19 July 2017
1QFY18 Results Update | Sector: Media
HT Media
Neutral
BSE SENSEX
31,955
S&P CNX
9,900
CMP: INR88
TP: INR90 (+2%)
Motilal Oswal values your support in the
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GST impacts ad growth, cost efficiencies lead to margin beat
Maintain EPS estimates and TP
EBITDA up 24%, above estimate; PAT nearly doubles:
EBITDA rose 24% YoY
to INR799m, 21% above our estimate of INR657m, despite the revenue
disappointment, as HT Media’s cost-efficiency efforts bore fruit. Opex levers
more than cushioned the impact of subdued ad/circulation performance.
PAT grew 86% YoY to INR416m, significantly above our estimate of
INR236m, largely due to EBITDA beat flowing through.
Print ad and circulation growth disappoints:
Revenue fell 3% YoY to
INR5.99b (est. of INR6.24b). Ad revenue declined 10% YoY to INR4.07b (est.
of INR4.5b) as volumes were impacted in the month leading to GST roll-out.
English ad revenue fell 16% YoY to INR2.29b, while Hindi ad revenue
remained flat YoY at INR1.78b (4% miss). Circulation revenue remained flat
YoY at INR770m (est. of INR800m). Radio revenue grew 30% YoY to
INR430m (est. of INR398m), mainly on increased inventory sale from new
radio station launches and also growth in existing stations. Like-to-like radio
business growth fell 7% YoY (new stations contributed INR120m in 1Q).
EBITDA margin expands ~290bp YoY, significant beat:
Despite the GST
impact (which put brakes on ad/circulation growth), HTML more than
salvaged margins (+290bp YoY) to 13.3% (est. of 10.5%), as its cost-efficiency
drive across all opex items helped it report healthy margin expansion.
Valuation and view:
While 1Q profitability remained healthy due to cost
efficiencies, the ad pain continues (66% of revenue). While we remain
positive on the regional business, sluggish English ad growth and low
dividend payout remain the key concerns. We maintain our earnings
estimates and
Neutral
stance with a target price of INR90 (11x FY19E EPS).
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
Avg Val, INRm
Free float (%)
Financials & Valuations (INR b)
2017 2018E
Y/E Mar
Net Sales
24.5
25.0
EBITDA
3.0
3.2
PAT
1.7
1.8
EPS (INR)
7.4
7.9
Gr. (%)
2.1
7.0
BV/Sh (INR)
109.8
120.1
RoE (%)
7.1
6.9
RoCE (%)
8.5
8.2
P/E (x)
11.9
11.1
P/BV (x)
0.8
0.7
HTML IN
233
19.2 / 0.3
96 / 70
5/-10/-5
23
30.5
2019E
26.3
3.1
1.9
8.1
1.5
130.4
6.4
8.1
11.0
0.7
Estimate change
TP change
Rating change
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
Jay Gandhi
(Jay.Gandhi@MotilalOswal.com); +91 22 6129 1546
Aliasgar Shakir
(Aliasgar.Shakir@motilaloswal.com); +91 022 3982 5423

HT Media
Exhibit 1: Quarterly revenue, EBITDA and margin trend
19.8
Revenue (INR b)
17.8 19.0 18.6 18.2
14.4 14.8
9.7
13.7
16.0
11.1
14.3 14.4
