3QFY2016 Result Update | Media
January 27, 2016
Hindustan Media Ventures
NEUTRAL
CMP
`275
Performance Highlights
Target Price
-
Quarterly Data
Investment Period
-
(` cr)
3QFY16
3QFY15
% yoy
2QFY16
% qoq
Revenue
240
207
16.2
227
5.9
Stock Info
EBITDA
60
40
50.1
52
15.4
Sector
Media
Margin (%)
25.0
19.4
(564bp)
22.9
(205bp)
Market Cap (` cr)
2,061
Reported PAT
47
37
28.1
45
4.1
Net Debt (` cr)
576
Source: Company, Angel Research
Beta
0.8
52 Week High / Low
302 / 200
For 3QFY2016, Hindustan Media Ventures Ltd (HMVL) reported earnings above
Avg. Daily Volume
9,778
our estimates. The top-line growth was healthy with strong growth in advertising
Face Value (`)
10
and circulation revenue. Advertising revenue growth for the quarter was strong due to
BSE Sensex
24,486
festive season and state elections in Bihar. On the operating front too, the company’s
Nifty
7,436
performance was strong, which in turn led to a higher PAT growth.
Reuters Code
HINS.BO
Strong growth in ad and circulation revenue: HMVL registered a growth of ~19%
Bloomberg Code
[email protected]
yoy in advertising revenue to ~`181cr. This was on back of the festive season that
fuelled advertising spends across most sectors, state elections in Bihar, as well as
Shareholding Pattern (%)
internal initiatives. Further, the company reported a ~6% yoy growth in circulation
Promoters
74.9
revenue to `54cr on back of higher circulation volume as well as realization per copy.
MF / Banks / Indian Fls
13.1
Higher PAT on back of strong operating performance: The company reported a
FII / NRIs / OCBs
5.4
strong PAT growth of ~28% yoy on the back of a strong operating performance.
Indian Public / Others
6.6
The operating performance was strong on account of lower cost of news print
which is a key raw material for HMVL.
Abs. (%)
3m 1yr
3yr
Outlook and valuation: Going forward, we believe that the company would
Sensex
(10.5)
1.9
21.8
perform well, both on the top-line and bottom-line fronts, on back of strong
HMVL
(3.7)
16.4
80.5
recovery in the Indian economy. Further, we expect strong growth in both
advertising and circulation revenue due to the company’s firm presence in the
states of Uttar Pradesh, Uttarakhand, Bihar and Jharkhand. Further, HT Media is
3-year price chart
hiving off its online content business to the company (HMVL). We are awaiting further
340
clarifications on the deal from the Management in order to assess its financial
290
implications. Until then, we retain our Neutral rating on the stock.
240
190
Key financials
140
Y/E March (` cr)
FY2014
FY2015
FY2016E
FY2017E
90
Net Sales
730
819
921
1,026
40
% chg
14.7
12.2
12.5
11.3
Net Profit (Adj.)
111
141
169
172
% chg
31.6
26.7
19.7
2.1
EBITDA margin (%)
20.7
20.3
22.7
21.5
Source: Company, Angel Research
EPS (`)
15.2
19.2
23.0
23.5
P/E (x)
18.1
14.3
12.0
11.7
P/BV (x)
3.3
2.7
2.2
1.9
RoE (%)
18.3
19.0
18.7
16.2
RoCE (%)
20.6
16.9
18.2
16.2
Amarjeet S Maurya
EV/Sales (x)
2.3
1.9
1.6
1.4
022-39357800 Ext: 6831
EV/EBITDA (x)
10.9
9.2
7.1
6.4
[email protected]
Source: Company, Angel Research; Note: CMP as of January 27, 2016
Please refer to important disclosures at the end of this report
1
Hindustan Media Ventures | 3QFY2016 Result Update
Exhibit 1: Quarterly performance
Y/E March (` cr)
3QFY16
3QFY15
% yoy
2QFY16
% qoq
9MFY16
9MFY15
% chg
Net Sales
240
207
16.2
227
5.9
691
616
12.1
Consumption of RM
89
87
2.9
86
3.6
260
258
0.5
(% of Sales)
37.1
41.9
38.0
37.6
41.9
Staff Costs
31
25
25.3
30
4.3
90
80
11.8
(% of Sales)
13.0
12.0
13.2
13.0
13.0
Other Expense
60
55
8.5
59
1.8
175
156
12.3
(% of Sales)
24.9
26.7
25.9
25.3
25.3
Total Expenditure
180
167
8.1
175
3.1
524
494
6.1
Operating Profit
60
40
50.1
52
15.4
167
122
36.5
OPM (%)
25.0
19.4
22.9
24.1
19.8
Interest
3
3
4.7
3
(11.8)
9
8
Depreciation
6
6
(8.4)
5
4.3
16
19
(12.2)
Other Income
11
16
(30.9)
19
(41.3)
42
41
2.7
PBT
63
48
32.5
63
0.5
184
136
34.7
(% of Sales)
26.2
