Hindustan Media Ventures Limted (HMVL)

As per Valuepickr guidelines, we should not post links to blogs/websites. Hence, I am reproducing a recent post almost verbatim on Hindustan media ventures limited.

Warren and Charlie’s fascination towards owning newspaper business is well known to most of us! Berkshire, in last two years, bought 28 daily news papers for USD 344 million. Warren Buffett devoted a large section of latest annual shareholder letter explaining the rationale for buying newspaper business, especially when, most people in US believe that newspaper industry is on deathbed! Here is the what Warren Buffet has to say about newspaper business

"Newspapers continue to reign supreme, however, in the delivery of local news. If you want to know what’s going on in your town - whether the news is about the mayor or taxes or high school football - there is no substitute for a local newspaper that is doing its job. A reader’s eyes may glaze over after they take in a couple of paragraphs about Canadian tariffs or political developments in Pakistan; a story about the reader himself or his neighbors will be read to the end. Wherever there is a pervasive sense of community, a paper that serves the special informational needs of that community will remain indispensable to a significant portion of its residents.


…Charlie and I believe that papers delivering comprehensive and reliable information to tightly-bound communities and having a sensible Internet strategy will remain viable for a long time."

So, how about an opportunity to own one of the largest Indian Hindi daily newspaper business with respectable management pedigree and excellent performance matrix on very favourable terms? Let’s explore it further:

About Hindustan Media Venture Limited (HMVL):


HMVL is the company promoted by HT Media limited, part of erstwhile KK Birla group. The company was part of KK Birla group till 2008, however post Mr.Birla’s demise in 2008, the HT Media business was passed onto one of his three daughters, Mrs. Shobhana Bhartia. Mrs. Bhartia is married to Mr. Shyam Sundar Bhartia, the chairman of the Jubiliant group (Jubliant Pharma, Jubilian foodworks etc). As a part of restructuring exercise, the “hindi” print media business was spun off and sold to HMVL on slump sale basis along with all the assets and liabilites in 2009. The idea of spinning of “hindi” print media business was to charter a well defined growth path for the business and provide sufficient management bandwidth. In 2010, HMVL came out with IPO to raise 270 crore to fund the expansion and pre payment of loan. The shares were issued to investors in IPO @ Rs.166.

Business of HMVL:

HMVL publishes hindi daily “Hindustan”, a children magazine “Nandan” and a woman centric magazine “Kadambini”. “Hindustan” is the second largest Hindi daily in the country by totalreadership and the third largest by average issue readership “AIR” according to latest data published by IRS in Q4, 2012. “Hindustan” is the mainstay of HMVL’s operations. Hindustan has 12 editions and more than 110 sub editions spread across the state of Bihar, Jharkhand, Delhi/NCR, Uttar Pradesh and Uttarakhand. According to latest IRS data, Hindustan has total readership of 3.2 crores.

Hindustan has been an undisputed leader in Bihar and Jharkhand market for many years with 68% and 46% market share respectively, well ahead of the second largest player in both the states by a wide margin. Hindustan is the second largest hindi daily in Delhi/NCR region. HMVL entered UP and Uttarakhand market before 3 years, and have reaped rich dividends from such geographical expansion. HMVL has been growing at brisk rate in both the markets. HMVL has not only emerged as the third largest player but has also inched very close to the second largest player Amara Ujala! According to the latest conference call, HMVL has broke even in UP last quarter and is likely to break even in Uttarakhand in next quarter.

HMVL’s business derives its revenue largely from two sources i.e. advertisement and subscription. Currently, HMVL derives 72% of its revenue from advertising, 25% from subscription and rest 3% is from interest/dividend income. However, looking at the past trend, that contribution of advertisement revenue has increased significantly from 60% to 72%. Based on my understanding, currently, in the print media, the typical split between ad and subscription revenue is 70/30. Raw material cost constitutes 40% of total revenue. It is likely that RM cost is likely to stabilize at current level or even decrease in case of newsprint prices decline due to appreciation of rupee.



