Hold HT Media; target of Rs 120: ICICI Direct
ICICI Direct recommended hold rating on HT Media with a target price of Rs 120 in its research report dated January 15, 2018.
January 23, 2018 / 12:09 PM IST
ICICI Direct's research report on HT Media
Revenues at Rs 625.4 crore (fell 3.8% YoY) came in below our estimate of Rs 629.2 crore. Hindi ad revenue came in at Rs 177 crore, up 4.9% YoY vs. our estimate of ~3% YoY growth. English ad revenue declined 7.6% YoY (our estimate: ~7% decline). The performance of radio was disappointing at 4.8% YoY revenue growth. Digital business revenues were impacted by weak performance of shine.com The company’s continued effort on cost savings aided EBITDA margins, which came in at 21.5%. On the costs front, savings in administrative and other expenses aided the EBITDA beat Reported PAT came in higher at Rs 124.4 crore as there were certain one-offs in the quarter pertaining to (1) other income included one-time gain of Rs 31.2 crore on sale of land & building, (2) tax reversal of Rs 23.6 crore arising from finalisation of the return of the previous year, which was recognised during the quarter. Adjusted PAT came in lower at Rs 69.6 crore (vs. expectation of Rs 77 crore).Outlook
While the cost rationalisation steps by the company have been impressive, lack of clarity on cash deployment either through acquisition/dividend, etc, despite its robust net cash (~Rs 1222 crore), remains a cause for concern. Moreover, the regional print segment with localised ad base continues to struggle owing to after-effects of demonetisations and GST. We assign a HOLD rating on the company valuing it at 10x FY20E EPS of Rs 12, with a revised target price of Rs 120. We highlight that a multiple re-rating hinges on an overall recovery of the regional print segment coupled with marked improvement in English print (arresting of decline) that is not visible as of now.
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