23.0
27.6
26.6
22.1
Provision for Taxation
16
11
47.0
18
(8.7)
50
34
45.3
(% of PBT)
25.6
23.1
28.2
27.2
25.2
Minority Interest
0
0
Recurring PAT
47
37
28.1
45
4.1
134
102
31.1
PATM
19.5
17.7
19.8
19.3
16.5
Exceptional items
Reported PAT
47
37
28.1
45
4.1
134
102
31.1
Equity shares (cr)
7.3
7.3
7.3
7.3
7.3
FDEPS (`)
6.4
5.0
28.1
6.1
4.1
18.2
13.9
31.1
Source: Company, Angel Research
January 27, 2016
2
Hindustan Media Ventures | 3QFY2016 Result Update
Strong top-line growth
For 3QFY2016, HMVL reported a healthy top-line growth of ~16% yoy to
~`240cr (excluding other income), owing to growth in advertising and circulation
revenue. Overall, the company registered a ~19% yoy growth in advertising
revenue to ~`181cr, primarily due to increase in advertising yields and volumes.
Further, the company reported a ~6% yoy growth in circulation revenue to ~`54cr
on back of higher circulation volume and realization per copy.
During the quarter, the company’s revenue growth was faster than the industry’s.
Growth was powered by a good festive season that fuelled advertising spends
across most sectors, state elections in Bihar, as well as HMVL’s internal initiatives.
Exhibit 2: Top-line growth trend
300
20
250
15
200
10
150
5
100
0
50
(5)
0
(10)
Net Sales
QoQ growth (%)
Source: Company, Angel Research
Strong operating performance due to lower material costs
For the quarter, the company reported an operating profit of
~`60cr, up
~50% yoy. The operating margin expanded by a significant 564bp yoy on account of
lower raw material costs as a percentage of sales which were down 482bp yoy due to
decline in cost of news print. Going forward, the Management expects margins to be
better due to lower news print costs and with the company following an effective cost
management strategy.
January 27, 2016
3
Hindustan Media Ventures | 3QFY2016 Result Update
Exhibit 3: Operating profit and margin trend
70
30
60
25
50
20
40
15
30
10
20
5
10
0
0
Operating Profit
Margin (%)
Source: Company, Angel Research
Higher PAT growth on back of strong operating performance
The company has reported strong PAT growth for the quarter of ~28% yoy to
`47cr due to strong operating performance.
Exhibit 4: Net Profit and growth trend
50
30
45
25
40
20
35
15
30
10
25
5
20
0
15
(5)
10
(10)
5
(15)
0
(20)
Net Profit
QOQ growth (%)
Source: Company, Angel Research
January 27, 2016
4
Hindustan Media Ventures | 3QFY2016 Result Update
Investment rationale
Robust advertising revenue growth expected to continue
The combination of increase in advertising volume as well as yield has resulted in
a healthy double-digit advertising revenue growth for the company in the last few
quarters. The company reported a double-digit advertising revenue growth in Bihar
and Jharkhand and strong growth in advertising revenue in Uttar Pradesh, which
resulted in a healthy top-line growth for FY2015.
According to the Management, double-digit advertising revenue growth is likely to
continue, considering good gains in readership share, especially in Uttar Pradesh
and on expectations of an improvement in the Indian economy.
Consistent double-digit growth in circulation revenue
The company continues to consistently report double-digit growth in circulation
revenue aided by increase in circulation volume and higher realization per copy.
For FY2015, HMVL reported a growth of 12.4% yoy in circulation revenue. During
the year, HMVL has retained its market leadership in Uttarakhand, Bihar and
Jharkhand by a wide margin and also retained its number two position in Uttar
Pradesh and Delhi. Going forward, the Management expects growth momentum
in circulation revenue to continue owing to the company’s strong brand and
leadership position.
Outlook and valuation
Going forward, we believe that the company would perform well, both on the
top-line and bottom-line fronts, on back of strong recovery in the Indian economy.
