Ht media ltd

[hitesh2710]

HT MEDIA LTD

The company publishes three leading newspapers… Hindustan Times (English—No 1 newspaper in Delhi and No 2 in Mumbai), Mint (English) and Hindustan (Hindi daily through a subsidiary).

It has four FM radio stations Fever 104… in Delhi, Mumbai, Bangalore, and Calcutta.

It also has a job portal in the internet space called Shine.com. This is in addition to its existing portals livemint.com and hindustantimes.com.

It publishes two Hindi magazines Nandan and Kadambini through its subsidiary Hindustan Media Ventures Ltd.

FINANCIALS

At cmp of around 81, market cap is around 1900 crores…

For fy 13, company had revenues of 1330 crores and operating profit of 129 crores. Net profit was 24 crores mainly affected due to extraordinary expense of 159 crore due to diminution in value of investment in its subsidiary HT Digital Ltd.

For Half Year ended Sep 2013, company had revenues of 677 crores as compared to 645 crores during h1 fy 13. Operating profit was down to 43 crores from 65 crores in earlier half year… Net profit was 65 crores as compared to 70 crores in earlier half year.

In terms of results there has been nothing great for the company except steady revenues and variable profit figures.

But company has net cash of 750 crores in books… Plus it has 75% stake in Hindustan Media Ventures ltd a listed company with a market cap of around 800 crores…(value of HT Media holding is close to 600 crores.) So along with cash and holding in the subsidiary total value comes to 1350 crores… Effectively if we strip this value from the market cap of HT Media, then it is available at an enterprise value of 550 crores.

OUTLOOK

Management indicates as strong business outlook in its q2 fy 14 presentation citing following factors

• Increasing returns in new businesses like HT Mumbai, Radio, Mint to contribute to increasing revenues and profits.

• Gaining traction in digital business.

• Strong balance sheet with net cash of 750 crores capable of growing businesses and exploring new opportunities.

TECHNICALS

Stock price had made a high of 266 in 2007 after which it fell down to a low of 36 in the 2009 meltdown. Post that it posted a rally and made a high of 185 in Oct 2010… Stock price is undergoing a downtrend since June 2011 and recently posted a low of 75 in Oct 2013.

Indicators like RSI have been showing positive divergences on weekly and monthly charts which might signal a culmination to downtrend. This however remains to be seen.

INVESTMENT THEME.

Investment in HT Media is based on attractive valuation for the business if one considers the net cash and holding value of the company in HMVL… If the company can get its act together in next few quarters and if the new businesses mentioned above start generating strong growth, there could be a good risk reward opportunity at current levels.

DISCLOSURES:

Stock is under watchlist… No position currently.

FEEDBACK INVITED.

[subashnayak_19_]

I have subscribed to Hindustan times newspaper. Not so pleased with its one sided bad-portrayal of Narendra Modi, and its quite open pro-congress biases. Thinking of stopping it.

Had read somewhere, (couldnt find the source) that its promoters have political connection. Does not feel comfortable investing in such companies. Any change in political equation can have bad impact on it.

I will never feel comfortable investing in such not-so-ethical business, even if it is available at a graham type valuation parameter.

[Vijayd74]

Hindustan Times, the Newspaper which is their Flagship brand, was a numero UNO in Delhi a few years back and commanded a huge premium in advertising rates, which is the major form of revenue for a newspaper.

The No. 1 spot in Delhi now does a see-saw between Hindustan Times and Times of India. which has stolen the thunder from HT. Due to this they have to face serious competition and revenue getting split between these two.

In Mumbai, the No.1 paper English daily is Times of India, followed by Mumbai Mirror, Hindustan Times ( No.2 in broadsheet as Mumbai Mirror is a Tabloid), DNA and closely on heels are Mid-day and others. They have a financial daily Mint, which is currently a No.2 Financial paper next to the leader Economic Times.

As far a numbers game go, they are No.3 in Mumbai, but the gap between leader Times of India (TOI) and HT is huge as far as advertsing rates go. Times is Mumbai commands a huge premium on ad rates whereas Hindustan Times have to go down on their knees to get ads. The major ads that we see in HT - Mumbai are national campaigns where clients want to advertise in Delhi market and get Mumbai rates for peanuts, whereas Times of India because of its dominant nature in both these markets and a nationwide reach always commands a heavy premium.

The major reason why papers like HT and DNA have increased their circulation in Mumbai is because of their cheap circulation drives like annual subscription of newspaper for Rs 99/- only. And because of these circulation drives HT and DNA are both bleeding very badly in Mumbai region, and especially now because Newsprint are imported ( the major cost centre in a newspaper) and cost have spiralled upwards due to dollar rates going up.

Morover, the share of Print media is going down day by day, which is being taken over in a big way by TV, Online, Hoardings, Radio and others.

I am not too aware of their Online Media business, but the news is not so good even for their radio businesses, though we need to validate this.

Overall, I would not be too positive on this company.

[hitesh2710]

thanks vijay for the feedback…

you seem to have a lot of insights into the newspapers market.

[p_pandekar]

All media companies are extremely cheap at this point. Any company that survives on its own is going to make lot of money. Its difficult to figure out who will survive on its own:-)

[Vijayd74]

Hitesh,

I have worked with a Newspaper company in Sales and hence could provide some inputs on workings of the same. The competition is very severe and except the Times group, all others have to fight for their survival by cutting on rates to get revenue, which ultimately affects the profit margins.

