16 July 2015
1QFY16 Results Update | Sector:
Media
HT Media
BSE SENSEX
28,446
Bloomberg
Equity Shares (m)
M.Cap.(INR b)/(USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
Avg Val INRm/Vol ‘000
Free float (%)
Financials & Valuation (INR b)
Y/E MAR
Net Sales
EBITDA
Adj. NP
Adj. EPS (INR)
Adj.EPS Gr.(%)
BV/Sh (INR)
RoE (%)
RoCE (%)
P/E (x)
P/BV (x)
Estimate change
TP change
Rating change
2015 2016E 2017E
22.9
2.8
1.8
8.5
14.9
9.9
10.5
10.3
1.0
24.3
2.9
1.8
7.7
-9.0
8.1
9.7
11.3
0.9
5-8%
26.4
3.2
2.1
9.2
18.4
8.7
10.4
9.5
0.8
n
n
S&P CNX
8,608
HTML IN
232.8
20.3/0.3
145/87
-12/-32/-36
21/187
30.5
n
CMP: INR87
n
TP: INR100 (+15%)
Neutral
EBITDA and ad growth in line; lower other income impacts PAT
EBITDA down 8%, PAT down 24% (YoY):
HTML’s 1QFY16 PAT declined 24% YoY to
INR393m, led by 1) continued sluggishness in ad growth, 2) front-ended digital
investments for the year (Shine.com), 3) lower other income due to MTM impact
of increased interest rates on mutual fund investments, and 4) higher tax rate. The
impact was partially offset by continued benign raw material prices (down 5% YoY)
Ad and circulation revenue up 5-6% YoY; broadly in line:
Revenue grew 7% YoY to
INR5.87b (est: INR5.74b). Ad revenue increased 5% YoY to INR4.43b (~7% adjusted
for election billing in 1QFY15), with Hindi up 7% YoY and English up 4% YoY.
Circulation revenue grew 6% YoY (English up 1%; Hindi up 8%).
EBITDA margin down 170bp despite favorable newsprint prices:
EBITDA margin
declined 170bp to 9.7%. While raw material costs were favorable (down ~400bp),
the company incurred higher other expenses (up ~500bp YoY)—largely toward
advertising and sales promotion in the digital business. HTML has front-ended the
investments in digital business, with EBITDA loss at INR239m for 1QFY16
compared with its target of INR500m-600m loss for the full year.
Maintaining EBITDA estimates but upgrading earnings 5-8%; Neutral:
HT Media’s
1QFY16 operating performance was broadly in line. While we remain positive on
the regional business (HMVL), sluggish English ad growth, losses in the digital
segment and low dividend pay-out are the key concerns. We are maintaining our
EBITDA estimates but upgrading earnings 5/8% in FY16/FY17 on lower
depreciation and finance costs. The stock trades at a P/E of 11.3x FY16E and 9.5x
FY17E. Maintain
Neutral
with a revised target price of INR100/sh based on 11x
FY17E EPS.
90.0 100.2 111.1
Shobhit Khare
(Shobhit.Khare@MotilalOswal.com); +91 22 3982 5428
Jay Gandhi
(Jay.Gandhi@MotilalOswal.com); +91 22 3089 6693
Investors are advised to refer through disclosures made at the end of the Research Report.
Motilal Oswal research is available on
www.motilaloswal.com/Institutional-Equities,
Bloomberg, Thomson Reuters, Factset and S&P Capital.