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HT Media: Inline results, maintain HOLD
HT Media’s Q3FY11 numbers were largely inline with our
estimates. Revenue grew 27% YoY on back of strong
advertising growth, in both the Hindi and English dailies.
While EBITDA margin contracted 135bp YoY, PAT margin
were maintained due to lower tax rates. We maintain our
HOLD rating with a target price of Rs166.
Robust ad revenue growth: HT Media registered blended
ad revenue growth of 27% YoY (25% growth in English and
35% growth in Hindi dailies) due to strong rural demand
and festive season. Circulation revenue dipped 2% despite
higher readership due to the company’s strategy of
pushing readership numbers in many new markets
Other businesses’ performance mixed: The radio
business registered a strong 80% YoY revenue growth to
Rs182mn revenues and EBITDA stood at Rs39mn. The
online business saw revenues fall QoQ from Rs27mn to
Rs21mn (but up 91% YoY). The JV with Burda also
registered a QoQ decrease in revenues from Rs290mn to
Rs150mn due to lower capacity utilization levels
Margins shrink due to higher newsprint costs: Margin
came to 19%, slightly lower than our estimate due to the
45% rise in raw material costs on back of the increase in
newsprint prices. PAT margin remained the same at 10.3%
due to a lower tax rate.
Maintain HOLD: With results being inline with our
estimates, we maintain our estimates and HOLD rating.
Strong revenue growth continues
HT media posted 27% YoY growth in revenue to Rs4,651mn in Q3FY11 on the back of the
advertising revenue which increased 27% YoY (and 12.3% QoQ) to Rs3,699mn from
Rs2,908mn in Q3FY10. English business advertisement revenue grew 25% on the back of
8% pricing increase and strong 17% volume growth. Hindi ad growth was 35% YoY on back
strong rural demand. We believe overall advertisement growth was on account of the
festive season (which fell in the quarter). However, government spends have reduced due
to the Bihar elections during the quarter. We believe that the ad rate hike taken by the
company (blended hike to the tune of 15% across Hindi and English) in January 2011
should further boost ad revenues and maintain the run rates being observed for the past
few quarters in the future.
While the overall readership increased for both the major publications (Hindustan and
Hindustan Times), circulation revenue dipped 2% YoY to Rs 471mn from Rs 481mn, though
it was up 13% QoQ. With the company’s focus being primarily to increase readership in
order to boost ad revenues we do not believe that the circulation revenues will increase
significantly in the coming quarters and expect a muted growth in the same.
Hindustan gaining readership; Hindustan Times is No. 2 in Mumbai
Hindustan has been growing in readership consistently in the last few quarters while
Hindustan Times has maintained its lead in readership in Delhi and has dethroned DNA
from the No. 2 spot in Mumbai. With the company further pushing its circulation in
Mumbai through lower schemes, and the new offers by DNA (Rs199 for 2 years) and Times
of India (an abridged version of Times of India and Mumbai Mirror at Rs149 for 1 year) we
expect price wars in the Mumbai English space in the coming quarters.
HT Media is also launching HT Money, an independent Hindi business news paper aiming
to utilize the reach of Hindustan and the content of Mint to cater to the SEC A customers in
the Hindi belt. We believe that this market is expected to bloom and the company should
manage to push considerable circulation and revenues from this enterprise.
Other businesses gaining traction
The radio business maintained a strong growth in the quarter with revenue of Rs182mn, an
increase of 80% over the same period in the last quarter. The business registered an EBITDA
margin of 21.4% as opposed to the negative EBITDA last year. On a QoQ basis, margin
improved from 11.3% in Q2FY11 on revenue of Rs141mn due to the higher realization on
back of the festive season.
The JV with BURDA saw revenue of Rs150mn, a decrease from Rs290mn on QoQ basis. This
was because of the lower utilization levels in the quarter. The facilities are operating at 45%
utilization rates and the company expects stable revenues from this JV in the coming
quarters with increased utilization rates.
The online business saw a decrease in the revenues from Rs 27mn in Q2FY11 to Rs21mn in
this quarter. The company posted EBIT losses of Rs107 mn in the quarter.
Raw material costs up; slight pressure on margins
International newsprint costs have increased over the year from US$550 to US$750 and this
coupled with the increase in circulation which was pushed for by the company saw raw
material costs increase by 45% over the year to Rs1,648mn. Consequently, EBITDA margin
contracted 135bp YoY to 19%. On a QoQ basis, margin improved 125bp due to better
inventory management.
Results inline, Maintain HOLD
With results being inline with our estimates, we retain our HOLD rating. Currently, the stock
trades at 20x FY11E and 14.2x FY12E EPS. We value the stock at 16x FY12E EPS, translating
into a target price of Rs166.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
HT Media: Inline results, maintain HOLD
HT Media’s Q3FY11 numbers were largely inline with our
estimates. Revenue grew 27% YoY on back of strong
advertising growth, in both the Hindi and English dailies.