Further, we expect strong growth in both advertising and circulation revenue due to
the company’s strong presence in the states of Uttar Pradesh, Uttarakhand, Bihar
and Jharkhand. Further, HT Media is hiving off its online content business to
Hindustan Media Ventures. We are awaiting further clarifications on the deal from the
Management in order to assess its financial implications. Until then, we retain our
Neutral rating on the stock.
Company Background
Hindustan Media Ventures Ltd is one of the leading print media companies in
India in terms of readership. The company publishes and prints 'Hindustan', the
third largest daily newspaper in India in terms of readership (9.9mn readers).
'Hindustan' has the largest readership in key Hindi-speaking markets of Bihar and
Jharkhand, with a strong and growing presence in Delhi NCR and the states of
Uttar Pradesh and Uttarakhand. 'Hindustan' is one of the fastest growing Hindi
daily newspapers in India.
January 27, 2016
5
Hindustan Media Ventures | 3QFY2016 Result Update
Profit and Loss Statement
Y/E March (` cr)
FY12
FY13
FY14
FY15
FY16E
FY17E
Total operating income
597
636
730
819
921
1,026
% chg
15.6
6.6
14.7
12.2
12.5
11.3
Total Expenditure
501
524
578
652
712
805
Cost of Materials
257
265
300
338
373
415
Personnel
73
80
87
107
127
146
Others
171
179
191
208
212
244
EBITDA
95
113
151
166
209
221
% chg
9.1
18.1
34.4
10.1
25.6
5.4
(% of Net Sales)
16.0
17.7
20.7
20.3
22.7
21.5
Depreciation& Amortisation
19
22
22
24
27
32
EBIT
76
91
130
142
182
189
% chg
7.0
19.7
42.7
9.6
27.8
3.9
(% of Net Sales)
12.7
14.3
17.8
17.4
19.7
18.4
Interest & other Charges
3
5
6
11
13
14
Other Income
19
28
31
56
62
64
(% of PBT)
20.8
25.0
19.8
30.0
26.9
26.8
Share in profit of Associates
-
-
-
-
-
-
Recurring PBT
92
114
155
188
231
239
% chg
20.4
24.3
35.5
21.7
22.8
3.5
Prior Period & Extra. Exp./(Inc.)
-
-
-
-
-
-
PBT (reported)
92
114
155
188
231
239
Tax
26
30
43
47
62
67
(% of PBT)
28.8
25.9
28.0
25.1
27.0
28.0
PAT (reported)
65
85
111
141
169
172
Add: Share of earnings of asso.
-
-
-
-
-
-
Less: Minority interest (MI)
-
-
-
-
-
-
PAT after MI (reported)
65
85
111
141
169
172
ADJ. PAT
65
85
111
141
169
172
% chg
21.9
29.3
31.6
26.7
19.7
2.1
(% of Net Sales)
11.0
13.3
15.2
17.2
18.3
16.8
Basic EPS (`)
8.9
11.5
15.2
19.2
23.0
23.5
Fully Diluted EPS (`)
8.9
11.5
15.2
19.2
23.0
23.5
% chg
21.9
29.3
31.6
26.7
19.7
2.1
January 27, 2016
6
Hindustan Media Ventures | 3QFY2016 Result Update
Balance sheet
Y/E March (` cr)
FY12
FY13
FY14
FY15
FY16E
FY17E
SOURCES OF FUNDS
Equity Share Capital
73
73
73
73
73
73
Reserves& Surplus
361
435
536
668
828
991
Shareholders Funds
434
508
609
741
901
1,064
Minority Interest
-
-
-
-
-
-
Total Loans
26
3
20
99
99
99
Deferred Tax Liability
12
13
13
13
13
13
Total Liabilities
472
525
643
853
1,013
1,176
APPLICATION OF FUNDS
Gross Block
229
242
254
292
322
372
Less: Acc. Depreciation
43
64
85
109
137
168
Net Block
186
178
169
183
186
204
Capital Work-in-Progress
7
1
11
11
11
11
Investments
213
278
369
547
577
597
Current Assets
175
172
225
282
375
502
Inventories
32
32
33
45
58
73
Sundry Debtors
78
79
93
107
129
149
Cash
44
28
26
40
59
105
Loans & Advances
22
27
65
74
101
144
Other Assets
0
5
8
16
28
31
Current liabilities
116
110
138