EBITDA (INR b)
16.3
12.0
13.9
EBITDA margin (%)
12.8 14.2
17.4
11.0
8.4 9.7
11.1 10.5
8.4
17.0
12.5 13.3
11.3
Source: Company, MOSL
Exhibit 2: RM cost as % of revenue
RM cost (INR m)
32.2
37.0 35.5 35.1
34.7
37.8 35.6 37.0 36.3 38.2
RM cost (% of revenue)
31.8 30.2 30.1 29.8
27.9 28.0 29.4 29.6 27.5 27.1 27.4
34.1 32.9 32.5 34.3 32.8 33.8 34.0 33.8
Source: Company, MOSL
Exhibit 3:
Ad
revenue
break-up (INR b)
English (INR b)
1.0
1.2
1.1 1.3 1.3
Hindi (INR b)
1.0 0.9
0.9 0.9 1.1 1.1
1.1 1.2 1.1
1.5 1.5 1.7 1.7 1.8 1.7 1.8
1.4 1.3
1.7
1.7
1.6 1.4
1.7 1.8
3.0 2.6 2.6 2.5 3.0 2.7 2.8 2.6 3.1 2.8 2.7 2.8 3.2 2.9 2.8 2.8 3.3 3.0 2.7 2.6 3.0 2.3
2.3 2.4 2.8 2.7 2.7 2.6
2.3
Source: Company, MOSL
Exhibit 4: Circulation revenue break-up (INR b)
English (INR b)
Hindi (INR b)
0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.6 0.5 0.6 0.6 0.6
0.4 0.4 0.5 0.5 0.5
0.4 0.4 0.4
0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.4
0.1 0.1 0.2 0.2 0.2 0.2 0.2 0.1 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2
Source: Company, MOSL
19 May 2017
2

HT Media
Exhibit 5: YoY ad revenue growth (%)
English
Hindi
Total
Source: Company, MOSL
Exhibit 6: YoY circulation revenue growth (%)
English
21
6
-2
-13
9
3
7 3
8 11 12
19
16
Hindi
14
Total
18 14
13 12 10
9 6 5 5 6 6
0 2 0
0
Source: Company, MOSL
19 May 2017
3

HT Media
Exhibit 7: HT Media: Consolidated quarterly results
Revenue
Operating expenditure
EBITDA
EBITDA margin (%)
Depreciation
Interest
Other income
PBT
Tax
Effective tax rate (%)
PAT
Minority interest
Reported net profit
Revenue mix (INR m)
Advertising
-English
-Hindi
Circulation
-English
-Hindi
Radio and entertainment
Others
Total
Operating cost (INR m)
Consumption of raw material
Employee cost
Other expenditure
Total Operating Costs
Operating Cost (% of Revenue)
Consumption of raw material
Employee cost
Other expenditure
1QFY17
6,147
5,504
643
10.5
295
247
478
579
186
32.2
392
168
224
4,505
2,728
1,777
772
209
563
332
538
6,147
1,804
1,489
2,211
5,504
29.4
24.2
36.0
4QFY17
5,853
5,122
731
12.5
337
218
488
665
225
33.8
440
184
256
4,073
2,328
1,745
757
205
552
445
578
5,853
1,589
1,371
2,163
5,122
27.1
23.4
37.0
FY13
20.5
2
15.3
0
10.7
-2
4.6
5
2.2
13
0.7
7
1.6
15
17.7
3
86
7.2
0
35.4
175
-2
33
1
1QFY18
5,990
5,191
799
13.3
320
194
531
817
239
29.2
578
162
416
4,073
2,293
1,780
770
210
560
430
717
5,990
1,643
1,313
2,235
5,191
27.4
21.9
37.3
FY14
22.0
7
16.7
9
11.4
6
5.3
15
2.6
15
0.8
17
1.8
15
18.9
7
86
7.3
1
33.3
175
0
35
7
YoY%
-3
-6
24
289bps
9
-21
11
41
28
-296bps
47
-4
86
-10
-16
0
0
0
-1
30
33
-3
-8.9
-12
1
-6
-192bps
-231bps
134bps
FY15E
22.9
4
17.2
3
11.2
-1
6.0
13
2.8
10
0.8
6
2.0
11
20.2
7
88
7.3
0
31.9
181
4
36
2
FY16
25.0
9
18.3
7
11.5
3
6.8
15
3.0
7
0.9
3
2.1
8
21.9
8
88
7.2
-1
28.9
196
8
31
-13
QoQ%
2
1
9
