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MEDIA
Advertisement expenditures in 3QFY11 will likely be strong on account of
the festival season and renewed vigor in consumption. Year -on - year
growth shall also benefit from a favorable base effect, as Dussehra fell in
2QFY10. We expect advertising revenues to grow at a robust 20-30% y/y
across companies under our coverage universe. Print media companies
under our coverage are likely to continue showing declines in circulation
revenues, on account of heightened competitive intensity in Jharkhand and
UP. Rise in newsprint prices as well as higher consumption of newsprint
(rising circulation across newspaper companies) shall impact margins of the
companies negatively. We expect ENIL to register strong growth on the
back of a strong top-line as well as lower expenses, while UTV shall likely
register declines in PAT on account of lower margins on new films.
n HT Media: We expect continued strength in advertising revenues, led by resurgence
in metro advertising. Hindustan shall continue being on a high growth
path, with strong growth in Bihar on account of election - related advertising in
3QFY11, as well as improving advertising revenues in UP. HT Media's circulation
revenues shall continue to register y/y declines on account of aggressive marketing
to increase circulation in Mumbai as well as price war underway in
Jharkhand. We expect margins to remain flat y/y, as improving yields make up
for higher newsprint expenses and lower circulation revenues. Including HT
Burda revenues (not included in 3QFY10), we estimate revenues of the company
to rise 30.7% y/y, and EPS to register growth of 41% y/y.
n Jagran Prakashan: Advertising revenues shall grow at a healthy pace, while
circulation revenues are expected to decline in the quarter, on account of lower
revenues in Jharkhand as well as certain parts of Uttar Pradesh, where
Hindustan Media Ventures has been aggressive in promoting the newspaper
Hindustan. We expect gross margins to decline y/y, on account of higher newsprint
expenses. We estimate 26% y/y growth in EPS for the company, led by
topline growth (20%).
n ENIL: ENIL is likely to report strong 3QFY11 results, on the back of strong
growth in advertising revenues as the ad-rate hikes flow through in the festive
season. The company is likely to report lower expenses on content on account
of benefits of the order from copyright board (reduction in royalty expenses). Q/
Q margins as well as PAT growth is likely to be strong as lower royalty expenses
were only partially reflected in 2QFY11 results. The company had also invested
in marketing expenses in 2QFY11, and Q/Q growth in marketing and selling
expenses is unlikely to be much higher. Further, the company is likely to report
strong q/q growth, on account of lower tax expenses (losses carried forward).
We estimate 58% y/y growth in PAT for the company, and 22% growth y/y in
revenues (all comparisons on standalone basis).
n UTV: UTV is likely to report robust revenues from films on account of two major
releases in the quarter (Guzaarish and Tees Maar Khan), which shall bring in
revenues on account of broadcasting and other rights sales. Operating margin
from the movies business is likely to be lower, as the releases' performance at
theatres hasn't been strong. The television segment is likely to bring in better
performance in the quarter on strong adex growth in the quarter. Key factor to
watch for would be games, where the company has been looking to sign a
publishing deal for its console business - not factored into current quarter's estimates.
Overall, we expect revenues to rise 3% y/y, and PAT to decline 25% y/y.
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