177
142
145
Net Current Assets
59
61
87
105
232
357
Deferred Tax Asset
7
7
7
7
7
7
Mis. Exp. not written off
-
-
-
-
-
-
Total Assets
472
525
643
853
1,013
1,176
January 27, 2016
7
Hindustan Media Ventures | 3QFY2016 Result Update
Cashflow
Y/E March (` cr)
FY12
FY13
FY14
FY15
FY16E
FY17E
Profit before tax
92
114
155
188
231
239
Depreciation
19
22
22
24
27
32
Change in Working Capital
(13)
(12)
1
(4)
(108)
(78)
Interest / Dividend (Net)
(14)
5
(23)
11
13
14
Direct taxes paid
(24)
(28)
(43)
(47)
(62)
(67)
Others
13
(20)
1
-
-
-
Cash Flow from Operations
72
81
113
171
101
139
(Inc.)/ Dec. in Fixed Assets
(35)
8
(27)
(38)
(30)
(50)
(Inc.)/ Dec. in Investments
(24)
(65)
(91)
(179)
(30)
(20)
Cash Flow from Investing
(59)
(58)
(117)
(217)
(60)
(70)
Issue of Equity
-
-
-
-
-
-
Inc./(Dec.) in loans
6
(23)
17
78
-
-
Dividend Paid (Incl. Tax)
(7)
(9)
(9)
(9)
(9)
(9)
Interest / Dividend (Net)
(4)
(6)
(7)
(11)
(13)
(14)
Cash Flow from Financing
(5)
(38)
2
59
(22)
(23)
Inc./(Dec.) in Cash
8
(15)
(2)
14
19
47
Opening Cash balances
36
44
28
26
40
59
Closing Cash balances
44
28
26
40
59
105
January 27, 2016
8
Hindustan Media Ventures | 3QFY2016 Result Update
Key ratios
Y/E March
FY12
FY13
FY14
FY15
FY16E
FY17E
Valuation Ratio (x)
P/E (on FDEPS)
30.9
23.9
18.1
14.3
12.0
11.7
P/CEPS
23.8
19.0
15.2
12.2
10.3
9.9
P/BV
4.6
4.0
3.3
2.7
2.2
1.9
Dividend yield (%)
0.4
0.4
0.4
0.4
0.4
0.4
EV/Sales
3.0
2.7
2.3
1.9
1.6
1.4
EV/EBITDA
18.8
15.2
10.9
9.2
7.1
6.4
EV / Total Assets
3.0
2.7
2.1
1.5
1.3
1.1
Per Share Data (`)
EPS (Basic)
8.9
11.5
15.2
19.2
23.0
23.5
EPS (fully diluted)
8.9
11.5
15.2
19.2
23.0
23.5
Cash EPS
11.6
14.5
18.1
22.5
26.7
27.8
DPS
1.2
1.2
1.2
1.2
1.2
1.2
Book Value
59.1
69.3
83.0
101.0
122.8
145.0
Returns (%)
RoCE
16.5
17.8
20.6
16.9
18.2
16.2
Angel RoIC (Pre-tax)
37.2
44.3
55.2
56.2
50.0
41.0
RoE
15.1
16.6
18.3
19.0
18.7
16.2
Turnover ratios (x)
Asset Turnover
3.2
3.6
4.3
4.5
5.0
5.0
Inventory / Sales (days)
19
19
16
20
23
26
Receivables (days)
48
45
47
48
51
53
Payables (days)
40
35
38
38
33
30
Net WC (days)
27
29
25
30
41
49
January 27, 2016
9
Hindustan Media Ventures | 3QFY2016 Result Update
Research Team Tel: 022 - 39357800
E-mail: [email protected]
Website: www.angelbroking.com
DISCLAIMER
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ownership of more than 1% in the company covered by Analyst. Angel or its associates/analyst has not received any compensation /
managed or co-managed public offering of securities of the company covered by Analyst during the past twelve months. Angel/analyst
has not served as an officer, director or employee of company covered by Analyst and has not been engaged in market making activity
of the company covered by Analyst.
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Disclosure of Interest Statement
HMVL
1. Analyst ownership of the stock
No
2. Angel and its Group companies ownership of the stock
No
3. Angel and its Group companies' Directors ownership of the stock
No
4. Broking relationship with company covered
No
Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors
Ratings (Based on expected returns
Buy (> 15%)
Accumulate (5% to 15%)
Neutral (-5 to 5%)
over 12 months investment period):
Reduce (-5% to -15%)
Sell (< -15%)
January 27, 2016
10