I would like to add though that I am not good on the financials aspects of balance sheet and P&L statements ( have started reading books recommended here). Maybe that can throw more light and give a better picture if we compare data for the last 4 years and see the graph of Sales growth vis-a-vis Profit margins and other key parameters. I am mentioning last 4 years because the newspaper industry as a whole has seen a downhill since then.

Vijay

[amangoklani]

Hi Hitesh,

Right of the bat I would like to thank you for offering great insights into various businesses on multiple posts at ValuePickr. They offer solid guidance and are of tremendous help.

Trying to give my two cents on the online ad revenues within the industry.

HT is a client of ours - we are a leading sports data and content provider in the Indian subcontinent and provide such content to almost all online portals, channels and newspapers (in some cases) all over the subcontinent.

HT’s share as an account has been only dwindling over the years. The only sport they are able to pay for is Cricket. For the rest they say they will be interested only if they get sponsors (read: ad revenues for advtg. on their site). They hardly ever seem to get sponsors. They used to subscribe to F1 and Football content - but they have stopped taking it a few years back. The dominant position in online ad revenues go to companies like Y!, Google, FB. Twitter and LinkedIn will soon catch up. In the news business my guess is TOI (Indiatimes) must be faring decently as they have online rights to IPL, NBA etc (at least in the sports vertical).

The only revenues HT must be getting will be for online ads displayed via Google Ads or via companies like Komli. IMHO revenues generated through this route would hardly make a dent in the larger scheme of things.

As our company has worked closely with them, I hardly would have the conviction to invest in HT. I also agree with Vijay’s points above.

[hemantbhatia]

Rajiv Verma, CEO addressed the call.Highlights of the call by Capital Mkt: For the quarter ended December 2013, HT Media registered a 6% rise in its consolidated sales to Rs 581.28 crore. There was a 9% increase in advertising revenues of print segment to Rs 451.6 crore from Rs 414.9 crore primarily driven by increase in advertising yields and volumes. There was an 18% increase in circulation revenues of print segment to Rs 66.5 crore from Rs 56.5 crore primarily driven by increase in realisation per copy. OPM during the quarter rose from 16.0% to 16.3% primarily due to the growth in advertising and circulation revenues. Raw material grew 3% to Rs 190.8 crore from Rs 184.7 crore due to increase in newsprint price. Other expenses grew 9% to Rs 189.9 crore from Rs 174.9 crore due to increase in advertising & sales promotion expenses. Consolidated net profit grew 25% to Rs 67.02 crore. For the nine months, consolidated sales grew 7% to Rs 1656.86 crore. Consolidated net profit grew 35% to Rs 172.69 crore. The management is glad that there was a healthy growth in revenue and profit. The company achieved highest topline and EBITDA this quarter, despite continued uncertainty in the macroeconomic environment. The results of the recent Indian Readership Survey (IRS) confirm the company's strong brand salience among English and Hindi dailies. It is now a clear No.2 in the markets of Mumbai and UP and No.1 in Uttarakhand. It has also retained its leadership positions in Delhi, Bihar and Jharkhand. Among its new businesses, digital and radio continue to gain traction, and it recently launched the first two centers of higher education venture, the Bridge School of Management. The management is confident that its diversified business model, established brands and sustained focus on cost reduction will continue to create value for all stakeholders as the macroeconomic environment improves Digital business continued to report buoyant performance. During the quarter there was a 42% increase in revenues from Digital segment to Rs 19.5 crore from Rs 13.8 crore. Shine.com registered revenue growth of 65%. Radio Business continued to improve its performance. It saw a 25% increase in revenues to Rs 26.7 crore from Rs 21.4 crore in Q3 FY13. EBITDA grew 166% to Rs 10.2 crore. HT Mumbai continued to consolidate its No. 2 position with a Total Revenue growth of 27% and achieved operational breakeven in Q3 FY14. HT Media inaugurated Bridge School of Management in October 2013. It launched its first 2 centers in Delhi NCR. This will provide higher education for working professionals with the aim to address the education-employment mismatch and to equip professionals with skills and practical knowledge of real business values for a global workplace. The company's business outlook continues to be strong as increasing returns in new businesses like HT Mumbai, Radio and Mint will contribute towards revenue growth and improved profitability. The company is gaining traction in the digital businesses. It has a strong balance sheet capable of supporting investments in growing businesses whilst exploring new opportunities. It has net cash of Rs 746.1 crore. Excluding HMVL cash will be about Rs 380 crore. The management would prefer to go for buyback rather than giving away one time hefty dividends. Tax rate should be around 23-24% in FY 2014 and 24-25% in FY 2015. Other income contains one time income in relation to Burda. Other income should have run rate of around Rs 25-30 crore. Digital revenues should grow 75% in FY 2015 over FY 2014 and in FY 16 this business should have positive OP. The company's gross debt is about Rs 700 crore and total net cash is about Rs 750 crore. Thus gross cash is around Rs 1500 crore. The company is taking advantage of the arbitrage the Indian market is offering between the cash and debt. The company invests only in FMP that too AAA rated FMPs. If cash is needed for capex, the company takes debt till FMP matures and then repays the debt as FMP matures. Capex should be about Rs 70-80 crore in FY 2015 largely on modernization and in Hindi space and IT. Advertisement revenues in Delhi are a pain. But after the IRs survey both Delhi and Mumbai advertisement business is expected to grow. Also as going forward as India's GDP improves, advertisement in Mumbai and Delhi will also grow. Radio business had EBITDA of Rs 10 crore. The company had 25% rate hike in the UP market. True effect of rate hike will happen from April. In print media, effect of rate hike happens over a period of one year. Expenses relation to newsprint expenses will be flat in March 2014 quarter as newsprint prices were higher in December 2013 quarter. Total Circulation was 43-45 lakh in December 2013 quarter and Hindi would be close to about 25 lakh copies. The company has generated close to Rs 90-95 crore of cash in the quarter. But the company was heavy in capex in this quarter. It also bought newsprint inventory till August. That is why net cash growth is not much. Mint should see breakeven in March 2014 quarter. Revenue numbers for Mumbai was Rs 47 crore. EBITDA in Mumbai is zero. Benefits of elections have already started coming in and will end with the elections.

