CMP: Rs. 91.10; Buy at
current levels & at every dips.
Short Term Target : Rs. 100; Medium to Long Term Target: Rs. 120; STOP LOSS – Rs. 83.80; Market Cap: Rs. 2,136.15 Cr; 52 Week
High/Low: Rs. 119.00 / Rs. 69.65.
Total Shares: 23,27,48,308 shares;
Promoters : 16,17,77,090 shares –69.51 %; Total Public holding : 7,09,71,218 shares –30.49 %; Book Value: Rs. 75.43; Face
Value: Rs. 2.00; EPS: Rs. 9.07; Dividend: 20.00 %; P/E: 9.93 times; Ind. P/E: 21.64;
EV/EBITDA: 5.22.
Total Debt: 382.62 Cr; Enterprise Value: Rs. 2,367.00 Cr.
HT MEDIA LTD: HT Media Limited was founded in 1924 and was incorporated on
3 December, 2002. HT Media ltd is based in New Delhi, India. HT Media Limited
operates as an subsidiary of The Hindustan Times Limited. The company came out with an IPO on
August 2005 offering 46,40,000 equity shares of Rs. 10 each for Rs. 530 per
share raising Rs. 245.92 Cr. The shares of HT MEDIA got listed on 1 September
2005 at Rs. 750.00 per share. The company declared split in face value of its
shares from Rs. 10 to Rs. 2 on 19 October 2006. The IPO proceeds were intended
to be used for capital expenditure, sales and marketing, and radio services. HT Media Limited, together with its subsidiaries, primarily
engages in the printing and publication of newspapers and periodicals in India.
It operates in three segments: Printing and Publishing of Newspapers and
Periodicals, Radio Broadcast & Entertainment, and into Digital and web.
The company
publishes well-known Hindustan Times
-English daily; Hindustan-a
Hindi daily; Mint-a business
newspaper daily, except Sunday; Nandan-a
monthly children’s magazine; and Kadambini-a
monthly women’s magazine. It also engages in FM radio broadcast and various
other related activities through its radio channels operating under the brand
name of Fever104 in the
cities of Delhi, Mumbai, Kolkata, and Bengaluru. In addition, the company also operates
few websites namely Shine.com- a
job portal; Desimartini.com- a
movie review website; HTCampus.com- an
education portal; Hindustantimes.com- a
news website; and livemint.com- a
business news website. Further, it provides HT
Education- a weekly educational supplement; My First Newspaper- a newspaper for school children and teachers; HTCampus- which provides the information
on various courses, vari0us colleges & universities; and Studymate- a supplementary education programme that focuses on the
CBSE curriculum and prepares students for examination. Additionally, the
company offers HT Brunch- a sunday
magazine supplement; HT City- a Delhi-based supplement; HT Estates- a realty supplement; HT Mini- a tabloid
newspaper for the commuters; HT Café- a Mumbai-based supplement related to bollywood and entertainment; and HT Business- for business news and
information. It also provides events and marketing solutions; digital content
distribution and digital marketing on the mobile medium; and commercial
printing solutions.
HT MEDIA
Ltd is locally compared with Jagran Prakashan Ltd, DB Corp Ltd, The Sandesh
Ltd, Deccan Chronicle Holdings Ltd, Infomedia Press Ltd, and Hindustan Media
Ventures Ltd, and Globally compared with News Corporation of USA, New York
Times Company of USA, Gannett Company of USA, Tribune Company of USA, Daily
News LP of USA, Berkshire Hathaway of USA, Lee Enterprise of USA, A.H.Belo
Corporation of USA, BELL Media of Canada, Bloomsbury Publishing of London, D.C.
Thomson & Co. Ltd of Scotland, Daily Mail and general Trust of UK, Dong-A
IIbo of South Korea, Hankyoreh Shinmun of South Korea, Hurriyet of Turkey,
Independent News & Media of Dublin, Ireland, EM News Distribution of Ireland, Fairfax
Media of Australia, Guardian Media Group of UK, Central European Media
Enterprise Ltd of Hamilton, Bermuda, Hong Kong Economic Times Hld of Hong Kong,
Modern Times Group AB of Sweden.
