1. business and industrial

2QFY2015 Result Update | Media
October 20, 2014
HT Media
BUY
Performance Highlights
CMP
Target Price
Quarterly Data (Consolidated)
(` cr)
Revenue
EBITDA
OPM (%)
Reported PAT
2QFY15
561
72
12.9
44
2QFY14
535
64
12.0
58
% yoy
4.9
12.0
82
(24.6)
1QFY15
546
62
11.3
33
% qoq
2.6
16.3
151
34.3
Source: Company, Angel Research
`111
`129
Investment Period
12 months
Stock Info
Sector
Media
Market Cap (` cr)
2,584
Net Debt (` cr)
988
HT Media reported a subdued set of results for 2QFY2015, both on the top-line
and the bottom-line front. The top-line growth was lower mainly due to lower
growth in advertising revenue, primarily from the English edition, which although
is showing signs of recovery. The company’s performance was subdued on the
profitability front as well, owing to subdued sales growth and lower other income.
Beta
English ad revenues show signs of recovery, but still below our expectation: HT
Media’s Hindi subsidiary - HMVL - registered a double digit advertising revenue
growth of ~12% yoy to `142cr on back of increase in yields and volume. English
advertising revenue grew by 7.0% yoy to `278cr owing to improvement in market
sentiment with increase in ad spend from automobile and real estate sectors in
particular. The Management expects English advertising yield to go up after
2HFY2015, leading to improvement in English advertising revenues.
Nifty
Despite OPM improvement, Net profit subdued: For the quarter, HT Media posted
a de-growth of ~25% in earnings to `44cr, owing to subdued sales growth and
lower other income. Other income in the corresponding quarter of the previous
year carried an amount of `38.2cr from the Burda stake sale and an amount of
`8.6cr pertaining to the HMVL stake sale, thus leading to a higher base for the
quarter under review (2QFY2015).
MF / Banks / Indian Fls
Outlook and valuation: Going forward, we believe that the company would
perform well, both on the top-line and bottom-line fronts due to expected
recovery in Indian economy. This would lead to increase in revenue from new
businesses like HT Mumbai, Radio and the Hindi editions; further, we also expect
the company to gain some traction in its Digital businesses. Moreover, the
company has a strong balance sheet which would make it more capable to
execute future expansion plans. Hence, we maintain our Buy recommendation on
the stock with a target price of `129.
0.5
52 Week High / Low
131 / 70
Avg. Daily Volume
20,713
Face Value (`)
2
BSE Sensex
26,430
7,879
Reuters Code
HTML.BO
Bloomberg Code
HTML@IN
Shareholding Pattern (%)
Promoters
69.5
8.1
FII / NRIs / OCBs
11.8
Indian Public / Others
10.6
Abs. (%)
3m
1yr
3yr
Sensex
3.1
26.6
56.0
HTML
(5.6)
20.2
(21.1)
Key financials (Consolidated)
Y/E March (` cr)
Net Sales
% chg
Net Profit (Adj.)