[dua]

This Point mentioned below of arbitrage was very unclear how company is taking advantage of arbitrage without going into riskier assets…Its very diff to take debt below 10% costing.maximum offered by aaa fmp…if company wants to create some wealth for shareholder, company should set off debt with cash…company would be holding 700 cr cash which is much higher than capex requirement of 100 cr for next year

The company is taking advantage of the arbitrage the Indian market is offering between the cash and debt. The company invests only in FMP that too AAA rated FMPs. If cash is needed for capex, the company takes debt till FMP matures and then repays the debt as FMP matures.

[hemantbhatia]

**Rajiv Verma, CEO addressed the call.**Highlights of the call by Capital Mkt;

For the quarter ended March 2014, sales grew 9% to Rs 543.80 crore. OPM was down from 14.3% to 13.9% which limited OP growth to 5% to Rs 75.40 crore.

It saw 10% increase in advertising revenues of print segment to Rs 417.2 crore primarily driven by increase in advertising yields.

Circulation revenues of print segment grew 14% to Rs 65.5 crore primarily driven by increase in realisation per copy.PBT jumped 31% to Rs 78.50 crore.

Provision for tax jumped 117% to Rs 36.30 crore.Thus PAT fell 2% to Rs 42.20 crore.

Minority interest jumped 155% to Rs 7.40 crore after which net profit fell 13% to Rs 34.80 crore.In FY 2014 2014, sales grew 9% to Rs 2200.70 crore.

The company witnessed 9% increase in advertising revenues of print segment to Rs 1665.2 crore against Rs 1529.3 crore primarily driven by increase in advertising yields and volumes.

It saw 15% increase in circulation revenues of print segment to Rs 257 crore from Rs 222.6 crore primarily driven by increase in realisation per copy.

OPM improved from 14.0% to 14.2% which saw OP rising 11% to Rs 312.40 crore due to growth in advertising and circulation revenues.

PBT jumped 35% to Rs 324.00 crore.Net profit grew 24% to Rs 207.50 crore.

FY 2014 was extremely difficult year

FY 2014 was extremely difficult year for all the companies in the print media business/. Exchange rate fluctuation made it difficult for the company to ascertain how much its costs would be as its major raw material was newsprint. Also the economy was down so advertisement spend was not at the same degree that the management would have liked it to be. However, at the end of the year exchange rate stabilized and the rupee strengthened so the company managed to tackle the costs in a better way.

The Hindi business OPM grew to 21% from 18%. The company has started this business in the last 7 years so bringing the OPM to 21% is commendable.

Balanced portfolio

HT media is one of the few companies having balanced portfolio in Hindi and English newspaper business.

The company has 4 radio stations in Mumbai, Dehli, Bangalore and Kolkata. EBIDTA has improved 130%. The company is ready with expansion of radio franchise as and when government allows.

The company has 2 vertical in education business: they are coaching center and higher education. Both these verticals are in interesting phase.

Increased its readership and consolidates its 2nd position

There were controversies in the IRS Readership data but the company got the permission from the court to share the dada with everyone including the analysts, advertisers, customers etc.

Hindustan is the second largest newspaper. It is very strong in UP, Bihar and Delhi.

Mint is number 2 business newspaper.

HTML increased its readership and consolidates its 2nd position in the English, Hindi and Business Daily Segments.

On all India basis, 2013 IRS Readership stood at 4.34 million against 3.82 million as per Q4 2012 IRS Readership.

In Delhi NCR it grew from 2.18 million to 2.27 million.

Mint grew from 0.22 million to 0.31 million during the same period.

Benefits of strong IRS performance will accrue in years to come. Thus yields will climb up in Delhi and Mumbai.Mumbai has become from 3 paper market to 2 paper market.

HT readership is 12.5 lakh compared to 20 lakh odd for the number one player. Third player is so far away that it is inconsequential.

HT media is the only company to close the gap between the top player and second player.

Digital business

The company has been investing in digital arena since the past 7-8 years.

Digital business continues to report buoyant performance for the Fiscal Year 2013-14. It saw 42% increase in revenues from Digital segment to Rs 76.2 crore from Rs 53.8 crore.

Shine.com saw revenues growing 58% in FY14 over FY13.

