HT Media:: Also an internet play:: top pick in print media.::CLSA

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Also an internet play
HT Media (HT) is ramping up internet business leveraging content and
marketing strengths from core print business and revenues here are set
to grow four fold in next three years. Meanwhile in core print business
HT’s Hindi and English publications are growing faster than industry and
the improved positioning could provide upside to our forecast 13% adrevenue
Cagr in FY12-13CL. We project 17% earnings growth for HT
despite the challenge of high newsprint prices. The stock trades at 15x
FY13CL earnings and success in internet business could enable valuation
multiple expansions. Maintain OPF.
Ramp up of internet business
HT Media is ramping up its internet business led by 100% owned job portal
www.shine.com, education portal www.htcampus.com and HT mobile a 65%
owned joint venture with Velti Plc of US for mobile marketing platform. Jobs is
the 2nd largest online activity amongst the 100m internet users in India and
HT cross leverages strengths across its print and internet businesses.
Consequently www.shine.com despite being a late entrant is already amongst
top four while partnerships such as Velti Plc for mobile marketing together
with HT’s content and marketing muscle will drive the division’s future
growth. In FY11 internet accounted for mere Rs104m/1% of HT consolidated
revenues and Rs397m in Ebit loss, but over the next three years it is slated to
grow four fold and achieve breakeven. Even as India’s abysmal 1%
broadband penetration is a significant constraint for internet businesses HT is
already set to be amongst leading players as the business grows.
Continued improvement in core business
Alongside new business expansion of internet HT has continued to consolidate
in its core print business as reflected in the latest readership survey - IRS Q1
2011. Amongst English dailies which witnessed a growth of 3.6% on YoY basis
Hindustan Times registered higher a 6.5%YoY growth. And amongst the Hindi
dailies while the leader Dainik Jagran witnessed a decline of 2.5% HT’s
Hindustan registered encouraging growth of 19%YoY. Besides HT’s business
paper Mint continues to consolidate its number two position in business daily
segment and in April 2011 launched in Hyderabad taking the total to ten
editions. HT’s improved positioning in core business provides potential for
upside to our forecast 13% advertising growth in FY12-13CL.
Earnings Cagr 17%; Maintain O-PF.
Even as high (Rs32,000/tonne) albeit stable newsprint prices remain an
overhang on core print business and we remain negative on HT’s radio
business and the company may bid for more stations in upcoming phase III of
licensing we project an average 17% earnings growth over FY12-13. Also HT’s
success and expansion in internet business could drive higher valuations. HT
is net cash at Rs6bn and with the stock trading at 15x FY13CL earnings, we
maintain Outperform and is our top pick in print media.