Investment Rationale:
HT
Media is one of the leading print media companies in India, which is home to
three leading newspapers in the country which is in the English, Hindi and
business segments namely Hindustan Times – the second most read English daily
with a readership of 38 Lakhs, Hindustan – the third most read Hindi daily with a
readership of 1.22 Cr and Mint - a business daily and India's first newspaper to be published in the Berliner format, Mint exclusively carries The Wall Street Journal "WSJ" branded editorial content by the virtue of content sharing partnership between HT Media & Newscorp.
Recently, TV18's business news channel CNBC-TV18 has entered into an strategic content alliance with MINT, as a part of the tie-up these two parties will share content with each other on daily basis & will work together on various editorial intiatives throughout the year, Starting from first of april, every issue of Mint will carry exclusive content from CNBC-TV18 while Mint's news & analysis will be available on CNBC-TV18 regularly also with content exchange between two digital assets- livemint.com & moneycontrol.com, this alliance will benefite both. Hindustan Times was started
in 1924 and has a more than 85 year history as one of the country’s leading
newspapers. The company also has four FM radio stations namely - “Fever 104” in Delhi,
Mumbai, Bengaluru and Kolkata. The company has also made a foray into the
internet space through its subsidiary Firefly e-Ventures Ltd, which operates
the job portal www.Shine.com. This is in addition to the existing websites
livemint.com and hindustantimes.com.
According to report by a global media investment management, a number of developing
markets across the globe will see significant growth in newspaper revenues.
Although revenues overall have declined over the past few years the appetite
for newspapers is growing, globally. It is being forecasted that by the end of
the 2017, 59.4 Cr newspapers would be distributed daily in Asia
Pacific markets only. A global media group says that the Print advertising will grow at 8.5 % in 2014 which would be up from 4.6 % last year, largely on the back of advertising by governments and political parties ahead of the general election falling May 2014. The report says that the growth in print is expected to come exclusively from newpapers, with the magazine advertising market estimated to shrink by 5 % this year after remaining stagnant for three years. The report states that in 2014, print will account for 38 % of its total advertising, last year print accounted to 39 % share in the advertising sector. Growth in regional-language print publication is also expected to increase.
For HT Media, its Advertisement growth was better
than the market estimates, with English ad posting a healthy 5.90 % YoY growth
after few subdued quarters and Hindi ad posting a handsome YoY growth of 16.3 %.
Even HT Media’s radio fared well this quarter reporting a growth of 22.5 % to reach
Rs. 26.7 crore. Going ahead, it is believed that the company will benefit from
the upcoming general elections and increased Ad spending by FMCG companies in a
bid to expand their rural footprint. However, the advertisement scenario would
remain subdued post the election fillip till the economy starts witnessing a turnaround.
It is expected that the company can post an English Ad revenue growth of 5.9 %
and 8.1 % and Hindi Ad revenue growth of 13.5 % and 13.3 % in FY14 and FY15,
respectively. Newsprint prices have increased 14 % YoY but due to consistent
efforts on the side of grammage and pagination, HT Media could mitigate the
impact to a considerable extent. English print reported 5.9 % YoY growth after
several subdued quarters and Hindi print also recorded 16.3 % YoY ad revenue
growth. This growth can be attributed both to the low base effect and improving
Ad scenario due to general elections in 2014. As the company already has
inventory till August in place it is expect that its raw material costs will
remain stable for the next few quarters. Company has a gross debt of Rs. 700
crore and a gross cash balance of Rs. 1500 crore, it has neither repaid its
debt, nor has distributed cash in terms of dividend or buyback. There has,
however, not been any clear roadmap on the cash usage by the company, which
would continue to be an overhang on valuations.