% chg
EBITDA margin (%)
EPS (`)
P/E (x)
P/BV (x)
RoE (%)
RoCE (%)
EV/Sales (x)
EV/EBITDA (x)
FY2013
2,048
2.3
168
1.3
13.8
7.2
15.4
1.6
10.5
9.4
0.9
6.7
FY2014
2,201
7.4
208
23.8
14.2
8.9
12.4
1.5
11.9
10.5
0.7
5.1
Source: Company, Angel Research; Note: CMP as of October 20, 2014
Please refer to important disclosures at the end of this report
FY2015E
2,301
4.6
174
(16.2)
12.4
7.5
14.9
1.3
9.0
8.0
0.6
5.1
FY2016E
2,495
8.4
187
7.5
12.4
8.0
13.8
1.2
8.7
7.9
0.6
4.5
Amarjeet S Maurya
022-39357800 Ext: 6831
[email protected]
1
HT Media | 2QFY2015 Result Update
Exhibit 1: Quarterly performance (Consolidated)
Y/E March (` cr)
Net Sales
2QFY15
2QFY14
% yoy
1QFY15
% qoq
1HFY15
1HFY14
% chg
561
535
4.9
546
2.6
1,107
1,076
2.9
3.1
186
2.0
4.4
Consumption of RM
189
184
(% of Sales)
33.8
34.3
Staff Costs
116
106
(% of Sales)
20.7
19.9
Other Expenses
183
180
(% of Sales)
32.7
33.7
Total Expenditure
489
470
3.9
484
0.9
Operating Profit
72
64
12.0
62
16.3
OPM
12.9
12.0
Interest
12
17
Depreciation
25
Other Income
34
PBT (excl. Ext Items)
69
11.3
15.2
16
18
(% of PBT)
23.5
21.8
Recurring PAT
52.6
64
9.4
11.9
8
5
Reported PAT
44
58
Equity shares (cr)
23
23
EPS (`)
1.9
2.5
359
33.4
241
212
21.8
19.7
357
362
32.2
33.7
973
933
4.3
134
142
(5.8)
13.8
(1.4)
12.1
13.2
27
31
27
(8.5)
52
44
18.5
39
(14.1)
73
85
(13.2)
(16.0)
59
15.5
128
152
(15.6)
(1)
(0)
(16.5)
59
15.8
127
151
11.4
14.1
33
36
26.2
23.8
82
12.1
375
33.9
(15.7)
12.1
(0)
5.6
31.8
(40.5)
81
Minority Interest
174
57
(1)
(7.3)
22.9
1.8
22
68
PATM
125
15
PBT (incl. Ext Items)
Provision for Taxation
9.0
(28.4)
Ext Income/(Expense)
(% of Sales)
34.0
(1)
10.7
(10.2)
17
(7.7)
29.4
(17.7)
42.1
25.0
7.7
9
(24.6)
33
34.3
23
(24.6)
1.4
34.3
95
115
8.5
10.7
17
10
77
106
23
23
3.3
4.5
(12.6)
(16.4)
(8.0)
(18.0)
(27.5)
(27.5)
Source: Company, Angel Research
October 20, 2014
2
HT Media | 2QFY2015 Result Update
English ad revenue showing signs of recovery, but still below
our expectation
For 2QFY2015, HT Media reported a lower ~5% yoy growth in its top-line to
`561cr owing to subdued growth in advertising revenues from English editions.
Overall, the company registered a ~9% yoy growth in advertising revenue to
`420cr and ~12% yoy growth in circulation revenue to `72cr.
Exhibit 2: Top-line growth trend
580
12
10
560
10
9
(` cr)
520
4
5
5
5
4
4
500
1
535
573
4Q13
1Q14
2Q14
3Q14
Consolidated Top-line
2
544
546
561
2Q15
541
1Q15
501
4Q14
547
3Q13
1
511
2Q13
480
460
6
(%)
8
540
0
yoy growth (RHS)
Source: Company, Angel Research
Hindi advertising revenue continues to grow in double digits
HT Media’s Hindi subsidiary - HMVL - registered a double digit advertising revenue
growth of ~12% yoy to `142cr on back of increase in yields and volume. English
advertising revenue grew by 7.0% yoy to `278cr owing to improvement in market
sentiment with increase in ad spend from automobile and real estate sectors in
particular. Further, the Management expects English advertising yield to go up after
2HFY2015, leading to improvement in English advertising revenues.
