HT Media - 4QFY2013 Result Update - Angel Broking

For 4QFY2013, HT Media's top-line performance was below our estimates, growing tepidly by 1.5% yoy to Rs. 501cr. However, fall in newsprint costs and other expenses (driven by lower newsprint prices, cutback in excess circulation in few markets, pagination efficiency and lower advertising and sales promotion expenses), aided HT Media to register OPM expansion of 456bp yoy to 14.3%. Consequently, Net Profit grew by 82.0% yoy to Rs. 40cr.

Key highlights for the quarter: Advertising revenue registered a sluggish growth of 1.1% yoy to Rs. 378cr, primarily driven by volume growth. After four consecutive quarters of de-growth, English ad revenue has posted a 2.7% growth. Also, Mumbai region is gaining strong traction with ad revenue growing by 25% driven by local advertising. However, HT Media's hindi print business subsidiary, HMVL's ad revenue declined by ~3% yoy (on account of high base effect due to elections in Uttar Pradesh in 4QFY2012). The circulation revenue grew by 18.8% yoy to Rs. 57cr, mainly driven by higher realization per copy. In terms of other segments, the radio segment contributed Rs. 18cr while the digital business contributed Rs. 15cr to the top-line. The company has announced its decision to divest entire 51% stake in HT Burda for an aggregate consideration of Rs. 60cr.

Outlook and valuation: At the current market price, HT Media is trading at 10.9x FY2015E consolidated EPS of Rs. 9.1. We recommend Buy on the stock with a target price of Rs. 117, based on 13x FY2015E EPS. 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.

Source : Equity Bulls

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