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Recommendations India

HT Media 1QFY2015 performance highlights and results update

August 1, 2014, Friday, 10:54 GMT | 05:54 EST | 15:24 IST | 17:54 SGT
Contributed by Angel Broking

HT Media reported a subdued set of results for 1QFY2015, both on the top-line and bottom-line front. The top-line growth was lower mainly due to lower growth in advertising revenue (primarily English edition). The company’s performance was subdued on the profitability front owing to lower operating performance and a higher tax rate (up 320bp yoy).

Sluggish growth in English ad revenues: HT Media’s Hindi subsidiary - HMVL registered a double digit advertising growth (17.3% yoy to Rs.156cr on back of increase in yields and volume). However, the English advertising revenue de-grew by 4.0% yoy to Rs.266cr owing to lower ad spending from government and real estate sector. The Management however expects English advertising yield to go up over FY2015, leading to improvement in English advertising revenues. Higher news print costs and taxes drag Net profit: For the quarter, HT Media posted a de-growth of ~31.2% to Rs.33cr on the earnings front owing to lower operating performance (operating margin contracted by 307bp yoy owing to higher news print and staff costs) and a higher tax rate (up 320bp).

Outlook and valuation: We believe that the company would perform well, both on the top-line and bottom-line fronts, going forward. This would be owing to an expected increase in revenue from new businesses like HT Mumbai, Radio and the Hindi editions; further, we also expect the company to gain some traction in its Digital businesses. Moreover, the company has a strong balance sheet which would make HT Media more capable for future expansion plans. Hence, we maintain Buy on the stock with a target price of Rs.152.

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