HT Mobile registered a revenue growth of 65% in FY 14 over FY 13

Revenue from Shine is Rs 24 crore and total job portal business is worth Rs 250 crore thus there is lot of gap to close.

Robust performance from Radio Business continues

Radio Business saw 19% increase in revenues to Rs 93.1 crore in FY 14 from Rs 78.3 crore in FY13.

EBITDA grew 129% to Rs 28.5 crore from Rs 12.5 crore; Margin improved to 31% from 16% during the same period for the Radio Business.

Other information

Total investment for this company is 300 crore and 60% is in properties.

During the March 2014 quarter Newsprint price grew from Rs 34500 to Rs 39500.

Capital allocation of the company will mostly be in Hindi and new business like education, radio and digital. For English newspaper it will not me much in Delhi and NCR. But it will invest somewhat in Mumbai English newspaper business.

Northwestern University forged JV with Bridge School of Management, a part of HT Media. The Joint Venture is on âPredictive Analytics’ professional certificate programmes in India, with the first programme to be launched early this summer.

The program will combine online content (developed and taught by Northwestern faculty) with weekly in-person sessions led by local faculty at Bridge School’s learning centers in Delhi.

Buy back plans

The company feels that it makes more sense for buy back than giving higher dividend but the company will have to wait for 12 months for another buyback from the end of previous buyback.

Resilient business model, established brands and sustained focus on cost reduction will continue to drive growth and create value

The company’s diversification strategy has worked well. HT Mumbai, Hindustan â especially in Uttar Pradesh, and its digital businesses have delivered strong growth. Its radio business continues to grow both revenue and profits.

The management is confident that its diversified and resilient business model, established brands and sustained focus on cost reduction will continue to drive growth and create value

Outlook

HT Media’s business outlook continues to be strong on the back of increasing returns in new businesses like HT Mumbai, Radio.

Going forward Hindi business will contribute towards revenue growth and improved profitability.

The company is also gaining traction in the digital businesses.

The company boasts of strong balance sheet capable of supporting investments in growing businesses whilst exploring new opportunities. It has net cash of Rs 901.3 crore.

[hemantbhatia]

Rajiv Verma CEO of the company addressed the call.Highlights by Capital Mkt; September 2014 quarter will have another phasing issue.For the quarter ended June 2014, HT media registered 4% fall in sales to Rs 333.82 crore. The company saw a 3% increase in advertising revenues of print segment to Rs 421.4 crore primarily driven by increase in advertising yields. If adjusted to Berta disinvestment, the advertisement revenues have grown by 6.5%. But even then the growth in sales was tepid.Circulation of print segment grew 13% to Rs 68.6 crore primarily driven by increase in realisation per copy.NPfell 31% to Rs 32.67 crore. The company saw pressure on raw material due to rise in newsprint prices. Raw material cost was highest ever. June 2014 quarter saw the highest cost paper inventory getting absorbed. In corresponding quarter last year the lowest cost paper inventory had got absorbed. Also the profitability was impacted by 19% rise in employee cost to Rs 125.2 crore due to impact of new hiring, increments and a charge for regulatory compliance. Large part of this is one time and small portion is recurring. However, the employee cost will continue to be around 20-25% of sales. After a good IRS the yields have gone up by 4-5%. English beat has seen yields going up 4-5%.New IRS numbers are expected to be out in a month's time. The company's digitization business is doing extremely well. It saw 39% increase in revenues from Digital segment to Rs 23.7 crore in June 2014 quarter. The Company also operates a job portal in the internet space, called www.Shine.com. Shine.com registers revenue growth of 41% in June 2014 quarter.Shine.com has the best database after the number one player.HT Mobile registers a revenue growth of 54%.Radio business saw 12% increase in revenues to Rs 24 crore. EBITDA went up by 79% to Rs 9.3 crore. Margin improved to 39% from 24% during the quarter.For its radio business, it has consolidated its number 2 position in Mumbai. Last year there was a good contribution from the real estate business but currently contribution from the real estate business has gone down. But given the good economic activity, the management expects contribution from the real estate business to recover.In last 2-3 years real estate advertisement has grown impressively.Also government advertisement was down in June 2014 quarter and is not yet seeing picking up. September 2014 quarter will have another phasing issue due to âshradh', which affects advertisement in a big was in Northern India.Capex to be lower at Rs 100 crore in FY 2015. This does not include radio auction.The management does not see newsprint prices rising. Investment in FMP will be impacted due to change in taxation in Budget 2014-15. The management will restructure some of its investments but cannot give exact details on conference call. This will however impact other income. Increasing returns in new businesses like HT Mumbai, Radio and Hindi business to contribute towards revenue growth and improved profitability. Overall, the management is optimistic on the medium term outlook given that both economic and industrial growth have bottomed out. It believes there will be significant opportunities for the company as the economic environment improves. The company has strong balance sheet capable of supporting investments in growing businesses. It has net cash of Rs 968.3 crore. This does not include its assets which are worth Rs 295 crore. The company cannot do buy back till 1 year after the end of its previous buy back. But buy back is definitely on the management's agenda.

