Jagran Prakashan’s Radio City To Hit Primary Market

Country’s oldest private radio broadcaster to use IPO proceed to clean up balancesheet.  

(Source: SXC/Freepik)
(Source: SXC/Freepik)

Music Broadcast Ltd. (MBL), a subsidiary of Jagran Prakashan Ltd. (JPL), has filed its draft red herring prospectus (RHP) with the Securities Exchange Board of India (SEBI) for an initial public offering (IPO). The IPO will consist of a fresh issue of shares worth Rs 400 crore and offer for sale of 26 lakh shares. MBL houses the radio business arm, Radio City, of JPL.

The company has appointed ICICI Securities as its book running lead manager and Karvy Computershare as registrar to the offer.

Radio City is the oldest private FM radio broadcaster in India and has been in business for 15 years now. It currently operates in 29 cities and has sales alliances in another two. Its broadcast licences were renewed for another 15 years, starting April 1, 2015

Twenty three out of its 25 existing promoters are looking to offload their stake completely, through this offer for sale. The primary shareholder, Jagran Prakashan, which holds 89.4 percent stake in the company and its director Satish Chandra Mishra will not be paring their stake through this offer for sale though. The other shareholders collectively hold around 6 percent.

JPL had acquired MBL on June, 2015 at an average cost of Rs 46.63 per equity share.

The radio broadcaster has no plans of expanding its business, with a large chunk of the fresh issue already earmarked to clean up its books. 50 percent of the amount raised will be used to redeem MBL’s debentures, including some issued to the existing promoters. The remaining amount has been set aside for general corporate purposes.

MBL’s revenue grew at a compounded annual growth rate (CAGR) of 18 percent from financial year 2012 to 2016. For the financial year 2016, company reported total revenue of Rs 245.5 crore and net profit of Rs 42.5 crore. The net profit was sequentially lower by 10 percent on account of an exceptional loss of Rs 13.6 crore.

Shares of Jagran Prakashan have gained for three straight sessions, after news of its latest IPO offering hit the markets. The shares rose as much as 2.2 percent on Tuesday an was trading at Rs 172.8 apiece.