The September 2025 quarter marks another challenging period for Raj Television, with net sales plummeting 56.14% year-on-year to ₹15.76 crores, the lowest quarterly revenue in the available data history. On a sequential basis, revenue declined 4.89% from ₹16.57 crores in Q1 FY26. The company's profitability metrics deteriorated across the board, with PAT margin compressing to 1.08% from 2.11% in the previous quarter, whilst operating margin stood at 6.85%, down from 8.15% sequentially.
| Quarter | Net Sales (₹ Cr) | QoQ Growth | YoY Growth | Net Profit (₹ Cr) | Operating Margin | PAT Margin |
|---|---|---|---|---|---|---|
| Sep'25 | 15.76 | -4.89% | -56.14% | 0.17 | 6.85% | 1.08% |
| Jun'25 | 16.57 | -23.75% | -34.84% | 0.35 | 8.15% | 2.11% |
| Mar'25 | 21.73 | -49.13% | +34.14% | -4.48 | -20.48% | -20.62% |
| Dec'24 | 42.72 | +18.90% | — | 0.27 | 3.14% | 0.63% |
| Sep'24 | 35.93 | +41.29% | — | 0.07 | 4.17% | 0.19% |
| Jun'24 | 25.43 | +56.98% | — | -16.88 | -71.22% | -66.38% |
| Mar'24 | 16.20 | — | — | 0.99 | 10.74% | 6.11% |
Financial Performance: Alarming Revenue Contraction
The company's financial performance in Q2 FY26 reveals deep-seated operational challenges. Net sales of ₹15.76 crores represent a catastrophic 56.14% year-on-year decline, suggesting significant market share erosion or structural issues in the broadcaster's revenue model. The sequential 4.89% decline from Q1 FY26's ₹16.57 crores indicates that the downward trajectory continues unabated, with no signs of stabilisation.
Operating profit (PBDIT excluding other income) stood at ₹1.08 crores with a margin of 6.85%, down from 8.15% in the previous quarter. The margin compression reflects the company's struggle to maintain operational efficiency amidst falling revenues. Employee costs remained elevated at ₹3.59 crores, representing 22.78% of net sales, up from 24.44% in Q1 FY26, highlighting the challenge of maintaining a fixed cost base whilst revenues shrink.
Net profit for Q2 FY26 declined 51.43% quarter-on-quarter to ₹0.17 crores from ₹0.35 crores, with PAT margin compressing to a wafer-thin 1.08%. Interest costs of ₹0.64 crores consumed nearly 4.06% of revenues, down from ₹0.75 crores in the previous quarter but still representing a significant burden on profitability. The effective tax rate of 33.33% in Q2 FY26 was higher than the 31.37% in Q1 FY26, further pressuring bottom-line performance.
Operational Challenges: Structural Profitability Crisis
Raj Television's operational metrics paint a concerning picture of a company grappling with fundamental business model challenges. The company's return on equity stands at a meagre 0.42% on average, with the latest ROE at -3.07%, indicating capital is being deployed inefficiently and generating negligible returns for shareholders. This represents one of the most critical weaknesses in the company's profile, as it suggests the business is destroying shareholder value rather than creating it.
The balance sheet reveals mounting pressures. Long-term debt increased to ₹12.99 crores as of March 2025 from ₹6.30 crores in March 2024, representing a 106.19% year-on-year surge. Trade payables jumped dramatically to ₹22.61 crores from ₹6.05 crores, a 273.72% increase that raises questions about the company's ability to manage working capital and meet vendor obligations. Total current liabilities stood at ₹45.19 crores, up 81.68% from ₹24.87 crores in the previous year.
Operating cash flow turned deeply negative at ₹-5.17 crores for FY25, a stark deterioration from the positive ₹3.00 crores in FY24. This negative cash generation, combined with minimal cash and cash equivalents of just ₹0.17 crores in H1 FY26, creates significant liquidity concerns. The company's debt-to-EBITDA ratio of 3.25 times indicates moderate leverage, but given the negative EBITDA trajectory, this metric understates the true financial stress.