[hemantbhatia]

Rajiv Verma CEO of the Co add the call.Highlights of the call by Capital Mkt: For the quarter ended September 2014, HT media registered 5% rise in consolidated sales to Rs 560.88 crore.Ad revenues grew 9% to Rs 420.0 cr driven by increase in ad volumes and yields.Circulation of print segment grew 12% to Rs 71.70 crore primarily driven by increase in circulation and realisation per copy.PBT fell 10% to Rs 15.93 crore.Net profit fell 25% to Rs 43.89 crore. EBITDA grew despite fall in other income. Other income fell 40% to Rs 33.89 crore due to the higher base effect of Burda stake sale (Rs 38.2 crore) and HMVL stake sale (Rs 8.6 crore) which occurred last year.For the six months ended September 2014, HT media registered 3% rise in consolidated sales to Rs 1107.29 crore. PBT fell 16% to Rs 127.83 crore. Net profit fell 28% to Rs 76.56 crore.Mumbai grew 15%. Digital businesses have shown robust growth and radio business continues to outperformDigital segment grew 40% to Rs 24.90 crore.Shine revenues have grown at 28%.HT Mobile registers a revenue growth of 54%.Radio grew 10% to Rs 24.4 crore. EBITDA grew 35% to Rs 7.4 crore. Margin improves to 30% from 25%.Hindustan grew 12%.Mint Grew 25%. The company does not give number of Mint copies circulated.HT Delhi grew 4%.Ad growth driven byreal estate in Mumbai and Delhi. Difficult to estimate how Government change in Haryana will impact the company.Average news print cost was about 39000 per ton and is expected to fall by 1-2% on average for next 1-2 quarters.Cash with company is around Rs 1000 crore. last quarter it was Rs 960 crore.Investment in books stands at Rs 330 crore out of which major is in real estate.If the company cashes today it would get net amount in the range of Rs 250-33 crore after provisions. At this point of time internet advertising is not affecting the company. Big ecommerce players are advertising in print medium and TV. So the company is getting advertisement from them. E commerce is not yet top 3 segment for the company.Festival season has been good and continues to be good. Measures that the government has taken right after the Lok Sabha elections, advertisement should continue to do well.The company remains optimistic on the medium term outlook for HTML as the economy revives and industrial growth gets back on track. It believes there will be significant opportunities for the company as the economic environment improves. Employee cost grew 9% to Rs 116 crore due to impact of new hiring, increments and a charge for regulatory compliance.If economy continues to do well, yield should grow around 15-20% for next two years.In UP the company is confident of reaching 20% margins from 5-10% now in next 2 years. In UP the market share is 21-22% in Rs 1000 crore market. Increasing returns in businesses like HT Mumbai, Radio and Hindi business to contribute towards revenue growth and improved profitability going forward.The company has strong balance sheet capable of supporting investments in growing businesses whilst exploring new opportunities - Net cash of Rs. 10,39.2 crore.The company will see uptick in economy as elections are over and strong government is at the center. Also as newsprint prices are expected to fall, the company is hopeful of good growth in advertisement and EBITDA margins going forward.

[hemantbhatia]

**Rajiv Verma CEO add the call.**Highlights of the call by Capital Mkt:

In December 2015 quarter, consolidated revenue increased 5% to Rs 649.9 crore.

It reported revenue growth across all its core businesses on the back of higher advertising in the festive season.Advertising Revenue increased 4% to Rs 496.7 crore. Circulation Revenues grew 10% to Rs 73.40 crore.EBITDA was flat at Rs 130.6 crore.

There was a 14% increase in employee costs to Rs 120.5 crore due to impact of new hiring, increments and a charge for regulatory compliance.

Also there was 18% increase in advertising & Sales Promotion expense.EBITDA margins stood at 20.1%.PAT was down 1% to Rs 73.9 crore. Net Profit margins stood at 11.4%.

Rs 14 crore of EO loss was due to write off of its investments in myparichay.

It has strong balance sheet position with Net Cash of Rs 1144 crore. This would be used to fund expansion.

The company increased its circulation in the Hindi belt and strengthened its position in Uttar Pradesh and Bihar.Mumbai is growing steadily. In Mumbai circulation stood at 450000 copies. Going forward it plans to increase this to 500000 copies.

It remains the most read English daily in Delhi and the national capital region.

Digital business saw 36% increase in revenues to Rs 26.7 crore.

Its digital businesses continue to show traction and radio remains highly profitable.

Radio business is progressing at a steady pace. Radio business saw 3% decrease in revenues to Rs25.8 crore primarily due to reduced focus on events and activations. However, EBITDA was up 35% to Rs 13.8 crore. Margin improved to 53% from 38% during the same period

Digital business had EBITDA loss of 45 crore majorly due to TV advertisement expense for shine.Shine.com registers revenue growth of 43% in Q3 FY15 over Q3 FY14.HT Mobile registers a revenue growth of 44% in Q3 FY15 over Q3 FY14.It hopes to turn around Digital business in FY 2016-17.

Raw material costs show a downward trend. It fell from Rs 39100/ton to Rs 37400/ton. The management feels that the news print price will fall another 2-3% in March 2015 quarter.Total newsprint consumption stood at 47100 tons in December 2014 quarter.

Newsprint price is likely to be benign for next 4-5 quarters.

Employee cost will stabilize to 9-10% of sales in FY 2016 onwards. In Q4 it is still expected to be higher at around 13%.FY 2016 capex is expected to be around Rs 75 crore.

