Angel Broking has come with its March`13 quarterly earning estimates for media sector. According to research firm in FY2013, print media stocks underperformed due to OPM pressure on account of higher newsprint costs and cyclical nature of ad revenue growth.
For 4QFY2013, we expect our Media universe to post a cumulative top-line growth of 10.7% yoy. The revenue growth of print media companies for the quarter would be aided by selective hikes in cover prices taken by them throughout the year as well as uptick in advertising revenues. Sun TV Network (Sun TV)'s top-line is expected to be bolstered by increasing advertisement spend of FMCG companies. PVR is also expected to post a healthy revenue growth on the back of robust seat additions and many successful releases during the quarter.
During 4QFY2013, the average prices of newsprint have marginally declined by 0.6% qoq and 1.2% yoy to USD 616. In INR terms, newsprint prices are almost flat qoq at Rs 33,423. However, they are up by 6.6% yoy on account of 8% yoy depreciation in INR vs USD.
In FY2013, print media stocks underperformed due to OPM pressure on account of higher newsprint costs and cyclical nature of ad revenue growth (sluggish due to slower GDP growth). Due to these cyclical headwinds, stocks are currently trading at cheaper valuations. However, considering the structural positives of the print business(high brand loyalty and significant entry barriers), in our view, print media stocks deserve a premium to the Sensex. Hence, we maintain our buy rating on DB Corp and Jagran Prakshan and Accumulate rating on HT Media.
| Net Sales | Net Profit | |||
| 4QFY13E | % chg | 4QFY13E | % chg | |
| Jagran Prakashan | 327 | 8 | 34 | -20 |
| DB Corp | 402 | 14 | 58 | 27 |
| HT Media | 521 | 6 | 47 | 115 |
| PVR | 164 | 40 | 6 | 194 |
| Sun TV | 461 | 8 | 175 | 10 |
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