HT Media says will go for entire 1% equity buyback

Rajiv Verma, CEO of HT Media says the media company may relook at the buyback price it offered to its investors.

Explaining the rationale buyback offer, Verma says, the stock was ruling at sub Rs 100 levels at the time of plan being conceptualised. “We thought Rs 110, which is 10 percent premium, would be a reasonably attractive premium,” he told CNBC-TV18 in an interview.
On the business front, he says, the ad pricing is at a level where people are finding it attractive to start consuming media again. “This might be a year when one may see elections and it could also lead to some good revenue coming into the company. So, putting all these factors together, the year is likely to be a very attractive one for us," Verma told CNBC-TV18. Below is the edited transcript of Verma’s interview to CNBC-TV18. Q: More than the numbers the street was perhaps disappointed with the quantum of the buyback, it was a very low Rs 25 crore, the stock price was very close to the market price – what was the point in your eyes of going in through such a meager buyback?
A: Our company has never done a buyback before. This was the first time we were doing a buyback and at the time we made the decision, the stock was hovering around Rs 100 or sub Rs 100. We decided that we are going to buy that 10 percent premium- Rs 25 crore was the total outlay we decided we are going to leave for doing this buyback.
Unlike several other companies, who go for buyback and buy only 25 or 30 percent – our plan was to buy full Rs 25 crore worth of equity from the market. However, at the time we made this decision, the stock was around Rs 100 and we thought Rs 110, which is 10 percent premium, would be a reasonably attractive premium.
But, let’s see if the going gets better. Maybe we are going to do buyback at different levels. At this point in time, we thought that this would be a good level at which we will be able to provide support to the market. Q: The level was not so important as much as the quantum. Your market cap is Rs 2,300 crore and you are choosing to buyback Rs 25 crore – what was the purpose of doing such a small exercise. Even if it is a signaling exercise it ought to have been a bit more substantial, right?
A: Many companies go for buyback but buy only 25 percent odd. In our case, we had decided we will go for full quantum buyback which would have been buying back roughly one percent of the company. Q: You know that traditionally the market sees these buyback as a confidence measure by the management or an indication that they see the business recovering- with the price of Rs 110, does it indicate that you are cautious about the prospects of your own business and where it could be headed and you think Rs 110 is fair value for the company and the business right now?
A: I am actually very optimistic about the future of our company. As one knows, we have a strategy which we believe is very robust. The various legs of this strategy are focusing on core and building other diversified growth engines and most of those growth engines are looking very healthy. So, as far as the prospects of the company are concerned, I am very optimistic about the future of the company. In extremely difficult environment last year, we came out very well and the future prospects are only looking better.
But coming back to the quantum of buyback, it is the first time we were doing buyback and we wanted to test the waters and learn from this magnitude of investment that we thought would be good for us to get some learning and then go for larger major better returns equation for the company.