Q1FY13 Results Preview
Media
Slowdown in ads continues
We expect Q1FY13 results to be subdued on the back of weak advertising environment coupled with economic slowdown. Ad revenue growth is expected to be in 0% – 7% range. Margins are expected to shrink on the back of high cost which would impact profitability. We expect a positive surprise from ZEEL on the back of strong rating improvement, Balaji Telefilms on the back of cost rationalisation and Jagran Prakashan while expecting a negative surprise from HT Media and Sun TV Network.
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m Challenging Ad environment: Ad environment continued to remain challenging for both broadcasting and print players. We have modelled a 0%-7% growth in ad revenues for all players. National advertising market which is lagging rural ad market would impact HT Media and Sun TV Network which are expected to post 0-2% ad growth. Low base would give ZEEL and Jagran Prakashan 5-7% ad growth.
m Subscription revenues to grow marginally: ZEEL is expected to post marginal growth sequentially in subscription revenues where as Sun TV is expected to de-grow its analog subscription revenues on the back of no deal with Arasu. Dish TV subscriber addition is expected to grow on QoQ basis but will be below full year estimates as the digitisation benefit in Metros would start only in October.
m Margins under pressure: Margins are expected to shrink 122bps YoY for our coverage companies. Both print & broadcasting companies are expected to report margin contraction. ZEEL would show margin expansion on the back of lower losses in sports while Dish TV would benefit on the back of operating leverage.
m Profits to decline: PAT for our coverage universe is expected to de-grow by 4.4% YoY. The print sector is expected to underperform the broadcasting space due to the impact of depreciating Rupee on newsprint prices. Dish TV profitability would be dragged down by depreciating INR on the back of its debt and STB.
m Subscription revenues to grow marginally: ZEEL is expected to post marginal growth sequentially in subscription revenues where as Sun TV is expected to de-grow its analog subscription revenues on the back of no deal with Arasu. Dish TV subscriber addition is expected to grow on QoQ basis but will be below full year estimates as the digitisation benefit in Metros would start only in October.
m Margins under pressure: Margins are expected to shrink 122bps YoY for our coverage companies. Both print & broadcasting companies are expected to report margin contraction. ZEEL would show margin expansion on the back of lower losses in sports while Dish TV would benefit on the back of operating leverage.
m Profits to decline: PAT for our coverage universe is expected to de-grow by 4.4% YoY. The print sector is expected to underperform the broadcasting space due to the impact of depreciating Rupee on newsprint prices. Dish TV profitability would be dragged down by depreciating INR on the back of its debt and STB.
m Neutral on the sector: Maintain Buy on Dish TV, Sun TV, Jagran Prakashan, ENIL, HT Media, Prime Focus. We have a Neutral rating on Balaji Telefilms, Info Edge and ZEEL.
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