Radio business will have another capex of Rs 200 crore.

The announcement of Phase III expansion in FM Radio is a positive development and the management believes it will be able to add to its portfolio of stations.

It expects to close the year on a strong note and carry the momentum into the next year. The company is well positioned to seize any opportunity that comes its way.

Going forward by the end of 3 years Mumbai and UP EBITDA margins should be around 25%.

Total debt on balance sheet is around Rs 550 crore on consolidated level.

Right now there is no thought process in increasing the cover price. But if the economic indicators do not improve in next 6 months it will be forced to take a relook at the c over prices.Hindi cover price was always more than English cover prices in the last five years. But English has catching up now and thus Hindi cover price rise is not much as English cover price.

The management plans to improve profitability in all its businesses especially HT Mumbai and Digital. It also hopes to increase footprint in Radio business.

The management feels that the company is a good proxy to the economy and if the economy does well the sales should grow faster. As cost are under control so operational leverage should kick in.

UP market EBITDA stood at 8-10%. It has market share of 23-24% in UP.Shine topline is expected to grow 50-60% in FY 2016.Mumbai edition grew 11%. Delhi was flat. Hindi business grew 11%.

[hemantbhatia]

Rajiv Verma CEO of the Co addressed the call.Highlights of the call by Capital Mkt:
For the quarter ended March 2015, HT media registered 6% rise in consolidated sales to Rs 576.92 crore. OPM fell 550 basis points from 13.9% to 8.4% which took OP down 36% to Rs 48.28 crore. Net profit grew 13% to Rs 39.28 crore.Advertising revenue grew 5.7% to Rs 465.30 crore due to increase in both advertising volumes and yields.Circulation revenue grew 8.6% to Rs 71.1 crore due to higher net realization per copy as well as higher circulation.
In FY 2015, HT media registered 4% rise in consolidated sales to Rs 2289.71 crore. OPM fell 250 basis points to 11.7% which took OP down 14% to Rs 268.55 crore. Net profit fell 13% to Rs 179.81 crore.
Advertising revenue grew 5.3% to Rs 1851.7 crore due to increase in both advertising volumes & yields.
Circulation revenue grew 10.8% to Rs 284.8 crore due to higher net realization per copy as well as higher circulation.Advertising revenue growth continues to be mid single digit as economy struggles.Mumbai grew 11% in FY & Q4 15%Hindi was up 10.3% in Q4.Radio did well as advt. grew 12% FY and Q4 at 15%.Digital continues to grow strongly @36% for FY and 32% For Q4.Delhi was a laggard. But q4 was better than FY. Hopes that FY 2016 will be better for Delhi than FY 2015.Raw material consumption grew just 1% for FY and decreased by 5% in Q4.Employee cost was high because of regulation and new hiring.Advertisement costs were up because of shine.com.Next year it expects all cost heads to rationalize and raw material price to be benign.The company is number 1 in Delhi.
If economies of scales comes thru with strong IRS numbers benign RM cost the company expects strong growth with margin expansion.Core OP fell because of slow sales growth. As cost like advertisement and other expenditure were up, margins got squeezed.Margins are certainly go up in future as all other expenditures will normalize and will grow in just higher single digit to double digit.The company does not plan to go for second line of buy back.Economy should pick up by the second half of the year. If this happens metros will see higher growth for print media companies. So English business should go up.Digital advertisement is picking up but it is not eating into print media so far.
UP revenue will be around Rs 225 crore in FY 2015 and are expected to grow 25% in next three years.
Capex plans for FY 2016 is 75 crore.Advertisement should grow by 15% in FY 2016 and higher if economy picks up.Biggest contributor is the government advertisement.There is scope for increase in cover price.Circulation grew 4-5% and is expected to grow around that range for the next 2 years.
Newsprint prices should continue to be at $ 500-525 a ton for the next 3 quarters.The company is the number 2 player in job business after naukri.com.Top line growth in digital should be 35% in FY 2016.
In FY 2015 debt was Rs 370 crore.90% of digital business comes from shine.com.If economy picks up the mature markets will throw up huge margin expansion.Gross debt is Rs 310 crore.
Hindustan Times’ Mumbai edition and Hindustan’s Uttar Pradesh editions, strengthened their presence in their respective geographies, and were both profitable.Its digital businesses grew handsomely and are at an inflection point. Radio continues to do well and it will invest in its growth.Digital business saw sales rise 36% Rs 104 crore. Shine.com registered revenue growth of 33% in FY15. HT Mobile registered a revenue growth of 50%.Radio business saw 6.7% increase in revenues to Rs 99.4 crore driven by advertising revenues growth of ~12% being partially off-set by reduced focus on events and activation.
Net Cash stands at Rs 1286.9 crore.