85bps
-5
-11
9
23
6
-457bps
31
-12
63
0
-1
2
2
2
1
-3
24
2
3
-4
3
1
29bps
-151bps
37bps
FY17
24.5
-2
17.5
-4
10.6
-8
6.9
1
3.1
2
0.9
-1
2.2
3
21.5
-2
88
7.0
-4
28.4
193
-2
32
3
FY18E
25.0
2
17.3
-1
9.8
-8
7.5
9
3.2
4
0.9
1
2.3
6
21.8
1
87
6.9
0
27.7
191
-1
33
1
1QFY18E
6,245
5,588
657
10.5
339
237
500
580
174
30.0
406
170
236
4,508
2,728
1,780
769
209
560
398
570
6,245
1,780
1,468
2,341
5,588
28.5
23.5
37.5
FY19E
26.3
5
18.1
5
9.9
1
8.2
9
3.4
5
0.9
0
2.5
6
23.1
6
88
7.4
7
28.2
199
4
33
3
v/s est (%)
-4.1
-7.1
21.7
283bps
-5.6
-18.2
6.3
40.7
37.3
-74bps
42.2
-4.5
75.9
-9.6
-15.9
0.0
0.2
0.5
0.1
7.9
25.8
-4.1
-7.7
-10.6
-4.5
-7.1
-107bps
-159bps
-17bps
FY20E
27.5
5
18.9
4
9.9
0
9.0
9
3.5
5
0.9
0
2.6
6
24.3
5
88
7.7
3
27.8
206
3
34
0
Exhibit 8: HT Media: A Snapshot
INRb
Consolidated revenue
YoY (%)
Ad revenue
YoY (%)
-English
YoY (%)
-Hindi
YoY (%)
Circulation revenue
YoY (%)
-English
YoY (%)
-Hindi
YoY (%)
Operating expenses
YoY
% of revenue
RM cost (INRb)
YoY
% of revenue
Newsprint consumed ('000 tonnes)
YoY (%)
News print cost per kg
YoY (%)
Source: Company, MOSL
19 May 2017
4

HT Media
Financials and Valuations
Income Statement (Consolidated)
Y/E March
Net Sales
YoY (%)
EBITDA
EBITDA margin (%)
Depreciation
Interest
Other Income
PBT
Tax
Tax rate (%)
PAT
Minority Interest
Reported PAT
Change (%)
Adjustments
Adjusted PAT
(INR Million)
2014
22,007
7.4
3,124
14.2
858
649
1,624
3,240
916
28.3
2,324
246
2,078
24
-374
1,704
0
2014
461
3,543
13,449
17,453
4,168
1,590
489
23,700
14,462
6,766
7,697
150
0
12,866
10,924
2,257
2,867
1,186
3,517
1,096
7,937
3,937
4,000
2,987
0
23,700
2015
22,897
4.0
2,802
12.2
1,003
467
1,676
2,896
574
19.8
2,322
385
1,765
-15
-28
1,793
28
2015
461
3,543
15,020
19,024
3,441
1,923
363
24,751
15,190
7,918
7,272
150
0
13,887
12,612
1,527
3,120
1,916
4,122
1,927
9,169
4,844
4,326
3,442
0
24,751
2016
25,008
9.2
3,079
12.3
1,018
630
1,543
2,973
832
28.0
2,142
465
1,677
-5
0
1,677
0
2016
461
3,441
16,613
20,515
10,572
2,360
336
33,783
19,014
8,936
10,077
150
0
17,032
15,907
1,617
3,718
1,725
6,662
2,185
9,384
4,546
4,838
6,523
0
33,783
2017
24,521
-1.9
2,983
12.2
1,248
951
2,295
3,079
671
21.8
2,408
696
1,712
2
0
1,712
2018E
25,045
2.1
3,208
12.8
1,408
804
2,271
3,268
817
25.0
2,451
620
1,831
7
0
1,831
2019E
26,274
4.9
3,129
11.9
1,451
731
2,352
3,299
825
25.0
2,474
616
1,859
1
0
1,859
2020E
27,548
4.9
3,272
11.9
1,497
491
2,432
3,716
929
25.0
2,787
741
2,046
10
0
2,046
Balance Sheet
Y/E March
Share Capital
Share Premium
Reserves
Net Worth
Loans
Minority Interest
Deffered Tax Liability
Capital Employed
Gross Fixed Assets
Less: Depreciation
Net Fixed Assets
Capital WIP
Deferred Tax Assets
Investments
Curr. Assets
Inventory
Debtors
Cash & Bank Balance
Loans & Advances
Other current assets
Current Liab. & Prov.
