Music Broadcast IPO subscribed 39 times

The Rs 488-crore initial public offering (IPO) of Music Broadcast garnered 39 times subscription. The institutional investor segment of the IPO was subscribed 40.4 times; high net worth individual (HNI) portion was subscribed 111.6 times; and retail segment was subscribed 9.4 times. The issue saw nearly 850,000 applications and generated demand worth Rs 13,600 crore. Music Broadcast is one of the oldest private FM broadcaster in the country. It operates 37 FM radio stations under the brand 'Radio City' and 'Radio Mantra'.

Music Broadcast will raise Rs 400 crore in the IPO, which will be used to mainly repay its debt. The issue also comprised of secondary share sale worth around Rs 89 crore by certain promoter group individuals.

The price band for the IPO was Rs 324 to Rs 333 per share. However, given the high subscription, the IPO is likely to be priced at the top-end of the price band.

Analysts had recommended long-term investors to subscribe to the IPO.

"At the higher price band of Rs 333, the offer is valued at 22.5 times EV/EBITDA and 31 times P/E on H1FY17 annualized basis. In comparison it's only listed peer - ENIL is trading at 29.3 times EV/EBITDA and 62.4 times P/E on FY17E. While the offer seems to be at a discount to ENIL, valuations at 31 times P/E is not cheap for MBL's financials. ENIL has been commanding premium valuation as it was the only listed entity in the radio business till now. Given such valuations, investors comfortable with radio business model and having a long term horizon can subscribe to the IPO," Centrum Wealth Research had said in note.

The company is a subsidiary of Jagran Prakashan, which will hold around 70.6 per cent in the company post IPO. Shares of Jagran closed one per cent higher on Wednesday, valuing the company at Rs 6,265 crore. At the top-end of the IPO price band, Music Broadcast will be valued at around Rs 1,900 crore.