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HT Media 3QFY2014 performance highlights and results update

February 17, 2014, Monday, 12:39 GMT | 07:39 EST | 18:09 IST | 20:39 SGT
Contributed by Angel Broking


For 3QFY2014, HT Media reported a sluggish 4.8% yoy growth in its top-line to Rs.573cr, in-line with our estimate of Rs.560cr. The company registered an 8.8% yoy growth in advertising revenue to Rs.452cr and 17.7% yoy growth in circulation revenue to Rs.67cr. On the operating front, the OPM contracted by 89bp yoy to 15.1% However, HT Media still posted a 24.9% yoy growth in net profit to Rs.67cr, aided by sharp increase in other income to Rs.44cr (vs Rs.24cr in 3QFY2013).

Sluggish growth in English ad revenues: Although HT Media’s Hindi subsidiary - HMVL registered a double digit advertising growth (16.3% yoy to Rs.138cr on back of increase in yields and volume), the English advertising revenue grew by only 5.9% yoy to Rs.314cr, primarily due to sluggish advertising growth in HT Media’s Delhi market. However, the advertising revenues from Mumbai region grew by a robust 18% yoy, albeit on a lower base.

Mumbai achieves breakeven, Mint expected to breakeven in 4QFY2014: During 3QFY2014, Mumbai market achieved operational breakeven aided by 25% yoy growth in revenues to Rs.47cr. However, Mint reported a loss of Rs.2.5cr during the quarter. The Management expects Mint to achieve operational breakeven in 4QFY2014. The digital business continues to make losses. According to Management commentary, the digital business is expected to make a loss of Rs.38cr in FY2014.

Outlook and valuation: At the current market price, HT Media is trading at attractive valuations of 7.5x FY2015E consolidated EPS of Rs.9.6. We maintain Buy on the stock with a target price of Rs.84, based on 8.8x 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.

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