HT Media/HMVL: Q3FY11 Concall: Key Takeaways

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HMVL - Conference call takeaways
HT Media/HMVL: Q3FY11 Concall: Key Takeaways
Ad revenues: Ad revenues remained strong in Q3FY11 due to full benefit of festive related
ads. English business saw an ad revenue growth of 25% in Q3FY11: 15% from volumes and
~9% from price hikes (14% YoY in Q2FY11; 20% YoY growth in Q1FY11; 4-5% YoY in
Q4FY10). Major part of the growth has come from volumes especially in English. Growing
ahead of markets. The Company has undertaken a 10-15% ad rate hike effective from 15
January 2011.

HMVL: Hindi business saw an ad revenue growth of ~35% in Q3FY11 (30% YoY in Q2FY11;
24% YoY in Q1FY11; 21% YoY in Q4FY10). Ads used to account for 55% of total HMVL
revenues 3 years back, now ads account for 72%. So ads will be the main growth driver.
Company has not been impacted due to DB Corp’s entry into Jharkhand. In 9mFY11 ad
revenues have grown at ~30% and company expects to maintain this growth over medium
term. Also due to a strong comeback of Nitish Kumar in Bihar, Bihar will do well. In the past
few months, HMVL has been consolidating position, improving quality of paper, increasing
readership and has taken selective cover price cuts.
Election ad revenues in Bihar: Negative impact of elections in Q3FY11 as election ads were
low as there was a strong wave in favor of One political party and Government ads were not
there.
Position in UP improving for HMVL: in UP, Hindustan is now 75-80% of the size of
number two player Amar Ujala and expects to become number two player over the next few
years. IRS currently does not reflect this as IRS data is 12 months trailing data. Gorakhpur
launch has been good and seeing good acceptance. The starting print order in that market
was ~0.1 mn copies. With Gorakhpur launch the company believes it has accomplished ~90-
95% geographical coverage of the UP state and expects to benefit going ahead from increase
in circulation and IRS numbers reflecting the increase in readership.
MUMBAI: Seeing good traction due to expansion in readership has not broken even. But lot
of Jodi sales happens for Delhi and Mumbai. It takes 7 years to break even and will take 2
years further for HT to break even.
Most segments are advertising well: Most of the industry segments are doing well. The
outperformers have been real estate, BFSI, Job, Government and classifieds. However
Company was cautious on Real estate ads going forward.
Burda business: Factory is getting stabilized. Currently 40-45% capacity utilization. Sales of
150 mn in Q3 FY11 (INR 280 mn in Q2FY11). Cost was INR 125 mn in Q3FY11 while in
Q2FY11 cost of INR 240 mn. EBITDA loss of INR 50 mn in Q3FY11. Company expects 85-
100% utilization in 3 shifts in the next 3-4 years and expects more deals to happen
(Internationally EBITDA margins for this kind of business is 15-18%).
Radio: 29% QoQ increase in revenues (in Q2FY11, 15% QoQ increase in ad revenues to INR
141 mn). EBITDA of INR 30 mn in Q3FY11 (INR 16 mn in Q2FY11)
Internet: Sales of ~INR 21 mn in Q3FY11 and EBITA loss of INR 107 mn (in Q2FY11, INR 27
mn and EBITA loss of INR 94 mn). Company will continue to invest in internet as it has
tremendous long term value.


Private Treaties/ Partnership for growth: Q3FY11 sales – INR 125 mn (Q2FY11 sales –
INR 140 mn)
Job portal shifted to standalone: This has been done to get better synergy in taxes as Job
portal in in losses and also better funding capability for the job portal. Also Shine print
segment is in standalone so makes sense to house both in same entity.
Newsprint costs: Prices are expected to go up marginally. Newsprint consumption has
increased due to increased circulation and ad volumes.
Newsprint: Newsprint consumption has increased due to increased circulation and ad
volumes. INR 30,900 was the average newsprint cost for Overall business in Q3FY11 while for
Hindi it was INR 29000 per ton. In FY11, Company will use an overall quantity of 0.18 mn
tons (in Q3FY11 used 0.046 mn tons) with Hindi using ~0.075 tons.
Pagination: In Hindi, pagination number of copies has increased as company is in expansion
phase. In English, pagination has increased primarily due to higher volumes and also
expansion in Mumbai.
Hindi Money: Launched in top 12 cities of Hindi belt like Patna, Lucknow, Dhanbad, Kanpur
etc... It is an underserved market and has good long term potential. Using in house resource
of Mint.
Overall Circulation: Mint: 0.14 mn; Hindustan: 2.11 mn; English: 1.335 mn
Tax rate: For FY11 tax rate is likely to be 28-29%.