Music Broadcast Limited returns to operating profit as costs fall

Music Broadcast Limited, which uses the Radio City brand, returned to operating profit before tax of Rs 1.5 crore in Q2 FY27, versus an operating loss of Rs 13.3 crore a year earlier. Revenue rose 8% to Rs 41 crore, but total expenses fell 20% to Rs 34.8 crore, producing the shift.

How did Radio City return to operating profit in Q2 FY27?

Radio City returned to operating profitability because its expense reduction exceeded its revenue growth. Q2 FY27 revenue increased by Rs 3.2 crore year on year to Rs 41 crore, while total expenses declined by Rs 8.5 crore to Rs 34.8 crore. Operating profit before tax consequently reached Rs 1.5 crore, compared with an operating loss before tax of Rs 13.3 crore in Q2 FY26.

Reported profit before tax also moved into positive territory, at Rs 8.9 crore in Q2 FY27 against a reported loss before tax of Rs 6.4 crore in Q2 FY26. Management attributed the operating improvement to disciplined cost management and operational efficiency, rather than presenting it as the result of a broad recovery in the advertising market.

The sequential comparison was less favourable on revenue. Q2 FY27 revenue of Rs 41 crore was Rs 3.5 crore below the Rs 44.5 crore reported in Q1 FY27. Management said the softer sequential operating environment reflected the festive season beginning earlier in the prior year, while maintaining that the cost base had benefited from structural measures taken over recent quarters.

Can Radio City sustain its lower cost base?

Radio City management said it expects the current profitability to continue, supported by its cost structure. Chief Financial Officer Rajiv Shah said quarterly costs over the last three quarters had been around Rs 39 crore to Rs 40 crore and that this level should continue. This was management’s view, not formal financial guidance.

On the Q2 FY27 sequential expense movement, Shah said total costs were roughly Rs 1 crore lower than in Q1 FY27. Employee expenses rose by Rs 60 lakh, but other expenses fell by Rs 1.6 crore, creating the net reduction. The disclosed quarter-on-quarter savings therefore came from other expenses rather than lower employee costs.

The first-half figures show that the turnaround was also cost-led over a longer period. H1 FY27 revenue declined about 2% to Rs 85.5 crore from Rs 87.2 crore in H1 FY26, while total expenses dropped 23% to Rs 70.4 crore from Rs 91.7 crore. Operating profit before tax was Rs 5.6 crore, reversing an operating loss before tax of Rs 20.2 crore a year earlier.

Reported profit before tax in H1 FY27 was Rs 21.2 crore, compared with a reported loss before tax of Rs 6.3 crore in H1 FY26. Management described the first-half result as reflecting cost optimisation and improved operating leverage. The call did not quantify the individual structural cost measures behind the H1 expense reduction of Rs 21.3 crore.

How is Radio City building non-FCT revenue?

Radio City said non-FCT contributed about 18% to 20% of revenue, while management gave an 80/20 FCT and non-FCT split for the quarter. The company is seeking to raise non-FCT contribution through branded events, sponsorships, digital solutions and integrated advertiser offerings, alongside its core radio advertising activity.

Management said it is exploring concerts and other experiential activities in Tier 2 and Tier 3 markets, where it sees traction and has a strong presence. Chief Executive Officer Abraham Thomas did not give an event count, revenue target or timing for the initiative. He said the company would pursue as many events as possible provided they were profitable.

That condition is material because Q2 FY27 revenue remained below the Rs 44.5 crore reported in Q1 FY27. Management said it is conscious of both the costs of events and the revenue they generate, which links its non-FCT expansion effort to the cost discipline that underpinned the return to operating profit.

Radio City also reported a 24% market share for the quarter in response to an investor question. The company did not specify the basis of that market-share measure or provide an earlier-period comparison. Its stated priorities include core radio monetisation, deeper engagement with strategic advertisers, branded content, sponsorships and digital integrations.

What does Radio City expect in the second half?

Radio City expects current profitability to continue, but management did not provide numerical revenue or earnings guidance. Shah said the company could not give guidance for the next two years because of market and geopolitical uncertainty. He said Radio City would seek to benefit if the market improved, while revenue would depend on market conditions.

For the nearer term, Thomas said management hoped the festive period would be better than the previous year. He said the festive season had begun and that the company was hopeful momentum would continue through the next two quarters. The company did not provide a target for second-half revenue, operating profit or non-FCT contribution.

Management also said net cash on the books was Rs 283 crore. When asked about a buyback, Shah said there were no plans at present. He also said management could not comment on dividends when asked about potential distributions after the debenture-related interest burden had ended.

Conclusion

Radio City’s Q2 FY27 operating turnaround was principally an expense story. Revenue increased 8% year on year to Rs 41 crore but was Rs 3.5 crore below Q1 FY27, whereas expenses fell 20% year on year to Rs 34.8 crore. H1 FY27 followed the same pattern: a 2% revenue decline accompanied a 23% reduction in expenses and a return to operating profit before tax.

The next item to watch is whether festive-period demand improves revenue while management maintains the cost structure it says should continue. Radio City also plans to develop profitable Tier 2 and Tier 3 events and other non-FCT offerings, but it has disclosed no revenue target, while citing market and geopolitical uncertainty as reasons for withholding longer-term guidance.