Radiowalla Network coming with IPO to raise upto Rs 14.25 crore

Radiowalla Network

• Radiowalla Network is coming out with initial public offering (IPO) of 18,75,200 shares of Rs 10 each in a price band Rs 72-76 per equity share. 
• The issue will open for subscription on March 27, 2024 and will close on April 2, 2024.
• The shares will be listed on NSE Emerge Platform.
• The face value of the share is Rs 10 and is priced 7.20 times of its face value on the lower side and 7.60 times on the higher side.
• Book running lead manager to the issue is Narnolia Financial Services.
• Compliance Officer for the issue is Kiran Gurnani.

Profile of the company

The company is into the business of customer engagement services which includes in-store radio services (exclusive radio channel for a brand) on subscription model basis, corporate radio (private radio channels for employee engagement in organisation) and advertisement services which includes digital signage solution, content management services and point of purchase advertising to its clients. It exclusively caters to the business-to-business (B2B) sector.

In the realm of In-Store Radio, it furnishes audio services to diverse clients, including malls, retailers, and hospitals, addressing their background audio requirements. It offer background music services, which involve providing a selection of music to enhance the ambient atmosphere of various spaces. It delivers AI-driven playlists of continuously updated music. In the domain of Corporate Radio, the company extends audio services to corporate clients, encompassing both musical and non-musical components. The music facet comprises of a specified background music to enhance the ambient atmosphere of the office places of its clients. The non-musical facet comprises internal communications, announcements, birthday wishes, significant company news, and any other information that the company intends to convey to its employees. Its background music services aim to create a pleasant and customized auditory experience tailored to the specific needs and preferences of its clients and their respective environments.

Under Audio Advertising, it offers programmatic Advertising which is data-driven approach to buying and placing digital advertisements in real-time. Instead of the traditional manual process of ad buying, where human negotiations and manual insertion orders are involved, programmatic advertising relies on algorithms and technology to automate the buying of ad inventory. It allows for precise targeting, efficient use of advertising budgets, and the ability to reach the right audience at the right time. Under Visual Advertising, the company offers Digital out of Home Advertising (DOOH) and Static Branding Opportunities. Digital Out of Home Advertising (DOOH) represents a contemporary advertising approach wherein it deploys digital standees, video walls, LED displays, touch screen kiosks, and commercial-grade monitors for clients and overseeing the management of their content. This dynamic method ensures a modern and engaging visual experience for the audience. In Static Branding Opportunities, it creates a platform for brand visibility and engagement, implementing strategies that involve direct interaction with the target audience. These activities aim to enhance brand recognition and generate valuable leads for its clients.

Proceed is being used for:

• Meeting out the expenses for Investment in Technology.
• Meeting out the Capital Expenditure for the Company.
• Meeting out the Working Capital requirements of the Company.
• Meeting out the General Corporate Purposes.
• Meeting out the Issue Expenses.

Industry overview

Advertising in India has come a long way in the last few years. The industry is one of the fastest-growing markets in the world, with India being the third largest contributor in the world of advertising, after China and the US, according to Statista 2023. With its developing economy, India provides advertisers with several opportunities to sell their services and products through the region's expanding media platforms. Economic expansion in India has also increased the purchasing power of a sizable segment of the population, resulting in a more affluent and brand-conscious consumer base. As a result, businesses are focusing on building a strong brand image for themselves through extensive advertising. 

The advertisement sector in India has been digitally disrupted in the previous decade as the number of individuals utilising smartphones and internet services has increased dramatically. This resulted in the rise of a number of consumer internet models and industries with enormous potential for digital advertising. Digital advertising is anticipated to expand at a modest rate of 8–10% in the fiscal year 2022-23. However, as economic tailwinds kick up in 2023-24, the digital ad expenditure is predicted to more than double to $ 21 billion by 2027-28. Global internet advertising market growth declined from 30.8% in 2021 to 8.1% in 2022, resulting in a total market value of $ 484 billion for the year. In contrast, India's internet advertising market expanded 35.3%, from $ 3.3 billion in 2021 to US$ 4.4 billion in 2022, making it one of the fastest growing in the world. The internet advertising market in India is predicted to develop at a CAGR of 12.3%, with total revenue reaching US$ 7.9 billion by 2027.

Pros and strengths

Global Presence: The company’s extensive global presence extends its reach and its understanding of clients' needs and cultural differences. Operating in diverse regions such as India, UAE, Mexico, Singapore, Sri Lanka, etc. The company has cultivated insights into its clients' diverse requirements and local cultures. This unique position enables the company to customize its services to precisely align with its clients' distinct needs. Its strength lies in transcending local market limitations, allowing it to seamlessly connect with clients worldwide. The ability to offer cross-cultural experience and a global perspective amplifies its competitive advantage, making it more suitable for its clients seeking both local relevance and a global presence.

