Buy HT Media; target Rs 117: Angel Broking
Brokerage house Angel Broking is bullish on HT Media and has recommended 'Buy' rating on the stock with a price target of Rs 117 in its research report dated July 22, 2014.
August 03, 2013 / 11:15 AM IST
Angel Broking's report on HT Media
"For 1QFY2013, HT Media's top-line performance was better than our expectation, growing by 10 percent yoy to Rs 541cr largely driven by a 10 percent yoy growth in advertising revenue to Rs 410cr. Circulation revenue also registered a strong growth of 16 percent yoy to Rs 61cr, mainly driven by higher realization per copy. On the operating front, OPM expanded by 77bp yoy to 14.4 percent. Consequently, profit grew by 17 percent yoy to Rs 47cr."
"After sluggish growth in the last few quarters, advertising revenue has bounced back to double-digit growth, primarily driven by volume growth. Strong performance in the Mumbai region with 25 percent yoy growth in advertising revenues (driven by local advertising) and 7 percent yoy growth in Delhi's advertising revenues led to an 8 percent yoy growth in English ad revenues to Rs 277cr. Meanwhile, HT Media's Hindi print business subsidiary - HMVL's ad revenue grew by 14 percent yoy to Rs 133cr on account of increase in advertising volumes. The Management has indicated at a shift in focus from volume driven to yield driven ad growth."
"Revenue from the Radio segment registered a strong growth of 15 percent yoy to Rs 21cr while the digital business grew by 41 percent yoy to Rs 17cr (on back of strong yoy growth in shine.com, HT Campus and HT Mobile). At the EBIT level, Radio contributed Rs 3.6cr compared to Rs 1.5cr in 1QFY2013. However, the digital business, which continues to be in losses, reported an increase in EBIT level losses from Rs 12cr in 1QFY2013 to Rs 17cr for the quarter under review (due to expenses incurred on advertising campaign for shine.com)."
Outlook and valuation: "At the current market price, HT Media is trading cheaply at 10.3x FY2015E consolidated EPS of Rs 9.3. We maintain Buy on the stock with a target price of Rs 117, based on 12.5x FY2015E EPS. Downside risks to our estimates include 1) a sharp rise in newsprint prices in INR terms, and 2) higher-than-expected losses/increase in the breakeven period of emerging editions and digital business," says Angel Broking research report.
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