Exhibit 4: Hindi advertising revenue
10
Source: Company, Angel Research
yoy growth (RHS)
(6)
30
-
118
111
133
127
138
133
156
142
2Q15
(4)
1Q15
278
Ad revenue (LHS)
(%)
10
5
(3)
4Q14
266
12
11
3Q14
3Q14
Ad revenue (LHS)
284
14
60
2Q14
314
15
17
16
15
1Q14
260
2Q15
277
1Q15
267
(2)
4Q14
297
2Q14
(4)
90
20
4Q13
0
(3)
1Q14
0
4
2
3
4Q13
100
7
6
4
200
3Q13
(` cr)
6
20
120
6
3Q13
8
300
25
150
8
(` cr)
400
(%)
Exhibit 3: English advertising revenue
0
(5)
yoy growth (RHS)
Source: Company, Angel Research
Among other businesses, the digital business reported a ~40% yoy growth in
revenue to `25cr while revenues of the radio business grew by ~10% yoy to `24cr.
The Management expects the company’s digital business’ revenue to continue with
its double-digit growth and expects revenue from the digital business to reach
`100cr in FY2015.
October 20, 2014
3
HT Media | 2QFY2015 Result Update
Exhibit 6: Circulation revenue
-
56
57
57
61
64
67
Circ. revenue (LHS)
yoy growth (RHS)
66
69
72
Exhibit 7: Gross Margin & OPM
Exhibit 8: Net profit and margin trend
65.9
67.1
67.5
65.7
66.7
66.2
66.0
(` cr)
40.0
30.0
11.1
16.0
14.3
14.4
12.0
15.1
13.9
11.3
12.9
30
20
10.9
9.8
8.0
11.7
8.0
8.8
7.8
6.5
6.4
6.0
33
Source: Company, Angel Research
40
47
58
67
35
33
44
Reported PAT (LHS)
4Q14
3Q14
2Q14
1Q14
4Q13
3Q13
2Q15
1Q15
4Q14
2Q14
3Q14
Gross margins
54
-
2Q13
OPM
1Q14
4Q13
3Q13
2Q13
0.0
6.0
4.0
10
10.0
(%)
10.0
2Q15
40
50.0
(%)
12.0
50
60.0
20.0
14.0
60
66.2
1Q15
61.8
-
yoy growth (RHS)
Source: Company, Angel Research
70.0
10
5
Source: Company, Angel Research
80.0
12
2Q15
(4)
13
1Q15
10
12
3Q14
20
14
14
11
2Q14
420
(2)
15
(%)
Ad revenue (LHS)
421
30
18
16
1Q14
417
40
2Q15
452
1Q15
387
4Q14
410
3Q14
378
2Q14
415
1Q14
2Q13
-
364
1
19
50
2
3
2
4Q13
(1)
6
4
200
100
60
4Q13
6
8
3Q13
9
20
2Q13
300
9
70
(` cr)
10
10
3Q13
(` cr)
400
80
10
(%)
500
12
4Q14
Exhibit 5: Consolidated advertising revenue
2.0
-
NPM (RHS)
Source: Company, Angel Research
Net profit subdued despite OPM improvement
In 2QFY2015, despite the growth in operating profit by ~12% yoy to `72cr and
improvement in margin by 82bp yoy, the company reported a Net profit de-growth
of ~25% yoy to `44cr owing to subdued revenue growth and lower other income.
Other income in the corresponding quarter of the previous year carried an amount
of `38.2cr from the Burda stake sale and an amount of `8.6cr pertaining to the
HMVL stake sale, thus leading to a higher base for the quarter under review
(2QFY2015). In terms of segment wise EBIT level, the company reported a profit of
~`67cr in the Print business while the Radio business reported an EBIT level profit
of ~`7cr. However, the Digital business reported an EBIT level loss of ~`15cr.
October 20, 2014
4
HT Media | 2QFY2015 Result Update
Investment rationale
Margin pressure to ease as ad revenue picks up
Losses in the Digital business and emerging markets, higher newsprint costs, and
cyclical nature of ad revenue growth are weighing on the company’s operating
margins.
The company has undertaken measures such as cutback in excess circulation and
pagination efficiency to improve margins. The company has also divested its entire
51% stake in HT Burda, which was making losses. Further, the Management has
indicated at a shift in focus from volume driven to yield driven advertising growth.
Going forward, we expect yield driven advertising growth and eventual recovery in
economy to aid advertising revenue growth and overall profitability.