Outlook and Valuation:
HT
Media is the India’s second largest print media company in terms of
readership-circulation and India’s largest listed print media company in terms
of revenue. The company's two key offerings: - Hindustan Times and Hindustan
features in the top five newspapers in their respective categories in terms of
readership. The company is a market leader in Delhi for Hindustan Times, Bihar
and Jharkhand for Hindustan and has emerged as a strong contender in the
financial daily segment for Mint in business segment. HT Media’s recent
underperformance can be attributed to its OPM pressure on account of losses in
digital business, higher newsprint costs and cyclical
nature of Ad revenue growth due to sluggish and slower GDP growth. The company
has undertaken measures such as cutback in excess circulation and have
increased pagination efficiency to improve its margin. The company has also
divested its entire 51 % stake in HT Burda which was making losses. The
Management has also indicated a shift in focus from volume driven to yield
driven advertising growth. Going forward, it is believed that the yield driven
advertising growth and the upcoming elections will help the company to improve its advertising
revenue growth and profitability.
HT Media reported its Q3FY14 numbers, which
were better on both the top-line and the bottom-line front. The company reported
revenues of Rs. 581.3 crore due to better-than-expected Ad-growth of 8.8 % in
the print segment. In addition, the impressive 17.7 % growth in circulation
revenues on the back of increased realisation per copy further aided the
company’s revenues. HT Media demonstrated EBITDA margin expansion by 0.31 % YoY
to 16.3 % owing to high operating leverage in the quarter. The PAT was at Rs. 67.0
crore and was aided by higher other income of about Rs. 35.7 crore. Also, HT
Media may remain under pressure on account of lower Ad growth in the English
segment on account of a challenging economic environment. Circulation revenues
grew 17.7 % YoY to Rs. 66.5 crore. The management indicated the growth in circulation
revenue was largely brought about by improvement in realisation per copy. The management
guided that the company would be taking further rate hikes in the upcoming
quarters improving its EBITDA margins. PAT margins expanded 1.73 % YoY buoyed
by higher other income of Rs. 35.7 crore this quarter. In this quarter company’s HT Mumbai achieves breakeven, Mint is expected
to breakeven in 4QFY2014: During 3QFY2014, HT Mumbai market achieved operational
breakeven aided by 25 % yoy growth in revenues to Rs. 47
cr. However, Mint reported a loss of Rs.
2.5 Cr during the quarter. The digital business
continues to make losses. According to Management commentary, the digital
business is expected to make a loss of Rs.
38 Cr in FY2014. The company have recently, on 20 February 2014 have completed its buyback of 22,72,727 equity shares of face value of Rs.2 each via open market transactions and had set Rs. 110 as it maximum buying price, however , the company was successful in buying all of 22,72,727 equity shares of Rs.2 each at an average price of Rs. 82.76 per share totalling to Rs. 18.80 Crs of cash outflow making an positive impact of 0.96 % on comapny's EPS. The At the current market price of Rs. 91.10, the stock is trading at a PE of 10.71 x FY14E and 9.90 x FY15E respectively. The company can post Earnings per share (EPS) of Rs. 8.50 in FY14E and Rs. 9.20 in FY15E. One can buy HT MEDIA LIMITED with a target price of Rs. 110.00 for Medium to Long term investment and for the SHORT TERM PLAYERS it should be Rs. 100.00.
| KEY FINANCIALS | FY12 | FY13 | FY14E | FY15E |
|---|
| SALES (₹ Crs) | 1,972.00 | 2,016.10 | 2,155.40 | 2,335.10 |
| NET PROFIT (₹ Cr) | 165.50 | 167.70 | 200.00 | 216.60 |
| EPS (₹) | 7.50 | 7.10 | 8.50 | 9.20 |
| PE (x) | 10.20 | 10.10 | 10.50 | 10.80 |
| P/BV (x) | 1.20 | 1.10 | 0.90 | 0.90 |
| EV/EBITDA (x) | 6.60 | 6.80 | 5.70 | 4.00 |
| ROE (%) | 11.40 | 10.50 | 11.20 | 10.90 |
| ROCE (%) | 10.10 | 9.00 | 7.70 | 9.60 |
I would buy HT MEDIA LTD for Medium to Long term for target of Rs. 110 and for the shorter term the target would br Rs. 100.00. As I always say, I am a long term believer in markets & I do respect the markets and will keep a strict stop loss of ₹ 83.80 on every purchase. (Why Strict stop loss of 8 % ?) - Click Here
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