Multi- Lingual Content: The company’s ability to provide services in multiple languages, including English, Hindi, Tamil, Kannada, Telugu, Gujarati, Marathi, Bengali, Punjabi, Arabic, and others as needed, strengthens its capacity to connect clients not only within specific regions but also across geographical borders. This versatility allows it to effectively communicate with a wide range of clients, fostering cross-cultural connections and expanding its market reach.

Established client base and partnerships with major retailers: The company’s strength lies in its well-established client base and strategic partnerships with major retailers. Over the years, it has cultivated strong relationships with a diverse range of clients, earning their trust and loyalty. These partnerships extend to prominent retail chains, reinforcing its position as a preferred provider of in-store radio and advertising solutions. The client base and retail collaborations not only enhance its market presence but also serve as a testament to the effectiveness and reliability of its services.

Risks and concerns

Depends upon the growth and stability of retail sector: The company provides In- store radio services and audio and visual advertisement solutions to retail business sector, thereby its business is significantly reliant on the growth and stability of the organized retail sector. Any adverse developments or a slowdown in the retail industry could potentially have an adverse impact on its business operations and financial performance. Major factors such as potential impact of shifting in the consumer behavior towards increased online shopping or other changes in shopping habits, which may reduce its client base, Economic downturns pose another risk, as they often lead to reduced retail advertising budgets, affecting its revenue streams. Additionally, heightened competition in Retail industry may affect its revenues and overall business prospects.

Rely significantly on content creators and Radio Jockeys: The company’s business operations rely significantly on content creators and Radio Jockeys (RJs) who play a pivotal role in generating non-music content for corporate radio and audio advertising in various settings, including retail environments and malls. The success and effectiveness of its services are intrinsically tied to the creativity and contributions of these individuals. In the event that it is unable to retain these key content creators and RJs for any reason, it could have a detrimental impact on its business operations. Any loss of key content creators and RJs may lead to a decline in the quality and appeal of its non-music content, potentially affecting its clients' satisfaction and, subsequently, client retention rates. Furthermore, a shortage of skilled content creators and RJs may result in challenges related to meeting content delivery schedules and managing advertising campaigns effectively.

The company’s In- store radio services depend on licensed music, obtained from Two key aggregators: The company’s in-store radio services are reliant on licensed music playlists obtained from two key aggregators. These agreements, while non-exclusive, are vital for the continuous broadcast of background music. The associated risk stems from its dependence on these agreements. Any disruptions, terminations, or modifications to these licenses or agreements could impact its capacity to deliver in-store radio services. Additionally, regulatory alterations, disputes, or unexpected issues with these aggregators have the potential to disrupt its music content, leading to potential repercussions on client satisfaction and its contractual commitments. 

Outlook

Radiowalla Network provides in-store radio services on a subscription model basis, which includes an exclusive radio channel for a brand. The company also offer corporate radio services, which provide private radio channels for employee engagement within an organisation. Additionally, the company provides advertisement services such as digital signage solution, content management services, and point of purchase advertising to its clients. Its services are exclusively catered to the business-to-business (B2B) sector.  It has empanelled itself with Directorate of Advertising and Visual Publicity (DAVP) which has now integrated into Central Bureau of Communication (CBC), which provides 360 degrees communication solutions to the Ministries/Departments/ Public Sector Undertakings (PSUs)/autonomous bodies. This allows the company to pitch government departments. This empanelment has granted it the privilege of participating in government department projects. On the concern side, the company’s major revenue is derived from radio engagement and subscription services. In case of any adverse circumstances affecting the accessibility, popularity of its brand and quality of its services may have a significant impact on its financial performance. Additionally, unforeseen events, such as technological disruptions or shifts in market dynamics, may pose risks to its revenue streams.

The company is coming out with an IPO of 18,75,200 equity shares of face value of Rs 10 each. The issue has been offered in a price band of Rs 72-76 per equity share. The aggregate size of the offer is around Rs 13.50 crore to Rs 14.25 crore based on lower and upper price band respectively. On performance front, total Income for the period ended March 31, 2023, stood at Rs 1,401.39 lakh whereas in Financial Year 2021-22 it stood at Rs 1,048.98 lakh representing an increase of 33.59%. The Restated Profit after Tax for the Period ended March 31, 2023, stood at Rs 107.31 lakh whereas for FY ended March 31, 2022, it stood at Rs 46.14 lakh representing an increase of 132.55%. Meanwhile, the company is proposing to expand its business operations in the international markets. The company will conduct a thorough market analysis which will identify promising international markets, taking into account factors such as size, growth potential, and cultural nuances. Besides, the company is proposing to invest in technology by establishing an AI based platform enabling it to strategically reach customers across varied geographies and market segments.