Centrum recommended hold rating on HT Media with a target price of Rs 98 in its research report dated May 03, 2018.
Centrum's research report on HT Media
We maintain our Hold rating on HT Media and revise our TP to Rs98. In last two month newsprint prices have increased by steep 40% led by China (world’s largest paper recycler) to ban imports of mixed paper in its campaign against environment pollution. We believe this would have an impact of 200bps on the operating margins of HT Media despite strategies taken by the management by increasing cover prices. While the advertising revenue was impacted in both the English and Hindi print for FY18, we have modelled high single digit ad growth for FY19 on the back of low base and sectors such as auto, real estate bouncing back while government/political ad would be high on many state elections. Further there would be margin expansion in the radio business and probable lower losses in the digital business.
We maintain our hold rating with revised TP of Rs98 as we value the company on an adjusted OCF to EV yield based methodology. Key upside risk is stronger than expected ad growth while downside risk being increase in newsprint cost.
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