Critical Concerns: Liquidity and Profitability Under Severe Pressure
Negative Operating Cash Flow: The company generated negative operating cash flow of ₹-5.17 crores in FY25, indicating it is consuming cash rather than generating it from core operations. With cash reserves at just ₹0.17 crores, this raises serious questions about near-term liquidity and the ability to fund operations without additional borrowing.
Deteriorating Returns: ROE of 0.42% (average) and -3.07% (latest) signals capital is being deployed with minimal effectiveness. For context, even a fixed deposit would generate better returns, highlighting the fundamental challenge in the business model.
Media Industry Context: Broadcasting Under Pressure
The Indian media and entertainment sector faces significant headwinds from digital disruption, with traditional broadcasters losing ground to streaming platforms and digital content creators. Regional broadcasters like Raj Television face particularly acute challenges, as they compete not only with established national players but also with an explosion of digital content tailored to regional audiences at lower cost structures.
The company's 5-year sales CAGR of 16.72% appears respectable on the surface, but this masks the recent deterioration. The 5-year EBIT growth of -47.47% reveals that whilst revenues grew, profitability collapsed, suggesting the company has been unable to translate top-line expansion into sustainable bottom-line performance. This divergence between revenue and profit growth indicates pricing pressure, rising costs, or both—common themes across regional broadcasting.
Advertising revenue, typically the lifeblood of broadcasters, appears under severe pressure based on the revenue declines. The shift of advertising budgets to digital platforms, combined with economic headwinds affecting discretionary spending, has created a challenging environment for traditional television broadcasters. Raj Television's inability to stabilise revenues suggests it is losing relevance with advertisers and potentially audiences as well.
Peer Comparison: Underperforming Across Key Metrics
| Company | P/E (TTM) | P/BV | ROE % | Debt/Equity | Div Yield |
|---|---|---|---|---|---|
| Raj Television | NA (Loss Making) | 1.59x | 0.42% | 0.21 | NA |
| Music Broadcast | NA (Loss Making) | 0.49x | 0.64% | -0.07 | NA |
| Digicontent | 10.44x | 5.44x | 43.71% | 2.06 | NA |
| Quint Digital | 1798.94x | 1.04x | 0.02% | -0.38 | NA |
| 7Seas Entertainment | 99.32x | 10.73x | 4.65% | 0.05 | NA |
Raj Television's peer comparison reveals a company struggling to generate acceptable returns on equity. Whilst its ROE of 0.42% is marginally below Music Broadcast's 0.64%, it pales in comparison to Digicontent's robust 43.71% and even 7Seas Entertainment's 4.65%. The company's price-to-book value of 1.59x sits in the middle of the peer group, but this appears unjustified given the weak return profile and deteriorating fundamentals.
The debt-to-equity ratio of 0.21 is relatively modest compared to Digicontent's 2.06, suggesting Raj Television has room for additional leverage if needed. However, given the negative cash flow generation and weak profitability, taking on additional debt would only exacerbate financial stress rather than provide a pathway to growth. The absence of dividend payments across the peer group reflects the challenging operating environment facing traditional media companies.
Valuation Analysis: Risk Premium Justified
Raj Television's current valuation reflects the market's deep scepticism about the company's prospects. Trading at a price-to-book value of 1.59x with a market capitalisation of ₹195.00 crores, the company is valued at a significant discount to its more profitable peers. The stock's classification as "Risky" in terms of valuation appears entirely appropriate given the deteriorating financial trends and structural challenges facing the business.
The stock has plummeted 60.66% from its 52-week high of ₹95.35, currently trading at ₹37.51, just 3.48% above its 52-week low of ₹36.25. This dramatic decline reflects investors' recognition that the company faces severe headwinds with limited visible catalysts for improvement. The year-to-date decline of 53.11% significantly underperforms the Sensex's 8.11% gain, resulting in negative alpha of 61.22%.
