Music Broadcast IPO: High-margin, high-growth business

Foray into new cities will drive revenue growth but valuations leave little room for immediate gains

The initial public offering (IPO) of equity in Music Broadcast (MBL), owner of leading radio brand Radio City, will enable the company to improve its balance sheet and become leaner.

Of the up to Rs 489 crore of issue proceeds, Rs 400 crore will flow into MBL, the rest being an Offer for Sale. The company will repay most of its Rs 300 crore debt through these funds, reducing its interest cost and improving the overall cash flow.

The Radio City brand enjoys leadership position in most markets and MBL has a healthy operating profit (Ebitda or earnings before interest,