Outlook and valuation
Going forward, we believe that the company would perform well, both on the topline and bottom-line fronts due to expected recovery in the Indian economy. This
would lead to increase in revenue from new businesses like HT Mumbai, Radio
and the Hindi editions; further, we also expect the company to gain some traction
in its Digital businesses. Moreover, the company has a strong balance sheet which
would make HT Media more capable for future expansion plans. Hence, we
maintain Buy on the stock with a target price of `129.
Downside risks to our estimates include 1) a sharp rise in newsprint prices in INR
terms, and 2) higher-than-expected losses/increase in the breakeven period of
emerging editions and Digital business.
October 20, 2014
5
HT Media | 2QFY2015 Result Update
Exhibit 9: One-year forward P/E band
250
10x
15x
20x
25x
30x
Share Price(`)
200
150
100
50
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Oct-13
Jan-14
Apr-14
Jul-14
Oct-14
0
Source: Company, Angel Research
Company Background
HT Media is the second largest print media company in terms of
readership/circulation and the largest listed print media company in terms of
revenue. The company's two key offerings, Hindustan Times and Hindustan,
feature in the top five newspapers in their respective categories in terms of
readership. The company is a market leader in Delhi (Hindustan Times), Bihar and
Jharkhand (Hindustan) and has emerged as a strong contender in the financial
daily segment (Mint).
October 20, 2014
6
HT Media | 2QFY2015 Result Update
Profit and Loss Statement (Consolidated)
Y/E March (` cr)
Gross sales
Less: Excise duty
FY2011 FY2012 FY2013 FY2014 FY2015E FY2016E
1,776
2,048
2,201
2,301
2,495
-
-
-
-
-
-
1,776
2,001
2,048
2,201
2,301
2,495
25.7
12.7
2.3
7.4
4.6
8.4
Total Expenditure
1,444
1,715
1,766
1,888
2,016
2,185
Cost of Materials
620
724
724
734
782
848
Net Sales
% chg
Power & Fuel Cost
37
40
48
64
71
80
Other Manufacturing Expenses
129
153
160
187
200
220
SG&A Expenses
289
325
325
348
341
359
Personnel
301
356
392
424
483
529
68
117
116
132
138
150
Others
EBITDA
332
287
283
312
285
309
% chg
33.6
(13.6)
(1.5)
10.6
(8.7)
8.4
(% of Net Sales)
18.7
14.3
13.8
14.2
12.4
12.4
Depreciation& Amortization
84
92
91
86
98
108
EBIT
248
195
191
227
187
201
% chg
39.4
(21.2)
(2.1)
18.6
(17.3)
7.5
(% of Net Sales)
13.9
9.8
9.3
10.3
8.1
8.1
25
36
45
65
56
54
Interest & other Charges
Other Income
(% of PBT)
Share in profit of Associates
Recurring PBT
% chg
34
75
94
162
148
150
13.2
32.0
39.0
50.1
53.0
50.4
-
-
-
-
-
-
257
234
240
324
279
297
(8.4)
(9.0)
2.7
34.8
(13.8)
6.4
-
-
-
-
-
257
234
240
324
279
297
Pr Period & Extr. Exp/(Inc.)
PBT (reported)
Tax
71
63
62
92
75
80
(% of PBT)
27.7
26.7
25.9
28.3
27.0
27.0
PAT (reported)
186
172
178
232
204
217
Add: Share of earnings of assoc.