Creditors
Prov. and other liabilities
Net Current Assets
Miscellanous exp
Application of Funds
E: MOSL Estimates
2017
461
3,641
18,217
22,319
11,045
3,000
408
36,771
24,538
10,184
14,355
357
38
22,819
8,388
1,546
3,256
1,396
527
1,664
9,186
4,026
5,160
-797
0
36,771
2018E
461
3,641
19,957
24,059
7,867
3,620
408
35,953
25,290
11,592
13,698
357
38
22,819
8,354
1,540
3,217
1,396
538
1,664
9,314
4,082
5,232
-959
0
35,953
2019E
461
3,641
21,722
25,824
6,147
4,235
408
36,615
26,078
13,043
13,035
357
38
22,819
10,237
1,646
3,362
3,000
564
1,664
9,871
4,326
5,545
365
0
36,615
(INR Million)
2020E
461
3,641
23,666
27,768
2,537
4,977
408
35,689
26,904
14,539
12,365
357
38
22,819
10,464
1,702
3,506
3,000
592
1,664
10,354
4,538
5,816
110
0
35,689
19 May 2017
5

HT Media
Financials and Valuations
Ratios
Y/E March
Adjusted EPS
Growth (%)
Cash EPS
Book Value
DPS
Payout (incl. Div. Tax.) (%)
Valuation
P/E
Cash P/E
EV/EBITDA*
EV/Sales
Price/Book Value
Dividend Yield (%)
* Proportionate
2014
7.4
3.6
12.7
82.6
0.4
4.4
2015
8.7
17.4
13.1
90.0
0.4
4.9
2016
7.3
-16.2
11.7
99.2
0.3
4.3
2017
7.4
2.1
12.8
109.8
0.4
5.4
2018E
7.9
7.0
14.1
120.1
0.3
4.3
2019E
8.1
1.5
14.4
130.4
0.3
4.3
2020E
8.9
10.1
15.4
142.1
0.4
4.3
12.0
6.9
4.5
0.5
1.1
0.5
10.2
6.8
4.5
0.4
1.0
0.5
12.2
7.6
5.9
0.5
0.9
0.4
11.9
6.9
4.4
0.4
0.8
0.5
11.1
6.3
3.1
0.2
0.7
0.4
11.0
6.2
2.2
0.1
0.7
0.4
10.0
5.8
1.0
0.0
0.6
0.4
Profitability Ratios (%)
RoE
RoCE
RoIC
Turnover Ratios
Debtors (Days)
Inventory (Days)
Creditors. (Days)
Asset Turnover (x)
Leverage Ratio
Debt/Equity (x)
9.4
12.1
16.6
48
37
76
2.2
10.1
10.7
15.5
50
24
88
2.5
7.7
8.7
12.4
54
24
76
2.1
7.1
8.5
9.9
48
23
68
1.8
6.9
8.2
11.2
47
22
68
2.1
6.4
8.1
11.2
47
23
68
2.3
6.5
8.6
12.9
46
23
68
2.7
0.2
0.2
0.5
0.4
0.3
0.2
0.1
Cash Flow Statement
Y/E March
EBITDA
Other Income
Interest Paid
Direct Taxes Paid
(Inc)/Dec in Wkg. Cap.