While EBITDA margin contracted 135bp YoY, PAT margin
were maintained due to lower tax rates. We maintain our
HOLD rating with a target price of Rs166.
Robust ad revenue growth: HT Media registered blended
ad revenue growth of 27% YoY (25% growth in English and
35% growth in Hindi dailies) due to strong rural demand
and festive season. Circulation revenue dipped 2% despite
higher readership due to the company’s strategy of
pushing readership numbers in many new markets
Other businesses’ performance mixed: The radio
business registered a strong 80% YoY revenue growth to
Rs182mn revenues and EBITDA stood at Rs39mn. The
online business saw revenues fall QoQ from Rs27mn to
Rs21mn (but up 91% YoY). The JV with Burda also
registered a QoQ decrease in revenues from Rs290mn to
Rs150mn due to lower capacity utilization levels
Margins shrink due to higher newsprint costs: Margin
came to 19%, slightly lower than our estimate due to the
45% rise in raw material costs on back of the increase in
newsprint prices. PAT margin remained the same at 10.3%
due to a lower tax rate.
Maintain HOLD: With results being inline with our
estimates, we maintain our estimates and HOLD rating.
Strong revenue growth continues
HT media posted 27% YoY growth in revenue to Rs4,651mn in Q3FY11 on the back of the
advertising revenue which increased 27% YoY (and 12.3% QoQ) to Rs3,699mn from
Rs2,908mn in Q3FY10. English business advertisement revenue grew 25% on the back of
8% pricing increase and strong 17% volume growth. Hindi ad growth was 35% YoY on back
strong rural demand. We believe overall advertisement growth was on account of the
festive season (which fell in the quarter). However, government spends have reduced due
to the Bihar elections during the quarter. We believe that the ad rate hike taken by the
company (blended hike to the tune of 15% across Hindi and English) in January 2011
should further boost ad revenues and maintain the run rates being observed for the past
few quarters in the future.
While the overall readership increased for both the major publications (Hindustan and
Hindustan Times), circulation revenue dipped 2% YoY to Rs 471mn from Rs 481mn, though
it was up 13% QoQ. With the company’s focus being primarily to increase readership in
order to boost ad revenues we do not believe that the circulation revenues will increase
significantly in the coming quarters and expect a muted growth in the same.
Hindustan gaining readership; Hindustan Times is No. 2 in Mumbai
Hindustan has been growing in readership consistently in the last few quarters while
Hindustan Times has maintained its lead in readership in Delhi and has dethroned DNA
from the No. 2 spot in Mumbai. With the company further pushing its circulation in
Mumbai through lower schemes, and the new offers by DNA (Rs199 for 2 years) and Times
of India (an abridged version of Times of India and Mumbai Mirror at Rs149 for 1 year) we
expect price wars in the Mumbai English space in the coming quarters.
HT Media is also launching HT Money, an independent Hindi business news paper aiming
to utilize the reach of Hindustan and the content of Mint to cater to the SEC A customers in
the Hindi belt. We believe that this market is expected to bloom and the company should
manage to push considerable circulation and revenues from this enterprise.
Other businesses gaining traction
The radio business maintained a strong growth in the quarter with revenue of Rs182mn, an
increase of 80% over the same period in the last quarter. The business registered an EBITDA
margin of 21.4% as opposed to the negative EBITDA last year. On a QoQ basis, margin
improved from 11.3% in Q2FY11 on revenue of Rs141mn due to the higher realization on
back of the festive season.
The JV with BURDA saw revenue of Rs150mn, a decrease from Rs290mn on QoQ basis. This
was because of the lower utilization levels in the quarter. The facilities are operating at 45%
utilization rates and the company expects stable revenues from this JV in the coming
quarters with increased utilization rates.
The online business saw a decrease in the revenues from Rs 27mn in Q2FY11 to Rs21mn in
this quarter. The company posted EBIT losses of Rs107 mn in the quarter.
Raw material costs up; slight pressure on margins
International newsprint costs have increased over the year from US$550 to US$750 and this
coupled with the increase in circulation which was pushed for by the company saw raw
material costs increase by 45% over the year to Rs1,648mn. Consequently, EBITDA margin
contracted 135bp YoY to 19%. On a QoQ basis, margin improved 125bp due to better
inventory management.
Results inline, Maintain HOLD
With results being inline with our estimates, we retain our HOLD rating. Currently, the stock
trades at 20x FY11E and 14.2x FY12E EPS. We value the stock at 16x FY12E EPS, translating
into a target price of Rs166.
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