The quarter presented a mixed narrative for the company, with profitability maintained despite significant top-line pressure. Revenue declined 4.89% sequentially to ₹15.76 crores, whilst the year-on-year comparison revealed a sharp 56.14% contraction from ₹35.93 crores in Q2 FY25. Operating margins compressed to 6.85% from 8.15% in the previous quarter, reflecting the challenges of maintaining profitability amidst declining advertising revenues and subscription income. The company's ability to swing to profit year-on-year, however, demonstrates improved cost management compared to the exceptionally weak performance in the corresponding period last year.
| Quarter | Sep'25 | Jun'25 | Mar'25 | Dec'24 | Sep'24 | Jun'24 |
|---|---|---|---|---|---|---|
| Net Sales (₹ Cr) | 15.76 | 16.57 | 21.73 | 42.72 | 35.93 | 25.43 |
| QoQ Growth | -4.89% | -23.75% | -49.13% | +18.90% | +41.29% | +56.98% |
| YoY Growth | -56.14% | -34.84% | +34.14% | — | — | — |
| Net Profit (₹ Cr) | 0.17 | 0.35 | -4.48 | 0.27 | 0.07 | -16.88 |
| Operating Margin % | 6.85% | 8.15% | -20.48% | 3.14% | 4.17% | -71.22% |
| PAT Margin % | 1.08% | 2.11% | -20.62% | 0.63% | 0.19% | -66.38% |
Financial Performance: Revenue Contraction Weighs on Margins
Raj Television Network's Q2 FY26 financial performance revealed persistent top-line challenges that continue to pressure the company's profitability metrics. Net sales of ₹15.76 crores represented a 4.89% sequential decline from ₹16.57 crores in Q1 FY26, and a precipitous 56.14% year-on-year contraction from ₹35.93 crores in Q2 FY25. This marks the continuation of a concerning revenue trend that has seen quarterly sales decline significantly from the ₹42.72 crores peak achieved in Q4 FY24.
Operating profit (PBDIT excluding other income) stood at ₹1.08 crores, down from ₹1.35 crores in the previous quarter, with operating margins compressing to 6.85% from 8.15%. The margin contraction of 128 basis points quarter-on-quarter reflects the company's struggle to maintain operational efficiency amidst declining revenues. Year-on-year, however, operating margins improved from 4.17%, demonstrating better cost control compared to the corresponding period last year.
Employee costs declined to ₹3.59 crores from ₹4.05 crores sequentially, providing some relief to the bottom line. Interest expenses also eased to ₹0.64 crores from ₹0.75 crores, reflecting reduced debt servicing costs. After accounting for depreciation of ₹0.20 crores and tax provisions of ₹0.08 crores at an effective rate of 33.33%, the company reported a net profit of ₹0.17 crores, translating to a PAT margin of 1.08%.
On a half-yearly basis (H1 FY26), the company generated revenues of ₹32.33 crores with a net profit of ₹0.52 crores, representing PAT margins of 1.61%. This compares unfavourably to the ₹61.36 crores in revenue achieved during H1 FY25, though profitability has improved from the loss-making position witnessed in the prior corresponding period.
Operational Challenges: Structural Headwinds Persist
The media and entertainment sector has faced significant disruption from changing consumer preferences, with traditional television viewership declining in favour of digital streaming platforms. Raj Television Network's portfolio of regional channels—spanning Tamil, Kannada, Telugu, Malayalam, and Hindi markets—has been unable to insulate the company from these industry-wide headwinds. The sharp revenue contraction suggests challenges in both advertising revenue and subscription income streams.
From a capital efficiency perspective, the company's return on equity (ROE) stood at a weak 1.25% on average, with the latest reading deteriorating to -2.97%. This indicates poor utilisation of shareholder capital and limited profitability generation relative to the equity base. Return on capital employed (ROCE) averaged -0.24%, with the latest figure at -1.24%, highlighting structural challenges in generating adequate returns on the total capital deployed in the business.