Daily newspaper market has largely been dominated by two or three players in most of the regions. In all the markets in which HMVL operates, the competitive landscape is no different! However, new players are entering in some of the markets dominated by HMVL especially Jharkhand and Bihar. It is possible that entry of a new player with deep pockets can change the competitive landscape in these markets.

There are predominantly following players in the market that HMVL operates in

Dainik Jagarn: Present in UP, Uttarakhand, Deli, Bihar, Jharkhand

Amar Ujala: Present in UP and Uttarakhand

Prabhat Khabari: Jharkhand

Navbharat Times: Delhi/NCR

Panjab Kesari: Delhi

Dainik Bhaskar: Jharkhand (2011) and entering in Bihar (2013)

Follwing is the state wisecompetitivesituation based on company’s presentation and IRS data (Presentation to investors)

_Bihar:_Currently, only two major players in the market Hindustan and Dainik Jagarn. Hindustan has lead of more than 60% in terms of AIR over Dainik Jagaran. DB has recently launched Patna edition and if they expand aggresively(as they have done in other states), it may be the third significant player in the state.

_Jharkhand:_Highly competitive market with 4 players in the fray. Hindustan is the leader followed by Prabhat Khabar, Dainik Jagaran and Dainik Bhaskar respectively. However interesting thing is that gap between first three players have remained almost constant even after the entry of a new player.

Delhi/NCR: This market is again fiercely contested market with 4 players. However, market is dominated by Navbharat Times which has been able to hold forte very wellin spiteof stiff competition. There is hardly any differencebetween second and third player i.e. Hindustan and Dainik Jagaran in terms of AIR and both have maintained their AIR over last couple of years. However, Punjab Kesari has lost readership consistently and is the only weak wicket!

_UP and Uttarakhand:_This market, few years back was dominated by Dainik Jagaran and Amar Ujala. However, entry of Hindustan has changed this dynamics. Hindustan has been gaining the readership at the expense of Amar Ujala while Dainik Jagaran has maintained its readership numbers in absolute terms. However both Dainik Jagaran and Amar Ujala has lost market share to Hindustan. Dainik Jagaran is still leading the market by a wide margin while the gap between Amar Ujala and Hindustan is narrowing down fast.

Financials & Ratios:

Here is the link for company’s financials (Financials are only comparable from FY11) Thanks, Ayush for making so many investor’s life so easy through screener!

Profit & Loss: In H1 FY14 HMVL has reported revenue of around 350 crore with net profit of 55 crore. If we annualize this number, FY 14 revenue is likely to be 700 crores with net profit of 110 crores. This translates into revenue growth of 10% CAGR in last three years while 28% CAGR profit growth.

Company’s EBIDTA margins have consistently increased from 18% in 2011 to 21% in 2013.In Q2, 2014, HMVL reported EBIDTA margin of 23%.

Balance sheet: Company has a very strong balance sheet with 36 crores of debt on total equity of 563 crores (As on H1 FY14).This translates into debt to equity ratio of 0.07. Company has cash and MF investment of around 400 crores (including non current investment of 95 crores).

Cash flow: Company has consistently generated free cash flow from operations in all the years resulting into healthy cash position for the company.Cash flow from operations have been in line with the net profit or have exceeded the net profit in each of the last three years. Cash flow from operating activity is 57, 72 and 81 crores against net profit of 54, 65 and 84 crores. This not only indicates efficient use of fixed assets but also means that working capital management also has been excellent.

Return on capital employed: Even though company has generated respectable ROCE of 22-24% in last 3 years on the entire capital employed, the number do not reflect the actual attractiveness of the business. If we deduct the cash/investment from the capital employed and count only actual capital deployed in the business, HMVL is likely to generate 110 crore of profit on 220 crore of capital employed (fixed asset + net working capital) which is phenomenal 50%! And according to management, the operational leverage is yet to kick in…!!