-
-
-
(1)
-
-
Less: Minority interest (MI)
5
6
10
24
30
30
PAT after MI (reported)
181
165
168
208
174
187
ADJ. PAT
181
165
168
208
174
187
0.4
(8.5)
1.3
23.8
(16.2)
7.5
% chg
(% of Net Sales)
October 20, 2014
2,001
10.2
8.3
8.2
9.4
7.6
7.5
Basic EPS (`)
7.8
7.1
7.2
8.9
7.5
8.0
Fully Diluted EPS (`)
7.8
7.1
7.2
8.9
7.5
8.0
% chg
0.4
(8.5)
1.3
23.8
(16.2)
7.5
7
HT Media | 2QFY2015 Result Update
Balance Sheet (Consolidated)
Y/E March (` cr)
FY2011
FY2012
FY2013
FY2014
FY2015E
FY2016E
SOURCES OF FUNDS
Equity Share Capital
47
47
47
46
46
46
Reserves& Surplus
1,255
1,400
1,549
1,699
1,894
2,101
Shareholders’ Funds
1,302
1,447
1,596
1,745
1,940
2,147
Minority Interest
130
136
144
159
159
159
Total Loans
312
387
434
417
407
407
Deferred Tax Liability
Total Liabilities
73
77
80
49
49
49
1,817
2,047
2,254
2,370
2,555
2,762
APPLICATION OF FUNDS
Gross Block
1,213
1,284
1,327
1,459
1,569
1,699
Less: Acc. Depreciation
408
497
594
679
777
885
Net Block
805
787
734
779
791
813
10
19
113
-
-
-
-
-
-
6
6
6
Investments
760
832
973
1,287
1,387
1,437
Current Assets
765
891
986
1,092
1,179
1,327
Inventories
146
182
163
226
240
273
Capital Work-in-Progress
Goodwill
Sundry Debtors
258
276
271
287
309
342
Cash
109
157
152
119
148
151
Loans & Advances
185
187
281
352
368
437
67
89
119
110
115
125
Current liabilities
604
594
635
794
808
820
Net Current Assets
161
298
352
299
371
507
Deferred Tax Asset
81
112
83
-
-
-
-
-
-
-
-
-
1,817
2,047
2,254
2,370
2,555
2,762
Other Assets
Mis. Exp. not written off
Total Assets
October 20, 2014
8
HT Media | 2QFY2015 Result Update
Cashflow (Consolidated)
Y/E March (` cr)
FY2011
FY2012
FY2013
Profit before tax
257
234
240
324
Depreciation
279
297
84
92
91
86
98
108
(32)
(78)
8
53
(44)
(132)
21
(28)
(48)
65
56
54
Direct taxes paid
(52)
(115)
(81)
(92)
(75)
(80)
Others
(28)
34
34
0
0
0
Cash Flow from Operations
Change in WC
Interest / Dividend (Net)
October 20, 2014
FY2014 FY2015E FY2016E
250
139
244
436
314
247
(Inc.)/ Dec. in Fixed Assets
(1)
(39)
(112)
(80)
(110)
(130)
(Inc.)/ Dec. in Investments
(284)
(72)
(141)
(313)
(100)
(50)
Cash Flow from Investing
(285)
(111)
(254)
(393)
(210)
(180)
Issue of Equity
198
0
0
0
0
0
Inc./(Dec.) in loans
(88)
65
59
(17)
(10)
0
Dividend Paid (Incl. Tax)
(8)
(8)
(9)
(9)
(9)
(9)
Interest / Dividend (Net)
(35)
(36)
(46)
(49)
(56)
(54)
Cash Flow from Financing
66
21
4
(76)
(75)
(63)
Inc./(Dec.) in Cash
31
48
(5)
(33)
29
3
Opening Cash balances
78
109
157
152
119
148
Closing Cash balances
109
157
152
119
148
151
9
HT Media | 2QFY2015 Result Update
Key ratios
Y/E March
FY2011
FY2012
FY2013 FY2014E
FY2015E
FY2016E
Valuation Ratio (x)
P/E (on FDEPS)
14.3
15.6
15.4
12.4
14.9
13.8
P/CEPS
9.7
10.1
10.0
8.8
9.5
8.8
P/BV
2.0
1.8
1.6
1.5
1.3
1.2
Dividend yield (%)
0.3
0.4
0.4
0.4
0.4
0.4
EV/Sales
1.1
1.0
0.9
0.7
0.6
0.6
EV/EBITDA
6.1
6.9
6.7
5.1
5.1
4.5
EV / Total Assets
0.8
0.8
0.7
0.5
0.4
0.4
EPS (Basic)
7.8
7.1
7.2
8.9
7.5
8.0
EPS (fully diluted)
7.8
7.1
7.2
8.9
7.5
8.0
11.4
11.0
11.1
12.6
11.7
12.7
Per Share Data (`)
Cash EPS
DPS
Book Value
0.4
0.4
0.4
0.4
0.4
0.4
55.9
62.2
68.6
75.0
83.3
92.3
13.9
9.8
9.3
10.3
8.1
8.1
0.7
0.7
0.7
0.7
0.7
0.7
DuPont analysis
EBIT margin
Tax retention ratio
Asset turnover (x)
ROIC (Post-tax)
Cost of Debt (Post-tax)
2.4
2.4
2.3
2.9
2.8
2.6
24.0
16.9
15.6
21.5
16.8
15.2
0.1
0.1
0.1
0.1
0.1