Traditional valuation metrics like P/E ratio are not applicable given the company's loss-making status. The EV-to-EBITDA multiple of -222.18x and EV-to-EBIT of -138.86x reflect negative earnings, making these metrics meaningless for valuation purposes. The EV-to-sales ratio of 1.90x appears elevated for a company with such weak profitability and deteriorating fundamentals, suggesting the stock may have further downside risk if operational performance continues to deteriorate.
Shareholding Pattern: Stable Promoter Base, Minimal Institutional Interest
| Category | Sep'25 | Jun'25 | Mar'25 | QoQ Change |
|---|---|---|---|---|
| Promoter | 70.88% | 70.88% | 70.88% | 0.00% |
| FII | 0.02% | 0.00% | 0.00% | +0.02% |
| Mutual Funds | 0.00% | 0.00% | 0.00% | 0.00% |
| Insurance | 0.00% | 0.00% | 0.00% | 0.00% |
| Non-Institutional | 29.10% | 29.12% | 29.12% | -0.02% |
The shareholding pattern reveals a stable promoter base holding 70.88% with no change over recent quarters, suggesting promoters remain committed despite the challenging operating environment. However, the complete absence of mutual fund and insurance company holdings, combined with minimal FII interest at just 0.02%, indicates institutional investors have no confidence in the company's prospects. This lack of institutional participation is a significant red flag, as sophisticated investors have clearly decided to stay away.
The absence of promoter pledging is a positive, indicating promoters have not leveraged their holdings to raise funds. However, this alone cannot offset the broader concerns about operational performance and financial sustainability. The non-institutional shareholding of 29.10% represents largely retail investors, who may lack the resources or expertise to fully assess the company's challenges.
Stock Performance: Severe Underperformance Across All Timeframes
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | -9.83% | +1.22% | -11.05% |
| 1 Month | -7.88% | +2.40% | -10.28% |
| 3 Months | -12.50% | +5.29% | -17.79% |
| 6 Months | -19.11% | +2.48% | -21.59% |
| YTD | -53.11% | +8.11% | -61.22% |
| 1 Year | -31.58% | +7.38% | -38.96% |
| 2 Years | -27.87% | +29.45% | -57.32% |
| 3 Years | -18.19% | +36.71% | -54.90% |
Raj Television's stock performance has been catastrophic across all measured timeframes. The year-to-date decline of 53.11% versus the Sensex's 8.11% gain represents negative alpha of 61.22%, indicating severe underperformance. The stock's high beta of 1.50 means it amplifies market movements, but in this case, the underperformance is driven by company-specific fundamental deterioration rather than market volatility.
The technical picture is equally concerning. The stock trades below all key moving averages—5-day (₹39.55), 20-day (₹40.65), 50-day (₹41.52), 100-day (₹43.12), and 200-day (₹57.40)—indicating a strong bearish trend. The overall technical trend is classified as "Bearish," with multiple indicators including MACD, Bollinger Bands, and OBV signalling weakness. The stock's volatility of 40.40% is more than three times the Sensex's 12.36%, classifying it as a high-risk, low-return investment.
Investment Thesis: Deteriorating Fundamentals Justify Caution
The investment thesis for Raj Television rests on four critical pillars, all of which currently point towards significant caution. The company's valuation is classified as "Risky," reflecting the market's recognition that current financial trends are unsustainable. The quality grade of "Below Average" indicates long-term financial performance has been weak, with the 5-year EBIT growth of -47.47% highlighting the erosion of profitability despite revenue growth.
The financial trend is categorised as "Negative," driven by the lowest operating cash flow of ₹-5.17 crores annually, minimal cash reserves of ₹0.17 crores in H1 FY26, and the lowest quarterly net sales of ₹15.76 crores in Q2 FY26. The half-yearly PAT of ₹0.52 crores, whilst positive, represents a 47.31% decline, indicating deteriorating profitability. The technical trend is "Bearish," with the stock below all major moving averages and multiple indicators signalling weakness.
The company's Mojo Score of 17 out of 100 places it firmly in "Strong Sell" territory, down from 23 in April 2025. This score reflects the cumulative impact of bearish technicals, negative financial trends, and weak fundamental strength. The key concerns limiting the score include the bearish technical trend, negative financial trend, and weak long-term fundamental strength characterised by the -47.47% CAGR decline in operating profits over five years.
