We met with ENIL management to explore various strategies adopted by the company to navigate through the downturn.
Post meeting, we remain cautious on the company in the medium term, as we expect macro headwinds will continue to strain ENIL’s profitability.
Radio will see the impact of weakening advertising spends, although strong competitive positioning will help it maintain market share.
OOH will remain a drag on consolidated financials with rising costs on new investments, while revenues are yet to gain traction. At the CMP of Rs115, the stock trades at FY10E EV/EBITDA of 10.5x.
With revenue growth likely to remain under pressure and Q4 results expected to be disappointing, we expect the stock will trade in the lower range of Rs100-130. We maintain our SELL recommendation.