As per Elara Capital's report last month, it stated that ad revenues will float atop Wave II debris and that the radio segment will be a laggard in bouncing back to pre-COVID levels, given high exposure to local & SME ad segments, and loss to digital mediums. 

It is expected to recover to a mere 58% of pre-COVID by end-FY22 and full recovery could be postponed to FY24. Ad revenue fell 70% vs pre-COVID levels in Q1 (vs expectations of a 50% decline), as yield remains adversely affected.

This is led by heavy pricing discounts via new initiatives like RC bazaar to attract advertisers, high yield markets like Mumbai, Bengaluru and Delhi remaining shut affected by rising COVID cases, and large high yielding advertisers moving to digital, led by better measurement than radio. 

"We believe long-term scaling up of the radio vertical remains a structural challenge on the rising digital penetration with the cheapest data prices globally, driving audio listenership for streaming platforms, audio streaming platforms like Spotify, Gaana & Saavn offering higher ROI, aided by strong tech backend, losing the government vertical, which contributed to ~20-25% of radio ad spend 3-4 years ago, and no cap on digital royalty. We expect EBITDA margin to remain under pressure until revenue recovers, as cost rationalization (30-40% of INR 508mn fixed cost savings in FY21 to be permanent in nature) will be unable to offset revenue weakness. We reiterate Sell with a revised TP of INR 13 from INR 14 on 9x (unchanged) FY23E EV/EBITDA," shares Karan Taurani, SVP – Research Analyst (Media, Internet & Consumer Discretionary), Elara Capital.