The balance sheet as of March 2025 showed shareholder funds of ₹123.53 crores, down from ₹144.54 crores in the previous year, primarily due to the ₹21.00 crores loss reported in FY25. Long-term debt increased to ₹12.99 crores from ₹6.30 crores, whilst current liabilities rose sharply to ₹45.19 crores from ₹24.87 crores, driven by higher trade payables. Fixed assets stood at ₹116.95 crores, representing the bulk of the company's asset base, whilst current assets totalled ₹50.81 crores.
Critical Concern: Deteriorating Capital Efficiency
With ROE at -2.97% and ROCE at -1.24% in the latest period, Raj Television Network demonstrates severely impaired capital efficiency. The company is destroying shareholder value rather than creating it, with returns well below the cost of capital. This structural weakness raises serious questions about the sustainability of the business model in its current form.
Industry Context: Traditional Broadcasting Under Siege
The Indian media and entertainment landscape has undergone profound transformation over the past five years, with over-the-top (OTT) platforms capturing increasing market share from traditional television broadcasters. Regional language content, whilst still commanding loyal audiences, has faced monetisation challenges as advertising budgets shift towards digital platforms that offer better targeting and measurement capabilities.
Raj Television Network's performance must be viewed against this backdrop of industry disruption. The company's diverse channel portfolio across multiple regional markets provides some diversification benefits, yet the uniform revenue decline across quarters suggests systemic rather than market-specific challenges. The absence of a significant digital presence or streaming platform strategy leaves the company vulnerable to continued secular decline in traditional broadcasting.
Peer comparison reveals that Raj Television Network's challenges are not unique to the company but reflect broader sector headwinds. However, the magnitude of revenue decline—56.14% year-on-year—suggests company-specific execution issues beyond general market weakness.
Peer Comparison: Valuation Disconnect Amid Losses
Within the media and entertainment sector, Raj Television Network's financial and valuation metrics paint a concerning picture relative to peers. The company's price-to-book value of 1.75x appears elevated given the loss-making position and deteriorating fundamentals, suggesting the market may not have fully discounted the structural challenges facing the business.
| Company | P/E (TTM) | P/BV | ROE % | Debt/Equity |
|---|---|---|---|---|
| Raj Television | NA (Loss Making) | 1.75 | 1.25% | 0.20 |
| UFO Moviez | 14.93 | 0.94 | 2.57% | -0.11 |
| GTT Data | NA (Loss Making) | 3.18 | 0.00% | 0.13 |
| Music Broadcast | NA (Loss Making) | 0.44 | 0.64% | -0.07 |
| Quint Digital | 1250.04 | 1.16 | 0.02% | -0.42 |
Raj Television's ROE of 1.25%, whilst weak in absolute terms, compares favourably to several peers in the beleaguered media sector. However, the price-to-book ratio of 1.75x suggests the market is pricing in a recovery or turnaround that current fundamentals do not support. With a debt-to-equity ratio of 0.20, the company maintains relatively conservative leverage, though this provides limited comfort given the operating losses and cash flow pressures.
Valuation Analysis: Premium Unjustified by Fundamentals
Raj Television Network's current valuation metrics present a disconnect between market pricing and underlying business performance. Trading at ₹41.15 with a market capitalisation of ₹213.00 crores, the stock commands a price-to-book value of 1.75x despite generating minimal returns on equity and facing persistent revenue declines.
The company's enterprise value to EBITDA multiple of -241.08x and EV to EBIT of -131.02x are meaningless in the context of negative operating profits. The EV to sales ratio of 2.49x appears elevated for a business experiencing 56% year-on-year revenue contraction and operating margin compression. The absence of dividend payments (last dividend of ₹0.10 per share paid in September 2019) further reduces the investment appeal.
