quarter.
The operating profits grew by 40% to Rs165.3 million. However, the operating margins have declined in the quarter as higher costs were incurred in its interactive business due to fund infusion in the gaming business of Ignition.
Net profit grew by 176% y-o-y to Rs251 million on the back of higher other income and higher operating profit.
We believe UTV’s strategic presence in various verticals of the media sector and its aggressive inorganic growth plans will reflect in its financials going forward.
We expect consolidated revenues to grow at a CAGR of 86% and net profits to grow at a CAGR of 73% over FY08-10E. We maintain our SOTP based target price of Rs1068 and reiterate our BUY recommendation.