Buy HT Media; target of Rs 126: ICICIdirect

ICICIdirect.com`s research report on HT Media“HT Media, revenues came in at Rs 560.9 crore, up 4.9% YoY and above our expectations of Rs 536.3 crore. The Hindi ad growth met expectations with 12% YoY ad growth. The English ad-growth came in higher at 6.9% YoY vs. our expectations of 3.5%. EBITDA came in at Rs 72.1 crore vs. estimated Rs 63.7 crore. The EBITDA margin came in at 12.8% vs. expectation of 11.9%, up 81 bps YoY. Higher than estimated costs were offset by higher revenues. The company reported a PAT of Rs 43.9 crore (vs. expectation of Rs 40.7 crore), declining 24.6% YoY. PAT is non-comparable on a liketo- like basis due to the presence of Burda in Q2FY14.” “The Hindi print segment has been relatively immune to the economic slowdown as compared to English dailies. HT Media, the third largest Hindi daily, with a readership of 12.2 million as per IRS December, 2012 has posted an ad growth of 10.6% (FY11-13 CAGR) in its Hindi segment. At the same time, the peers Jagran and DB Corp posted growth of 8.8% and 8.4% FY11-13 CAGR. Even as far as the readership growth is concerned, HT Media is leading its peers with 3.4% FY11-13 CAGR vs. peers Jagran Prakashan and DB Corp with 0.9% and 1.5% FY11-13 CAGR. It continues to maintain leadership positions in the markets of Bihar and Jharkhand even as it faces tough competition with entry of DB Corp in Jharkhand in 2012 and in Bihar in 2014. However, its absence in the key Hindi speaking market of MP is an opportunity loss for the company. Nonetheless it is performing quite well in its existing markets and has posted a 15.2% YoY growth in overall advertisement to reach Rs 530.0 crore in the ad revenues in FY14. We expect the Hindi ad revenue to grow at a 15.6% FY14-16E CAGR to reach Rs 708.3 crore.” “HT Media’s English segment has shown some signs of economic revival and improving scenario in the BFSI space by posting a 6.9% ad growth vs. expectations of 3.5%. We have factored in a revenue and PAT CAGR of 7.9% and 21.9% over FY14-16E. We value the stock at 11x FY16E EPS of Rs 11.5, arriving at a target price of Rs 126. With the beginning of a revival in the English segment and higher circulation revenues due to the company’s ability to take cover price hikes, we re-rate the stock as BUY,” says ICICIdirect.com research report.   

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