0.1
Leverage (x)
(0.3)
(0.4)
(0.5)
(0.5)
(0.5)
(0.5)
Operating ROE
16.8
10.2
7.9
10.8
8.5
7.6
RoCE
15.3
10.6
9.4
10.5
8.0
7.9
Angel RoIC (Pre-tax)
33.2
23.1
21.1
29.9
23.1
20.8
RoE
13.9
11.4
10.5
11.9
9.0
8.7
Returns (%)
Turnover ratios (x)
Asset Turnover
1.5
1.6
1.5
1.5
1.5
1.5
Inventory / Sales (days)
29.9
33.2
29.1
37.4
38.0
40.0
Receivables (days)
53.0
50.3
48.3
47.6
49.0
50.0
Payables (days)
64.3
63.9
67.1
65.3
63.0
59.0
Net WC (days)
18.7
19.5
10.3
19.7
24.0
31.0
(0.4)
(0.4)
(0.4)
(0.6)
(0.6)
(0.5)
Net Debt to EBITDA
(1.7)
(2.1)
(2.4)
(3.2)
(3.9)
(3.8)
Interest Coverage
10.0
5.4
4.3
3.5
3.3
3.7
Solvency ratios (x)
Net Debt to equity
October 20, 2014
10
HT Media | 2QFY2015 Result Update
Research Team Tel: 022 - 39357800
E-mail: [email protected]
Website: www.angelbroking.com
DISCLAIMER
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment
decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should
make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the
companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine
the merits and risks of such an investment.
Angel Broking Pvt. Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make
investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this
document are those of the analyst, and the company may or may not subscribe to all the views expressed within.
Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and
trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's
fundamentals.
The information in this document has been printed on the basis of publicly available information, internal data and other reliable
sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this
document is for general guidance only. Angel Broking Pvt. Limited or any of its affiliates/ group companies shall not be in any way
responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report.
Angel Broking Pvt. Limited has not independently verified all the information contained within this document. Accordingly, we cannot
testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document.
While Angel Broking Pvt. Limited endeavours to update on a reasonable basis the information discussed in this material, there may be
regulatory, compliance, or other reasons that prevent us from doing so.
This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced,
redistributed or passed on, directly or indirectly.
Angel Broking Pvt. Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking
or other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or
in the past.
Neither Angel Broking Pvt. Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from
or in connection with the use of this information.
Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the
latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Pvt. Limited and its affiliates may
have investment positions in the stocks recommended in this report.
Disclosure of Interest Statement
1. Analyst ownership of the stock
HTML
No
2. Angel and its Group companies ownership of the stock
No
3. Angel and its Group companies' Directors ownership of the stock
No
4. Broking relationship with company covered
No
Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors
Ratings (Returns):
October 20, 2014
Buy (> 15%)
Reduce (-5% to 15%)
Accumulate (5% to 15%)
Sell (< -15%)
Neutral (-5 to 5%)
11