"With negative operating cash flow, minimal liquidity, and accelerating revenue declines, Raj Television faces a critical juncture where fundamental business model restructuring may be necessary for survival."
Key Strengths & Risk Factors
Key Strengths
- No Promoter Pledging: Promoters hold 70.88% without any pledging, indicating personal financial stability and commitment to the business.
- Modest Leverage: Debt-to-equity ratio of 0.21 provides headroom for additional borrowing if needed, though current cash flow makes this inadvisable.
- Long Operating History: Established in 1994, the company has three decades of experience in South Indian entertainment and regional content creation.
- Stable Promoter Base: No change in promoter holding over recent quarters suggests long-term commitment despite operational challenges.
- Regional Content Expertise: Deep understanding of South Indian audience preferences and cultural nuances provides potential competitive advantage in regional markets.
Key Concerns
- Catastrophic Revenue Decline: Q2 FY26 revenue of ₹15.76 crores represents a 56.14% year-on-year collapse, indicating severe market share loss or structural business model failure.
- Negative Cash Generation: Operating cash flow of ₹-5.17 crores in FY25 combined with cash reserves of just ₹0.17 crores creates acute liquidity concerns.
- Abysmal Returns: ROE of 0.42% (average) and -3.07% (latest) indicates capital is being deployed with virtually no effectiveness, destroying shareholder value.
- Rising Debt Burden: Long-term debt increased 106.19% to ₹12.99 crores whilst profitability collapsed, creating a dangerous combination of rising leverage and falling earnings.
- Zero Institutional Interest: Complete absence of mutual fund and insurance holdings, with just 0.02% FII interest, signals sophisticated investors see no value.
- Deteriorating Margins: PAT margin of 1.08% in Q2 FY26 leaves virtually no buffer for error or further revenue declines.
- Structural Industry Headwinds: Traditional broadcasting faces existential threat from digital platforms, with regional players particularly vulnerable to disruption.
Outlook: Critical Monitoring Points
Positive Catalysts
- Stabilisation of quarterly revenues above ₹20 crores for two consecutive quarters would signal demand bottoming
- Operating margin expansion above 10% would indicate improved cost management and pricing power
- Positive operating cash flow generation for two consecutive quarters would ease immediate liquidity concerns
- Strategic partnerships or content licensing deals with digital platforms could provide new revenue streams
- Entry of institutional investors (MF or FII) would signal improving confidence in turnaround prospects
Red Flags
- Further sequential revenue decline below ₹15 crores would indicate accelerating business deterioration
- Negative quarterly net profit for two consecutive quarters would raise going concern questions
- Cash balance declining below ₹0.10 crores without fresh capital raising would create existential liquidity crisis
- Debt increasing beyond ₹15 crores without corresponding revenue improvement would signal distress borrowing
- Promoter stake reduction or any pledging activity would indicate loss of confidence or personal financial stress
- Operating margin falling below 5% would leave insufficient cushion to cover interest and maintain positive net profit
The Verdict: Fundamental Restructuring Required
Score: 17/100
For Fresh Investors: Avoid completely. The combination of accelerating revenue decline, negative cash flow, minimal liquidity, and structural industry headwinds creates an unacceptable risk-reward profile. With no visible catalysts for improvement and deteriorating fundamentals across all key metrics, capital preservation should be the priority.
For Existing Holders: Consider exiting at current levels or any technical bounce. The stock has declined 60.66% from its 52-week high, but further downside remains possible if operational performance continues to deteriorate. The absence of institutional interest and weak return profile suggest limited support for the stock price. Any recovery would require fundamental business model transformation, which appears unlikely in the near term.
Fair Value Estimate: Given negative earnings and deteriorating fundamentals, traditional valuation methods are not applicable. The current price of ₹37.51 may still overvalue the business if cash flow remains negative and revenues continue declining. Book value of ₹15.28 per share represents a floor, but even this could erode further if losses continue.
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.
