Buy Hindustan Media; target of Rs 358: Kotak Securities

Kotak Securities' report on Hindustan Media Ventures (HMVL)

"BUY Hindustan Media Ventures (HMVL), with a price target of Rs 358, as: 1/ HMVL's readership as well as operating profits growth have outperformed peers over FY11-FY14, and profit growth is set to outperform peers through FY14-FY16E, on readership gains, 2/ the stock is likely to overcome erstwhile earnings uncertainty via readership growth and election advertising (three of four of HMVL's key geographies go to polls between 3QFY15-4QFY16), 3/ at 9.8 PER FY16E, HMVL is the most attractively priced stock in our media coverage universe, 4/ our fair value estimate (Rs 358/ share) indicates that the market may be over-prepared for HMVL making an expensive acquisition (deviation from fair value implies value destruction of Rs 10Bn factored in)."

"Our DCF valuation of HMVL indicates a fair value of Rs 358/ share. We believe the market is aggressively pricing in risks of an expensive acquisition (deviation from our fair value estimates indicate factoring in risks of value destruction of over Rs 10Bn), diversion to non-core operations, or risks from new operations. We see significant upside for the stock, and recommend BUY. Risks include: 1/ utilization of cash, 2/ loss of competitive position, 3/ raw material risks, 4/ related with advertising environment", says Kotak Securities research report.

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