HT Media - 1QFY2013 Result Update - Angel Broking

For 1QFY2013, HT Media reported weak performance on the earnings front. The company's bottom-line declined by ~21% yoy to Rs.43cr on account of margin pressure (due to yoy increase in newsprint prices in INR terms due to rupee depreciation) and sluggish ad revenue growth (due to slowdown in GDP growth).

Key highlights for the quarter: The Company's top line remained flat at Rs.490cr due to 3.1% yoy decline in advertising revenues to Rs.373cr which was partially offset by healthy 8.3% yoy rise in circulation revenue to Rs.53cr primarily on account of selective increase in cover prices. In terms of other segments, radio segment contributed Rs.19cr and HT Burda contributed Rs.24cr to the topline. On the operating front, OPM contracted by 454bp yoy to 13.6%. However, OPM expanded by 387bp qoq due to cost rationalization measures undertaken by company such as increasing pagination efficiency.

Outlook and valuation: At the CMP, HTML is trading at 11.1x FY2014E consolidated EPS of Rs.8.1. We maintain our Buy recommendation on the stock with a revised target price of Rs.113, based on 14x FY2014E EPS (at ~15% discount to our target multiple for Hindi print media players). Downside risks to our estimates include 1) any further rise in newsprint prices, 2) competition becoming fierce, impacting ad rates/volumes.

Source : Equity Bulls

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