The stock's 52-week range of ₹36.10 to ₹95.35 reflects extreme volatility, with the current price 56.84% below the high achieved earlier in the period. The valuation grade has deteriorated from "Very Expensive" to "Risky" over the past year, appropriately reflecting the fundamental challenges. Fair value estimation is challenging given the loss-making position, but any valuation premium to book value appears unjustified absent a credible turnaround strategy.
Shareholding Pattern: Stable Promoter Base, Minimal Institutional Interest
The shareholding structure of Raj Television Network has remained remarkably stable over recent quarters, with promoter holding steady at 70.88% as of December 2025. This high promoter stake demonstrates continued confidence from the founding family, though it also limits free float and liquidity in the stock.
| Quarter | Promoter % | FII % | MF % | Insurance % | Public % |
|---|---|---|---|---|---|
| Dec'25 | 70.88% | 0.02% | 0.00% | 0.00% | 29.10% |
| Sep'25 | 70.88% | 0.02% | 0.00% | 0.00% | 29.10% |
| Jun'25 | 70.88% | 0.00% | 0.00% | 0.00% | 29.12% |
| Mar'25 | 70.88% | 0.00% | 0.00% | 0.00% | 29.12% |
| Dec'24 | 70.90% | 0.05% | 0.00% | 0.00% | 29.05% |
Institutional participation remains virtually non-existent, with FII holdings at a negligible 0.02%, mutual fund holdings at 0.00%, and no insurance company participation. This absence of institutional interest reflects the company's micro-cap status, limited liquidity, and weak fundamentals that fail to meet institutional investment criteria. The lack of institutional support also contributes to higher stock price volatility and limited research coverage.
Positively, there is no promoter pledging, indicating that the promoters have not leveraged their holdings for external financing. The stable shareholding pattern suggests no distress selling, though it also indicates limited institutional confidence in the company's prospects.
Stock Performance: Severe Underperformance Across All Timeframes
Raj Television Network's stock performance over the past year has been catastrophic, with the shares declining 51.97% compared to the Sensex's 10.41% gain, resulting in negative alpha of 62.38 percentage points. This severe underperformance extends across virtually all timeframes, reflecting sustained investor pessimism about the company's prospects.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | +1.66% | +0.50% | +1.16% |
| 1 Month | +0.37% | +0.79% | -0.42% |
| 3 Months | +8.72% | +0.43% | +8.29% |
| 6 Months | -3.31% | +4.50% | -7.81% |
| YTD | -4.30% | -1.16% | -3.14% |
| 1 Year | -51.97% | +10.41% | -62.38% |
| 2 Years | -38.12% | +17.65% | -55.77% |
| 3 Years | -13.91% | +38.81% | -52.72% |
The stock has also significantly underperformed its media and entertainment sector, which declined 12.97% over the past year, meaning Raj Television underperformed its sector by 39.00 percentage points. This sector-relative weakness suggests company-specific issues beyond general industry headwinds.
From a technical perspective, the stock exhibits a "mildly bearish" trend, trading below all major moving averages including the 5-day (₹41.08), 20-day (₹40.57), 50-day (₹41.25), 100-day (₹41.06), and 200-day (₹45.19) averages. With a beta of 1.50, the stock demonstrates high volatility relative to the broader market, amplifying losses during market downturns. The risk-adjusted return of -1.26 with 41.34% volatility places it firmly in the "high risk, low return" category.
Investment Thesis: Multiple Red Flags Outweigh Limited Positives
Raj Television Network's investment proposition is severely challenged by deteriorating fundamentals, persistent revenue declines, and structural headwinds facing traditional broadcasting. The company's proprietary investment score of 9 out of 100, with a "Strong Sell" rating, reflects the confluence of negative factors across valuation, quality, financial trends, and technical indicators.
