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HTML reported 2Q earnings below our estimates on account of FX losses
and higher interest costs. While revenue growth was in line with our
expectations, English markets have seen a sharp slowdown in ad growth,
though Hindi markets delivered robust growth. HTML is expanding its
presence in UP market to best position itself to benefit from the
forthcoming state elections.
Hindi markets driving ad growth. HTML's 2QFY12 advertising
revenues increased 13% YoY largely driven by Hindi advertising, up
25% YoY (mainly yield driven). English advertising grew by 8% YoY.
Management noted that while real estate, education and government
advertising have slowed; local consumer (FMCG, Auto) sectors have
held up. Management expressed caution for the rest of the year.
UP expansion ahead of state elections. Management indicated that
they have increased the circulation in UP and are growing ahead of the
market with total revenue share of 13%-14% vs. total readership share of
5%-6%. Hindustan is looking to launch 2 new editions in Moradabad
and Aligarh in 3Q, to close any gaps in its coverage area in UP.
Management indicated that any upside from UP state elections would be
visible in 4Q.
Q2FY12 result highlights. Revenues increased 11% YoY driven by
higher circulation revenues (+21% YoY), ad revenues (+13% YoY) and
Radio & Entertainment (+12% YoY). EBITDA margin declined 330bps
YoY, primarily due to FX loss and diminution in investments value.
Excluding these items, EBITDA margin declined 90bps YoY. Net profits
increased 13% aided by higher non operating income and lower tax rate.
Estimate and TP changes. We cut our EPS estimates by 14%/13% for
FY12E/FY13E factoring in lower ad revenue for English markets and
higher newsprint and interest costs. We remain OW and roll forward our
TP to Sep-12, still at Rs250, based on 20x Sep-13E P/E. Key risks
include rising competitive intensity, failure to scale up in new markets,
increase in newsprint costs and further slowdown in growth.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
HTML reported 2Q earnings below our estimates on account of FX losses
and higher interest costs. While revenue growth was in line with our
expectations, English markets have seen a sharp slowdown in ad growth,
though Hindi markets delivered robust growth. HTML is expanding its
presence in UP market to best position itself to benefit from the
forthcoming state elections.
Hindi markets driving ad growth. HTML's 2QFY12 advertising
revenues increased 13% YoY largely driven by Hindi advertising, up
25% YoY (mainly yield driven). English advertising grew by 8% YoY.
Management noted that while real estate, education and government
advertising have slowed; local consumer (FMCG, Auto) sectors have
held up. Management expressed caution for the rest of the year.
UP expansion ahead of state elections. Management indicated that
they have increased the circulation in UP and are growing ahead of the
market with total revenue share of 13%-14% vs. total readership share of
5%-6%. Hindustan is looking to launch 2 new editions in Moradabad
and Aligarh in 3Q, to close any gaps in its coverage area in UP.
Management indicated that any upside from UP state elections would be
visible in 4Q.
Q2FY12 result highlights. Revenues increased 11% YoY driven by
higher circulation revenues (+21% YoY), ad revenues (+13% YoY) and
Radio & Entertainment (+12% YoY). EBITDA margin declined 330bps
YoY, primarily due to FX loss and diminution in investments value.
Excluding these items, EBITDA margin declined 90bps YoY. Net profits
increased 13% aided by higher non operating income and lower tax rate.
Estimate and TP changes. We cut our EPS estimates by 14%/13% for
FY12E/FY13E factoring in lower ad revenue for English markets and
higher newsprint and interest costs. We remain OW and roll forward our
TP to Sep-12, still at Rs250, based on 20x Sep-13E P/E. Key risks
include rising competitive intensity, failure to scale up in new markets,
increase in newsprint costs and further slowdown in growth.
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