Company has current market cap of 800 odd crores which is 7.3 times estimated FY 14 earnings. However, company is sitting on cash kitty of 400 crores which management is planning to deploy for acquisition, use it for expansion, return it to shareholders or a combination of these options. If management rationally deploys this capital and generate even 20% return it will translate into additional earnings of 80 crores, taking yearly earning to around 200 crores. Thus, after cash is deployed, effective P/E will be even less than 7, depending upon the kind of return generated on the capital.

Moreover, according to management (both in AR and in concall), company in past 3 years have made substantial capital expenditure for upgrading their printing facilities and expanding into new geographies. In next few years, management will focus on maximizing the revenue from the investment made, increasing operational efficiencies and further consolidating its position in existing markets. Management has also indicated that this will result into operating leverage coming in to play resulting in significant increase in bottom line.

In terms of peer comparison, DB corp, which also operates in vernacular/hindi print media and has similar margin and return ratios is trading at 19 times trailing P/E. As DB Corp covers wider geography and is bigger in scale than HMVL, it will command some premium over HMVL. Even if we assume that HMVL will trade at 25% discount to DB Corp, HMVL shall trade around 13-14 P/E. Currently, the stock is trading at 7 times FY 14 earning without considering cash deployment providing enough margin of safety and substantial upside potential.

Currently market is punishing the company because it is sitting on large cash pile without utilizing it. This is perceived as key risk for the company as market has burnt their fingers in numerous companies where promoters have siphoned the cash through some very innovative and/or blatant means! I personally feel that given respectable management pedigree and management reiterating its intention to deploy cash in due course provide comfort to shareholders. Management in the last couple of concall, has confirmed that they are keeping cash reserves and evaluating various opportunities for inorganic growth. Management has also indicated that HMVL has a threshold limit of “war chest” in mind which it wants to preserve for inorganic growth. However, once that threshold is reached, company shall redistribute additional cash to shareholders. In latest concall, management also gave hints that company is very near to the threshold cash limit. So, it is possible that we witness some action from management on that front which will act as catalyst towards bridging the valuation gap.

Key investment rationale:

)- Newspaper is a sticky business and switching cost/inertia is high

)- Typically, in newspaper business, growth in ad revenue is non linear after a newspaper approaches critical mass and scale as volume of advertisement and pricing power both grow. In UP and Uttarakhand, HMVL is approaching that inflection point.

)- Currently there is large gap between advertising rates of Amara Ujala (second largest player) and Hindustan in UP ( at least 30-40%). If HMVL continue to grow and reaches the scale of Amara Ujala, it can signifcantly increase advertisement rate ( I have compiled a comparison between ad rates published by all major hindi dailies for HMVL market. If anyone wants it, I can send it over)

)- Increasing literacy rates in Hindi belt is structurally good as new potential consumers will get added hence the potential customer base will expand

)- Rural India and tier-II and tier-III towns are considered next growth engines for many businesses. Hence advertisement spend focused on this market is likely to go up. All vernacular and Hindi print media companies are going to be beneficiary of this trend

)- There is large gap between advertisement rates charged by english dailies and Hindi/vernacular dailies. However, increasing focus on rural/tier-II/tier-III town by companies will narrow down this gap providing higher yield to hindi/vernacular dailies.

Key risks:

)- Competitive intensity in key markets of Jharkhand and Bihar is increasing. any irrational behaviour by the new entrant/competitor can have negative financial impact.

)- If management neither deploy cash in business/for acquisition or returns it to shareholder, market will continue to assign lower valuation

)- Management pay too high a price for the acquisition resulting into value erosion for the shareholders

One more interesting aspect! Azim Premji and his investment companies own 2.18% stake in the company.

Overall, I feel it a good opportunity to own a solid business on favourable terms. Invite views and discussion on the same.


Forgot to add disclosure: I have initiated a position in the company hence my view may be biased.

Excellent write up dhwanil. Always a pleasure reading your posts.

Coming to HMVL, I feel markets are punishing the group companies both HT media and HMVL are posting fresh lows since a long time and are in a downtrend…

But based on financials it looks attractive… Only problem is for a company sitting on such a cash pile and generating so much cash flows, dividend payout is miserly at 10-15% and probably the reason for markets to punish them.