[hemantbhatia]

Rajiv Verma CEO of the company addressed the call.Highlights by Capital Mkt
For the quarter ended June 2015, HT media registered 7% rise in consolidated sales to Rs 587.18 crore.
OPM fell 170 basis points from 11.3% to 9.7% which took OP down 8% to Rs 56.88 crore.PBT fell 11% to Rs 52.73 crore.Net profit fell 24% to Rs 24.95 crore.
Advertising revenues grew 5% to Rs 467.5 crore primarily due to increase in advertising volumes.
The company saw 6.3% increase in circulation revenue to Rs 72.9 crore due to higher circulation as well as higher net realization per copy.The year started well although economic growth is still slow.There are mixed signals on account of global macroeconomic concerns.Its English dailies saw volume-led growth across markets.Hindustan maintained its upward growth trajectory, driven by investments in both UP and Bihar.Digital assets are increasingly gaining a foothold in markets.Net Cash stands at Rs 1199.1 crore.
Its 2014 IRS Readership for HT on All India basis stands at 4.52 million against 4.34 million as per 2013 IRS Readership.Its 2014 IRS Readership for HT in Delhi NCR stands at 2.30 million against 2.27 million as per 2013 IRS Readership.2014 IRS Readership for HT Mumbai stands at 1.44 million against 1.36 million as per 2013 IRS Readership.2014 IRS Readership for Mint stands at 0.30 million against 0.27 million as per 2013 IRS Readership.Revenues from Digital segment grew 29% to Rs 30.6 crore from Rs 23.7 crore.Shine.com registered revenue growth of around 9% (to around Rs 10 crore) in Q1’FY16 vs. Q1 last year.TV commercial for shine increased the expenses for the segment.HT Mobile registered a revenue growth of 71% in June 2014 quarter. The company hopes the growth rate sustains for the full year.Its Radio business is progressing at a steady pace. This business grew its revenues by 2.3% to Rs 24.5 crore in June 2014 quarter largely due to advertising revenue growth.Radio business EBITDA grew 2.7% to Rs 9.5 crore.EBITDA margins improved to 35.9% from 35.6% during the quarter.
The company aims to add to its portfolio of stations in Phase- III auctions.Ad revenue has picked up. Up trend is not strong but the good news is that there is uptrend.Mumbai grew 19%. The company is close to 10% EBITDA in Mumbai and is expected to grow to 25%+ once sales in Mumbai picks up more.HMVL grew 7% adjusted for electionsHT Delhi grew 4% which was heartening.Other income growth was negative due to mark to market for mutual fund. Going forward it will grow and it will be maintained at FY 2015 figures.RM fell 5%. RM prices continue to be benign and will remain so in the future.Revenues uptrend to pick up pace in FY 2015-16 while expenses will show modest growth.Provisioning for ad equity was Rs 4 crore during the quarter.Advertisement from FMCG grew better than last year.
Real estate continues to be laggard at 6%.Education was lower than last year.
As the year progresses, It will continue on the growth path and deliver positive results even as the economic environment improves.The company saw 36.4% increase in advertising & Sales Promotion expenses and 20.8%increase in general and admin costs.Employee costs grew 10.2% to Rs 137.9 crore due to impact of new hiring, increments. This was partially off-set by the fall in raw material costs by 4.6% due to drop in newsprint costs.Circulation was 44 lakh including all news papers.Net realization per copy was Rs 1.5.English pagination was 31 and Hindi was 23. In Delhi Hindi pagination was 39 and in Mumbai it was 33.

[manish26]

This stock is extremely undervalued. This not showing any growth but i think looking at the size and the opportunity & other digital assets it holds. Also the job portal Shine which is started off good; i think one should keep a watch on this counter. If the company shows first sign of growth then its a good time to buy this company.

Disclosure: Have exposure of 1% currently

Regards

Manish Shah

[crazymama]

CONFERENCE CALL - from Capital Markets

On digital side the company hopes to reduce its losses by at least 50% in FY 2017

HT Media held its conference call on 27th May 2016 to discuss its results for the period ended March 2016.
Rajiv Verma CEO and Vinay Mittal CFO of the company addressed the call.

Highlights of the call:

• For the quarter ended march 2016, HT media registered 11% rise in consolidated sales to Rs 630.95 crore.

• Advertising revenues grew 8.5% to Rs 496.70 crore primarily due to increase in advertising volumes as well as yields.

• PAT grew 1% to Rs 49.68 crore. Minority interest grew 20% to Rs 12.06 crore after which net profit fell 4% to Rs 37.62 crore.

• The Hindi business outperformed the market and it witnessed the return of growth in the English business.

• Its new businesses are doing well.

• HT Mumbai has established itself as a clear alternative in India’s commercial capital.

• It launched Radio Nasha 107.2 in Delhi, becoming the only radio business in the region with two stations.

• Its digital business showed significant revenue growth and has reduced its losses.

• This year is rich with opportunities to expand reach and offerings. The management believes it is well placed to tap these and that its innovative strategies, prudent and timely investments, and world-class execution will continue to differentiate it from the competition.

• In FY 2016 advertising revenue grew 7.5%.

• Circulation Revenues grew by 5.6% in FY 2016.

• The company has strong balance sheet position with Net Cash of Rs 890.7 crore.

• The company saw 35% increase in revenue from Digital segment to Rs. 140.3 crore in FY 2016.

• Shine.com registered revenue growth of 29% in FY16.

• HT Mobile registered a revenue growth of 63% in FY16.

• Radio business progressing at a steady pace

• It saw 17.7% increase in revenue to Rs 117.0 crore in FY16 driven by advertising revenue growth as well as Chennai launch.

• EBITDA was down 11.6% to Rs 40.5 crore due to Chennai launch.

• During FY 2016 EBITDA grew primarily due to increase in topline and decline in raw material costs by 2.6%. However this was partially offset by 15% increase in employee costs to Rs 556.0 crore on account of new hiring and increments impact.

