Buy HT Media; target of Rs 110: Angel Broking

Angel Broking report on HT Media:

For 4QFY2014, HT Media reported a modest 8.7% yoy growth in its top-line to Rs 544cr (slightly ahead of our estimates of Rs 532cr), aided by strong growth in advertising revenues from Hindi editions. Overall, the company registered a 10.4% yoy growth in advertising revenue to Rs 417cr and 14.1% yoy growth in circulation revenue to Rs 66cr. On the operating front, the OPM contracted by 47bp yoy to 13.9% while the net profit declined by 13.1% yoy to Rs 35cr (our expectation was of Rs 45cr).

Sluggish growth in English ad revenues: Although HT Media’s Hindi subsidiary - HMVL registered a double digit advertising growth (20.3% yoy to Rs 133cr on back of increase in yields and volume), the English advertising revenue grew by only 6.4% yoy to Rs 284cr, primarily due to sluggish advertising growth in HT Media’s Delhi market. However, the Management expects English advertising yield to go up over FY2015, leading to improvement in English advertising revenues.

Net profit dragged down by reversal of deferred tax asset: On the operating front, print business reported 14.1% yoy growth in EBIT to Rs 78cr. The digital business continued to report an EBIT level loss to the tune of Rs 7-8cr while the radio business reported an EBIT level profit of Rs 5cr. Further, reversal of deferred tax asset (of Rs 19cr related to HT Burda subsidiary) led to a 13.1% yoy decline in net profit to Rs 35cr.

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