The quality assessment reveals a "below average" company based on long-term financial performance, with average ROCE of -0.24% and average ROE of 1.25% indicating severely impaired capital efficiency. The financial trend is classified as "negative," driven by declining quarterly revenues, compressed margins, and deteriorating cash positions. Technical indicators remain bearish, with the stock trading below all major moving averages and exhibiting weak momentum.
Key Strengths & Risk Factors
KEY STRENGTHS
- Stable Promoter Holdings: 70.88% promoter stake with zero pledging demonstrates continued family commitment to the business
- Diversified Portfolio: Multiple channels across Tamil, Kannada, Telugu, Malayalam, and Hindi markets provide geographic diversification
- Conservative Leverage: Debt-to-equity ratio of 0.20 indicates relatively low financial risk from leverage perspective
- Return to Profitability: Quarterly profit of ₹0.17 crores versus loss in prior year demonstrates some operational improvement
- Established Brand: Long-standing presence in regional broadcasting with established viewer relationships
KEY CONCERNS
- Severe Revenue Decline: 56.14% YoY revenue contraction in Q2 FY26 indicates fundamental business challenges
- Negative Capital Efficiency: ROCE of -1.24% and ROE of -2.97% demonstrate value destruction rather than creation
- Structural Industry Headwinds: Traditional broadcasting facing secular decline from OTT platform competition
- Minimal Institutional Interest: Virtually zero FII/MF holdings reflect lack of institutional confidence
- Compressed Margins: Operating margins of 6.85% under pressure from fixed cost base and declining revenues
- Cash Flow Concerns: Operating cash flow of -₹5.00 crores in FY25 indicates inability to generate cash from operations
- No Digital Strategy: Absence of visible OTT or digital platform strategy leaves company vulnerable to continued disruption
Outlook: What to Monitor for Potential Stabilisation
POSITIVE CATALYSTS
- Revenue stabilisation with sequential growth for two consecutive quarters
- Launch of credible digital/OTT platform strategy to capture changing viewership patterns
- Operating margin expansion above 10% demonstrating improved cost efficiency
- Positive operating cash flow generation for full fiscal year
- Strategic partnerships or content deals that enhance monetisation capabilities
RED FLAGS TO WATCH
- Further sequential revenue decline in Q3 FY26 below ₹15 crores
- Return to quarterly losses in upcoming quarters
- Increase in debt levels or promoter pledging to fund operations
- Continued absence of institutional investor interest or further selling
- Operating margins falling below 5% indicating unsustainable cost structure
- Stock breaking below ₹36 support level (52-week low)
The Verdict: Avoid This Deteriorating Broadcaster
Score: 9/100
For Fresh Investors: Avoid initiation entirely. The combination of 56% revenue decline, negative capital efficiency, structural industry headwinds, and absence of credible turnaround strategy makes this an unattractive investment at any valuation. The media sector offers better opportunities in companies with digital strategies and growing revenues.
For Existing Holders: Consider exiting positions on any price strength. Whilst the stock has declined significantly from its 52-week high, further downside remains probable given deteriorating fundamentals and negative financial trends. The 70% promoter holding limits downside from distress selling but also constrains liquidity for exits.
Fair Value Estimate: ₹25-30 (39% downside from current levels), reflecting book value discount appropriate for a business destroying shareholder value with negative ROCE and facing structural decline.
Rationale: Raj Television Network exemplifies a classic value trap—seemingly cheap on price-to-book but fundamentally challenged by revenue declines, margin compression, and secular industry headwinds. The absence of institutional interest, negative financial trends, and weak capital efficiency metrics all support a strong sell recommendation. Only a dramatic strategic pivot towards digital platforms with demonstrated traction would warrant reassessment.
Note— ROCE= (EBIT - Other income)/(Capital Employed - Cash - Current Investments)
⚠️ Investment Disclaimer
This article is for educational and informational purposes only and should not be construed as financial advice. Investors should conduct their own due diligence, consider their risk tolerance and investment objectives, and consult with a qualified financial advisor before making any investment decisions.
