Hindi ad growth has been relatively insulated from the slowdown --BUY HT Media :: ICICI Securities, PDF link

Please Share::

�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��

��

-->
Hindi ad growth has been relatively insulated from the slowdown
The Hindi print segment has been relatively immune to the economic
slowdown as compared to English dailies. HT Media, the third largest
Hindi daily, with a readership of 12.2 million as per IRS December, 2012
has posted an ad growth of 10.6% (FY11-13 CAGR) in its Hindi segment.
At the same time, the peers Jagran and DB Corp posted growth of 8.8%
and 8.4% FY11-13 CAGR. Even as far as the readership growth is
concerned, HT Media is leading its peers with 3.4% FY11-13 CAGR vs.
peers Jagran Prakashan and DB Corp with 0.9% and 1.5% FY11-13 CAGR.
It continues to maintain leadership positions in the markets of Bihar and
Jharkhand even as it faces tough competition with entry of DB Corp in
Jharkhand in 2012 and in Bihar in 2014. However, its absence in the key
Hindi speaking market of MP is an opportunity loss for the company.
Nonetheless it is performing quite well in its existing markets and has
posted a 15.2% YoY growth in overall advertisement to reach | 530.0
crore in the ad revenues in FY14. We expect the Hindi ad revenue to grow
at a 15.6% FY14-16E CAGR to reach | 708.3 crore.
English ad shows some signs of revival in quarter
National advertisers curtailed their ad spends due to economic slowdown
and made a shift to the cheaper vernacular advertising, which negatively
impacted the English print business. HT Media, which runs the second
largest English daily “Hindustan Times” with a readership of 3.8 million as
per IRS December 2012 posted only 2.6% FY11-13 CAGR in its English ad
revenues. Growth in English ad revenue will be closely linked to recovery
in economic activity. We expect a gradual pick-up in English ad revenue
with 5.1% and 6.7% growth in FY15E and FY16E respectively.
Balance sheet mismatch, low dividend payout
The company as on FY14 had a gross debt of about | 416.8 crore and
cash and current investments of about | 935.9 crore. The management
indicated it was deriving arbitrage benefits out of the cash and debt
available. However, the low dividend payout of 20% amounting to 0.4
paisa per share despite of the huge cash continues to worry the investors.
Lack of clarity on the company’s cash management policy could remain
an overhang on the stock.
Ad growth turnaround to be only gradual; target price | 126
HT Media’s English segment has shown some signs of economic revival
and improving scenario in the BFSI space by posting a 6.9% ad growth
vs. expectations of 3.5%. We have factored in a revenue and PAT CAGR
of 7.9% and 21.9% over FY14-16E. We value the stock at 11x FY16E EPS
of | 11.5, arriving at a target price of | 126. With the beginning of a revival
in the English segment and higher circulation revenues due to the
company’s ability to take cover price hikes, we re-rate the stock as BUY.

LINK
http://content.icicidirect.com/mailimages/IDirect_HTMedia_Q2FY15.pdf