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Tier II and Tier III markets would drive growth in the print media with
increasing consumption, shifting focus of advertisers, narrowing
discount to English ad rates and rising penetration on the back of
increasing literacy levels. Hindustan Media Ventures (HMVL), being a
regional player and with dominance in the fast growing states of Bihar,
Jharkhand (14.4% CAGR in FY04-09) is well poised to capitalise on this
growth. We expect short-term concerns arising from the launch of DB
Corp in its key markets to subside in due course with expanding
markets. We see the topline growing at 16.1% CAGR (FY10-13E) to |
686.1 crore while EPS would grow by 31.4% to | 13.9, on the back of a
better operational performance and negligible interest cost due to debt
repayment.
Under-penetrated Industry
The print industry remains highly under-penetrated with rural reach as
low as 21%. Rising income, consumption in smaller towns and closing
gap in ad rates with English peers would fuel advertisement growth while
increasing literacy and penetration would aid circulation growth. The
industry is expected to grow at 9.0% CAGR over CY10-14E to | 268
billion, led by 11.6% CAGR in advertisement revenue to | 176 billion and
6.3% CAGR in circulation revenue to | 92 billion. Being a regional pure
play, HMVL would grow faster than the industry at 16.1% over FY10-13E.
Third largest Hindi daily
Hindustan, the third most read daily, is the only newspaper to show
improvement in readership in IRS Q210 data. It continues to enjoy strong
leadership in its key markets with 74.3% & 58.0% readership share in
Bihar & Jharkhand, respectively. It is the fastest growing Hindi daily in
biggest Hindi ad market of UP (market share up from 16% in R2 2007 to
21% Q110). Due to higher yields and improving literacy rates, we expect
20.2% & 6.1% CAGR (FY10-13E) in ad & circulation revenue, respectively.
Valuations
Higher focus towards regional advertising on back of increasing income
levels and rising consumption in smaller towns and villages would aid
ad revenue growth while rising literacy levels and deeper penetration in
Tier II and III cities would aid circulation growth. Players like HMVL,
which cater to regional demand, would continue to grow faster than
national peers. At the CMP of | 132, the stock is trading at 12.4x FY12E
EPS of | 10.6 and 9.5x FY13E EPS of | 13.9.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Tier II and Tier III markets would drive growth in the print media with
increasing consumption, shifting focus of advertisers, narrowing
discount to English ad rates and rising penetration on the back of
increasing literacy levels. Hindustan Media Ventures (HMVL), being a
regional player and with dominance in the fast growing states of Bihar,
Jharkhand (14.4% CAGR in FY04-09) is well poised to capitalise on this
growth. We expect short-term concerns arising from the launch of DB
Corp in its key markets to subside in due course with expanding
markets. We see the topline growing at 16.1% CAGR (FY10-13E) to |
686.1 crore while EPS would grow by 31.4% to | 13.9, on the back of a
better operational performance and negligible interest cost due to debt
repayment.
Under-penetrated Industry
The print industry remains highly under-penetrated with rural reach as
low as 21%. Rising income, consumption in smaller towns and closing
gap in ad rates with English peers would fuel advertisement growth while
increasing literacy and penetration would aid circulation growth. The
industry is expected to grow at 9.0% CAGR over CY10-14E to | 268
billion, led by 11.6% CAGR in advertisement revenue to | 176 billion and
6.3% CAGR in circulation revenue to | 92 billion. Being a regional pure
play, HMVL would grow faster than the industry at 16.1% over FY10-13E.
Third largest Hindi daily
Hindustan, the third most read daily, is the only newspaper to show
improvement in readership in IRS Q210 data. It continues to enjoy strong
leadership in its key markets with 74.3% & 58.0% readership share in
Bihar & Jharkhand, respectively. It is the fastest growing Hindi daily in
biggest Hindi ad market of UP (market share up from 16% in R2 2007 to
21% Q110). Due to higher yields and improving literacy rates, we expect
20.2% & 6.1% CAGR (FY10-13E) in ad & circulation revenue, respectively.
Valuations
Higher focus towards regional advertising on back of increasing income
levels and rising consumption in smaller towns and villages would aid
ad revenue growth while rising literacy levels and deeper penetration in
Tier II and III cities would aid circulation growth. Players like HMVL,
which cater to regional demand, would continue to grow faster than
national peers. At the CMP of | 132, the stock is trading at 12.4x FY12E
EPS of | 10.6 and 9.5x FY13E EPS of | 13.9.
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