Dear All,
Forwarding you the Result Update on HT Media for 4QFY2011 with an Accumulate recommendation and a Target Price of `175 (12 months).
For 4QFY2011, HT Media’s results were largely in line with our estimates. Therefore, we have tweaked our numbers but have kept the same target price. We maintain Accumulate on the stock.
Strong top-line growth led by ad revenue growth yoy: HT Media posted a good set of numbers on the revenue as well as the profitability front. The company reported top-line growth of 24.8% yoy to `467cr. Recurring earnings grew by modest 10.5% yoy albeit on account of a significant decrease in tax rate. Key highlights for the quarter include 1) overall growth of 20% yoy in advertising revenue, driven by 20.8% yoy growth in English and 19.5% yoy growth in Hindi (however, sequentially, advertising revenue declined a bit, with 2.1% qoq decline in English print and 0.6% qoq decline in Hindi print), 2) a 9.3% yoy/12.2% qoq increase in circulation revenue, 3) an 80.4% yoy/41.8% qoq jump in radio revenue and 4) a 347bp yoy OPM contraction due to 444bp yoy gross margin contraction.
Outlook and valuation: HT Media posted impressive ad revenue, with an uptick in the economy. We estimate such growth in ad revenue to sustain, with English (HT Times and Mint) and HMVL posting CAGRs of 13% and 21% over FY2011–13, respectively. Aggressive cost rationalisation in the radio business (continues to be EBITDA positive and posted EBIT profit of ~`6cr), trickle-down effect of higher revenue traction and cooling of newsprint prices from their peak (factoring in a CAGR of ~15% during FY2011–13E) will help HT Media post margins of ~18% during FY2012–13. At the CMP of `158, HT Media is trading at 16.2x FY2013E consolidated EPS of `9.7. Owing to significant improvement in the profitability of its growing businesses and incremental revenue traction on the back of improvement in advertising spend across sectors, we maintain Accumulate on the stock with a target price of `175 based on 18x FY2013E earnings.
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If you have any further queries, feel free to call us on 022 39357600, Extn: 6865 or mail us at advisory@angelbroking.com
With best regards,
Fundamental Advisory Desk
Angel Broking
Akruti Star,6th Floor, Road No.7,MIDC, Andheri (E),Mumbai – 93.
Call : (91) (022) 39357600 Ext. 6865
Website : www.angelbroking.com
Disclaimer: Ours is an advisory role. The final decision and consequences based on our information is solely yours. Moreover, in keeping with regulatory guidelines, we do not guarantee any returns on investments. Prospective investors and others are cautioned that any forward-looking statements are not predictions and may be subject to change without notice.
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