CF from Op.Activity
(inc)/Dec in FA + CWIP
(Pur)/Sale of Investments
CF from Inv.Activity
Issue of Shares
Inc/(Dec) in Debt
Dividends Paid
Other Financing Activities
CF from Fin.Activity
Inc/(Dec) in Cash
Add: Opening Balance
Closing Balance
E: MOSL Estimates
2014
3,124
1,624
-649
-396
-321
3,382
-244
-3,135
-3,378
-478
342
-107
-93
-336
-333
1,519
1,186
2015
2,802
1,536
-467
-699
60
3,232
-578
-1,022
-1,599
0
-727
-109
-53
-889
744
1,186
1,916
2016
3,079
1,543
-630
-859
-3,272
-139
-3,824
-3,145
-6,968
-102
7,131
-84
-28
6,917
-190
1,916
1,725
2017
2,983
2,295
-951
-639
6,991
10,679
-5,732
-5,787
-11,518
200
472
-108
-55
509
-330
1,725
1,395
2018E
3,208
2,271
-804
-817
162
4,021
-751
0
-751
0
-3,178
-92
0
-3,269
0
1,396
1,396
2019E
3,129
2,352
-731
-825
280
4,205
-788
0
-788
0
-1,719
-93
0
-1,812
1,605
1,396
3,000
(INR Million)
2020E
3,272
2,432
-491
-929
255
4,539
-826
0
-826
0
-3,610
-102
0
-3,713
0
3,000
3,000
19 May 2017
6

HT Media
Corporate profile
Company description
HT Media is a leading Indian print media company
with a readership base of ~16m and average daily
circulation of 4.1m. Hindustan Times (English daily)
and Hindustan (Hindi daily) are leading brands
ranked 2nd and 3rd respectively on a pan-India
basis in their respective genres. ‘Mint’ is the second
most read business daily in India. HT Media’s radio
business is concentrated in the four metros. The
company’s online portfolio is focused on news,
networking, jobs and education space and is likely
to continue incurring operating loss.
Exhibit 2: Shareholding pattern (%)
Mar-17
Promoter
DII
FII
Others
69.5
9.4
8.2
12.9
Dec-16
69.5
9.6
8.3
12.6
Mar-16
69.5
8.9
8.3
13.4
Source: Capitaline
Exhibit 1: Sensex rebased
Source: MOSL/Bloomberg
Exhibit 3: Top holders
Holder Name
Franklin Templeton Mutual Fund A/C
Franklin India Prima Plus
ICICI LOMBARD GENERAL INSURANCE
COMPANY LIMITED
Reliance Emergent India Fund
GOVERNMENT PENSION FUND GLOBAL
BAJAJ ALLIANZ LIFE INSURANCE COMPANY
LIMITED
% Holding
5.0
3.4
3.3
3.0
1.2
Source: Capitaline
Note: FII Includes depository receipts
Exhibit 4: Top management
Name
Shobhana Bhartia
Shamit Bhartia
Dinesh Mittal
Designation
Chairperson
&
Editorial Direct
Joint
Managing
Director
Company Secretary
Exhibit 5: Directors
Name
Dinesh Mistry
Ajay Relan
N K Singh
Name
Priyavrat Bhartia
K N Memani
Vikram Singh Mehta
*Independent
Source: Capitaline
Exhibit 6: Auditors
Name
S R Batliboi & Co LLP
Type
Statutory
Exhibit 7: MOSL forecast v/s consensus
EPS
(INR)
FY18
FY19
MOSL
forecast
7.9
8.1
Consensus
forecast
8.0
9.2
Variation (%)
-1.3
-12.0
Source: Bloomberg
Source: Capitaline
19 May 2017
7

Disclosures
This document has been prepared by Motilal Oswal Securities Limited (hereinafter referred to as Most) to provide information about the company (ies) and/sector(s), if any, covered in the report and may be distributed by it
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