• PAT fell primarily as higher EBITDA was more than off-set by higher interest costs on Radio related borrowings and higher tax charge.

• Going forward the company plans to operationalize new Radio stations acquired in Phase-III auctions.

• It will also strive to improve profitability of Digital segment by focusing on growing revenue exponentially.

• It may leverage the strong balance sheet which has net cash of Rs 890.7 crore, to fund expansion.

• Good results despite drought like situation in some parts of India. With good monsoon there would be pick up in the economy from second half of FY 2017. The company is well placed to avail of the situation.

• With good monsoon, advertisement will increase.

• Cumulative advertisement growth in English for the quarter was close to 1.4%.

• The company had a part if legal expenses for historical legal stuff which all came in Q4.

• Thus other expenses should normalize in FY 2017.

• As economic picks up, operation leverage will come and even sales will also grow faster.

• On digital side the company hopes to reduce its losses by at least 50% in FY 2017.

• Consolidated other income should be around Rs 200 crore in FY 2017.

• Tax rate should be in the range of 26-28% in FY 2017.

• Advertisement from FMCG was 11%, Auto was 9%, and Education was 8%.

• Real Estate was laggard.

• In UP EBITDA margins is close to 15% and market share is close to 25-27%. 25-27% is a matured market margins which should be same for roughly 3 years.

• Advertisement for equity was Rs 370 crore.

• Capex for FY 2017 would be Rs 70-80 crore.

• 80% of growth was volume driven in FY 2016.

• Top line growth can come only if economy grows. So if monsoon is good, u can expect good sales growth.

• As green shoots are visible in the economy, things should improve for the company from second half onwards.

[arsh13]

I am a new entrant into the VP forum and was going through the thread on Hindustan Media Ventures which has 149 posts and with lots of members bullish and excited on the story both from a technical as well as fundamental perspective. In contrast, the listed parent HT Media is a comparatively neglected story with just 17 VP posts (most of them concall transcripts) and ditto with the sell-side analyst community - IDFC Capital for example rates this as an underperformer.

From an absolute valuation perspective, HT Media seems to be extremely undervalued (as @manish26 has pointed out a while back in earlier posts) and the under-valuation has persisted now for a few years.

Rough math:

Approach 1

1. Market cap of HMVL is Rs 2,000 cr approx; HTML stake in HMVL is worth ~ Rs 1,500 cr
2. Assume say 20% holdco discount - value of HMVL holding is say Rs 1,200 cr
3. Stand alone company EV is therefore Rs 1,900 cr (market cap) less Rs 1,200 cr less net cash / (net debt) = Rs 700 cr less net cash of approx Rs 40 cr [have approximated net cash since balance sheet schedules are not available till the annual report is out] = Rs 640 cr
4. Hence the profitable HT english franchise + mint + radio + digital is all available at 640 /218 = 3x FY16A EV/EBITDA
5. Which seems too good to be true, or am I missing something

Approach 2

1. Market cap of HTML is Rs 1,900 cr approx
2. Net cash as per analyst transcript posted by @crazymama is rs 926 cr [again cant reconcile with headline consol balance sheet figures]
3. Hence EV is approx Rs 1,000 cr.
4. Consol FY16 EBITDA is approx Rs 307 cr; hence stock at CMP trades at about 3.2 FY16 EV/EBITDA;
5. again looks absurdly cheap
6. At approx 10x PEthis is not as cheap on PE multiple basis - but not expensive either

What I dont like about HTML:

1. Tangle of related party transactions - brand transfer from parent to subsidiary for no apparent reason, etc
2. Financials difficult to read - results ppt and press release dont give a simple number like net cash / (debt) in a straight forward manner
3. Low growth, compared to HMVL, Jagaran, or DB Corp
4. Analyst transcript seems to suggest they have net cash and yet have an unhedged forex loan to purchase/ import newsprint - all because they want to pay long term cap gains on liquid / debt funds and not STCG tax. Too cute by half and one spike in fx will knock these calculations for a six.

Lastly I never did understand why a listed company should have a listed subsidiary in the same business - at least an IDFC Bank has a regulator to blame. Here there doesnt seem to be any compelling business rationale.

Curious to hear the views of others particularly those invested in HMVL.

Disclosure: Invested in HMVL recently (the VP thread on HMVL is one of the best I have read and way better than most analyst reports) but not in HTML. Plan to build a tracking position in HTML and wait to see the annual report.

[ravjan]

HMVL is a vernacular newspaper, wherein HTML is a long established English Daily and the probability of growth is limited due to the following.

• Competition
• Readers ability to switch to online media
• Television

It is a different story with HMVL Though it faces competition, readers of vernacular papers do not switch to online content as online content in vernacular languages are pretty basic. More so, our rural masses are taking adult education and have the urge to become literate. As of now our rural masses are behind the literacy curve so to speak. This tendency will continue for another 2 to 3 decades or probably more, to reach full literacy. This positive change in our society will continue fueling HMVL’s growth.

Hope this view helps

[narayana526]

Is HT media entering preferential share subscription agreement with JHS for subscribing JHS shares@43/Share

http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/8AA5DE74_2FD9_40F6_913A_28B6C19FF5A5_173452.pdf