Oct 16, 2012 02:54 PM IST | Source:

Accumulate HT Media; target of Rs 105: KRChoksey

KRChoksey is bullish on HT Media and has recommended accumulate rating on the stock with a target of Rs 105 in its October 16, 2012 research report.

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KRChoksey is bullish on HT Media and has recommended accumulate rating on the stock with a target of Rs 105 in its October 16, 2012 research report.

“HT Media Ltd’s Q2FY13 numbers were below our expectation as advertising revenue plunged due to slowdown in economy which resulted in shrinkages in ad spends across the board. The company reported net sales of Rs 510.7crs, marginal growth of 3.6% YoY. EBITDA stood at Rs 56.5crs, a sharp decline of 20.7%. Higher newsprint cost and increase in employee expenses eroded EBITDA margins by 330bps to 11.1%. Net profit for the quarter was Rs 33.3crs, lower by 24% over Q2FY12. Net profit margin for the quarter was 6.5%, down by 240bps YoY. Q2FY13 witnessed pressure on ad spends from major sectors of ad pie National advertising remained subdued. The impact was partially mitigated by strong growth in local advertising. The management expects things to improve in Q3FY13 being festive season. Radio and digital segments witnessed strong revenue growth in the quarter. Delay in ad spends revival in English market will dent on revenues. Higher newsprint cost and increase in operating expenses will put margins under pressure going ahead.”

“HT Media’s advertising revenue dropped by 1% YoY to Rs 364crs primarily due to decline in pricing. English ad revenue declined by 2.8% YoY to Rs 249crs. Hindi segment showed improvement in ad revenue by 2% YoY to Rs 115crs mainly driven by local market. Circulation revenue grew by 11% to Rs 56.3crs driven by increased circulation. We expect ad revenue to witness pressure in FY13E due to slowdown in government spending and major sectors of ad pie like BFSI, real estate.  The company reported EBITDA of Rs 56.5crs, declined by 21% YoY as newsprint cost and employee expenses went up. Consequently EBITDA margin plunged by 330bps YoY to 11.1%. We believe margins will be under pressure with newsprint cost to go up as circulation increases. However losses from digital portfolio will shrink in FY14E as the management has guided that HT Burda will break even in FY13E.”

“HT Media’s declined advertising revenue reiterates tough shrinkages in ad spends in major sectors of ad pie. We remain conscious about spurt in advertising spends for print media considering current microeconomic environment. At current market price, the stock is available at attractive valuation of 13.6x PE to its FY14E earnings. We recommend accumulate on the stock with a target price of Rs 105,” says KRChoksey research report.

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