UBS ::HT Media Q 4 FY11 results ahead of expectations 􀂄

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UBS Investment Research
HT Media
Q 4 FY11 results ahead of expectations
􀂄 Headline numbers ahead of UBS and street estimates
HT Media’s Q4 FY11 consolidated revenues grew 22.1% YoY to Rs4.7bn vs.
UBS-e of Rs4.5bn and consensus estimate of Rs4.6bn. The EBITDA margin
declined 550bps YoY to 18.6% mainly led by higher raw material costs (vs. UBS-e
of 18.1%). Net profit grew 10.3% YoY to Rs529m ahead of UBS-e of Rs408m and
consensus estimate of Rs441m mainly due to higher-than-expected other income.
􀂄 Other takeaways from the result
1) Radio and entertainment segments reported good results: revenues grew 81%
YoY to Rs258m; EBITDA margin was at 26.0%. 2) Ad revenues grew 20.5% YoY
to Rs3.6bn (UBS-e Rs3.8bn). Circulation revenue was flat QoQ. 3) Raw material
costs increased 510bps YoY to 35.1% of sales (UBS-e 34.0%). The EBITDA
margin was ahead of UBS-e due to lower-than-expected employee and other
expenses.
􀂄 UBS view: Maintain +ve view on India print media sector & HT Media
We expect India print media revenue to rise in the next five years, led by
favourable demographics, rising income and literacy levels, and increasing print
penetration. We maintain our Buy rating on HT Media as we expect strong revenue
growth and margin improvement to come from the monetisation of the National
Capital Region edition of the Hindustan Times and improving advertising yields on
a turnaround at this newspaper’s Mumbai edition and Mint.
􀂄 Valuation: maintain Buy with price target of Rs180
We derive our price target from FY13E EPS of Rs10.79 and 16.5x PE.