Also growth in revenues has been tepid… Last two quarters though have been good.

Looks like worth digging more.



Great post dhawal. The reserves for so long seems to be susceptible.

Also can you please point me to source where it mentions Azim Premji having stake in this company. I would like to read more.




Look at shareholding pattern of HMVL for september on bse… azim premji has 8.4 lac shares.

hope this helps.


1 Like

Sorry Hitesh,

I could not find. Do you mean on bseindia.com?



[ Comment too short ]

Hi Hitesh,

Thanks for compliments.

For HMVL, I also feel the same way that market is punishing the company for what it considers as “hoarding” of cash. However, such valuation anomalies can provide the right entry points and handsome returns. Ofcourse, one has to evaluate whether management is “hoarding” cash for no reason or it is just a market perception of hoarding while management is putting up rationale for preserving cash. In lot of these cases, I believe the management integrity is also an important factor.

HMVL management has in the past (refer to con call transcripts) indicated that they are actively looking at pursuing inorganic growth. So, given that, one has to evaluate, is 300-400 crore of war chest too much? I did some research around that. Recently, Maheshwari family one of the promoters of Amar Ujala (the second largest daily in UP after Dainik Jagaran) acquired 14% stake from other co promoter Agarwal family @ 150 crore.This transaction valued AU @ 1000-1200 crore.

http://www.livemint.com/Consumer/PCaggNpBonO6SlrA6rp75I/Maheshwari-group-consolidates-stake-in-Amar-Ujala.html Link: http://www.livemint.com/Consumer/PCaggNpBonO6SlrA6rp75I/Maheshwari-group-consolidates-stake-in-Amar-Ujala.html

Now, even if HMVL intends to acquire a player half the size of AU, it may have to shell out @ 500-600 crore. Considering that company has preference for not over leveraging its balance sheet, keeping cash kitty of 300-400 crore does not look out of place.

We have experienced this phenomena in Bajaj Corp and JB chemicals, both of which were punished by the market for not distributing the cash. However, both management, seems to be walking the talk and market, slowly is changing their perception about these companies.

I agree that top line growth has been tepid. However, considering that most of the newspaper companies derive 65-70% of their income from advertisement business which is directly linked to economic growth, the newspaper industry is facing very challenging time. If you look at DB Corp, their profit have declined or have only marginally grown in last 2 years. However, ad revenue growth has been muted 10% for DB Corp. HMVL’s ad revenue growth is in the range of 12% for last 2 years. So once the economic environment improves and advertisement spend increases (looks like already some improvement as most of the media companies have indicated traction in ad revenues in last couple of quarters), the revenue growth can be in higher trajectory. Moreover, as I mentioned earlier, HMVL’s advertisement rates in UP and Uttarakhand are lower by 30-40% than their nearest competitor Amar Ujala. As, HMVL is fast approaching readership and reach of Amar Ujala, management has indicated that its yields from Advertisement is likely to improve in UP and Uttarakhand. These factors can help drive better growth in topline in next couple of years.

My personal view is that as such, at this valuation, we are hardly paying anything for growth. Rather, growth will be the icing on the cake. It is the value unlocking that will deliver returns in the first place.

Would be good to hear your views as well.


Hi Sunil,

Here is the link.

http://www.hmvl.in/pdf/Shareholding_Pattern_Q2_2013_14.pdf Link: http://www.hmvl.in/pdf/Shareholding_Pattern_Q2_2013_14.pdf

In addition to Azim premji’s own name, two other companies Napean trading and Tarish trading, holding 1.03% of the company, are also investment vehicles used by Premji family for making investments.

Some points to ponder:

Growth seems low (about 10%) … The high growth figures from screener are an effect of the IPO funding.

If internal business accruals were so strong, why was the need to raise funds to pay debt?

