TV 18 Marching Ahead

Reliance Capital, Norwest Venture Partners & TV18 Group have come together to provide initial funding for Yatra Online, a centralised travel services company. The founders of Yatra are non-resident Indians (NRI) and "seasoned travel industry executives" who have returned to India to launch the first online and centralised travel services company of its kind, said a joint statement from the funders. The statement did not specify how much funding is being received by Yatra. The founders, Mr Dhruv Shringi and Mr Manish Amin, bring a combination of 45 years of travel experience and 15 years of online travel experience to Yatra, said the statement.

The founders helped build and manage one of Europe's largest online travel businesses, Ebookers Plc, which was recently acquired by travel giant Cendant Corporation (market capitalisation: $17.98 billion) for $410 million, it said. "We are very excited about our investment in Yatra and the market opportunity the company has targeted. Internet penetration in India is only in its infancy and investing in companies with sound business models that leverage the Internet to reach today's consumers is a growing trend for our firm," said Mr Promod Haque, Managing Partner of Norwest Venture Partners and board advisor to Yatra. The investors are also committed to supporting Yatra through its subsequent stages of growth, said a statement from the funding companies.

Yatra will help businesses and consumers to book airline, railway and bus tickets and reserve hotel rooms and car rentals across 5,000 large cities and rural areas in India by calling Yatra's call centre, or by going to the Internet Web site http://www.yatra.in/, or through services provided on mobile handsets.

Earlier, Television Eighteen India (TV18) reported a strong 55% year-on-year and 23.7% quarter-on-quarter growth in its consolidated revenues for Q3FY2006 to Rs38.1 crore backed by the strong performance of the news and Internet & content operations. The operating profit margin (OPM) was maintained at 51.3% and the operating profit grew by 58% year on year (yoy) and by 20.7% quarter on quarter (qoq) to Rs19.6 crore during the quarter. Due to higher depreciation and interest cost, the consolidated net profit grew by a slower 47.1% yoy (19.6% qoq) to Rs12.3 crore. I believe that TV18's business model has become more robust with the inclusion of the channels Awaaz and CNN-IBN in the bouquet. Looking at the company's robust business model, the stock is attractively quoting at 14.6x its FY2007E earnings per share (EPS) and 8.6x its FY2007E enterprise value (EV)/earnings before interest, depreciation, tax and amortisation (EBIDTA).