Very low free float … about 3%

Hi Akbar,

If you read the write up, that is what I have written that full year numbers should be consider only from FY 11. Top line has grown @CAGR 10% while bottom line has grown at healthy 28%. Also, as mentioned earlier, it is important to keep in mind that last couple of years were not very good for most of the media companies as ad spend had reduced considerably due to subdued economy.

Regarding debt, I was checking the DRHP filed where they had given financial numbers from 2005. It only appears in 2009 when actually HT media spun “hindi” media business off. To me it looks that when the spun off the “hindi” media business from HT media, liabilities and assets must have been allocated to new companies and as a part of that a debt of 135 crore was sitting on the books.

DB Group is expected to launch a paper in Patna in Q4. If that happens, competition for ad space will increase and more importantly cover price of the paper might come down significantly.

Nice post Dhwanil,

As a sector I think print should do much better in the coming year ( especially vernacular languages ) as compared to last year aided by upcoming election ad spend and comparative better buoyancy in business. Regional language print along with Hindi has been seeing an impressive uptick.

Hi Ramsaravana,

Sure, DB group is planning to launch its Patna edition and competitive landscape might change thereafter, at least temporarily. However, my understanding of dynamics of newspaper industry is that unless the newspaper has reached critical scale and number of editions spread across the region, it is difficult to garner meaningful pie of ad revenues. So, immediately the impact may be limited on ad revenues.

On cover price, yes there may be immediate impact both in terms of reduced cover price and higher marketing spend. However, if one looks at any new market where DB Corp has launched a new edition, eventually, the cover prices have been rationalized over 2-3 years. Take Jharkhand/Gujarat market. Same thing has happened in both the markets.

Having said that, I am not implying that there will not be pressure on HMVL due to new entrants. There definitely will be and it will boil down to how effectively HMVL defends its business in one of its key markets.

I agree Austin. That is the same inference I am also able to draw from my reading and understanding of the sector.

Motilal Oswal has come out with the report post Q2 earnings on HMVL. Here is the link


Hi Dhwanil,
Have you looked at half-yearly balance sheets? Short term borrowings rise, in Sep as compared to Mar. What are your thoughts on this?


Good thesis Dhwanil

HMVL looks a good opportunity especially in an election year


Print media is expected to see a boost this year from election led spending of additional 1000 crs ; a large part of which would be on Print (60 - 65%)

Restriction on TV advt also helps print

Being a Hindi newspaper Co it has larger contribution from local advertisers and hence to that extent immune from economic slowdown as with Rural India holding up well; Local advt is still growing well

Healthy net cash B/s of rs 400 crs with mkt cap of about Rs 850 crs. On an expected Ebit of Rs 130-140 crs in FY 15 this equates to just about 3-3.5x EV/EBIT. Hence very cheap.

Decent management in HT media ; healthy 20%+ return ratios, election catalyst makes this an attractive opportunity over next year

Now one may argue print is structurally declining globally. But in India it still contributes about 45% of advt and growing at 8-10%CAGR. Hindi print advt is even growing faster. As per Ficci report print media is expected to grow at 9% CAGR till 2017. So no doubt this is not a 10 yr story but even from a medium term perspective given the cheap valuations HMVL looks a good buy.

Hi Rohit,

At present level, risk reward seem to be in favour. HMVL is gaining traction in UP hence can expect reasonable share of ad spend that the state is going to witness considering the importance of winning “big” in UP for both Congress and BJP. On the other hand, competition is likely to itensify in coming days in Bihar with entry of DB in the state. So, important to watch how it plays out.

However, most importantly, the value unlocking will happen when company will start taking steps to deploy or return cash. This will be the trigger for re-rating. If it is combined with good performance in next couple of quarters, it can give handsome upside from current level. A doubler from here can not be can not be ruled out in 6 months.

Discl: Invested @ average price of 105.


My question is doesn Jagran at 11 times make more sense than HMV at about 9 times. Am just about starting to research on this sector, but prima facie it seems Jagran’s ROCE is higher, better payouts, leadership with a more diversified product…The benefits spoken above should benefit all players right. So what specifics make HMV a better bet??