HT Media: Add more on decline for a decent return of 40%-50% in 8-12 months

Sanjay Chhabria | May 10, 2018, 8:54 a.m.

HT Media is a media powerhouse engaged in printing and publishing of newspapers and Radio Broadcasting. The Company's segments include Printing & Publishing; Radio Broadcast & Entertainment, and Digital. HT Media (HTM) has a foothold in all the media and entertainment segments, be it virtual or real and has managed to create a large and captive audience. HT Media is India’s second largest print media company in terms of circulation of English daily newspapers. In the past few years, the company has diversified its business portfolio with presence in print, radio, internet and events and marketing solutions. Going forward, the company aims to leverage existing infrastructure to establish a national footprint in all segments and enter other segments of the media and entertainment industry.

HT Media Limited is one of India’s foremost media companies, and home to three leading newspapers in the country in the English, Hindi and business segments – Hindustan Times (English daily), Hindustan (Hindi daily, through a subsidiary) and Mint(business daily). Hindustan Times was started in 1924 and has a more than 90-year history as one of India’s leading newspapers. HT Media also publishes two Hindi magazines Nandan and Kadambini through its subsidiary Hindustan Media Ventures Limited. The Company has 15 operational FM radio stations - “Fever” in Delhi, Mumbai, Bengaluru, Chennai, Kolkata, Hyderabad and UP and “Radio Nasha” in Delhi and Mumbai. Radio business is doing well with launch of New stations. The Company also has a presence in the Internet space through its subsidiary Firefly e- Ventures Limited which, amongst other websites, operates the job portal www.Shine.com. This is in addition to the existing websites livemint.com and hindustantimes.com

The print segment is the major revenue contributor with 98% share in the total revenue. It has a bouquet of three major dailies (Hindustan Times, Hindustan and Mint), with leadership position in some markets. HT Media has diversified its business model growing from just a print media company to having a footprint across media channels. Now it also has a presence in the radio, internet and events and marketing solutions. The company has increased its focus on the internet and mobile phone user segment. It is still in the infancy stage and is gaining traction with improvement in features and functionality in web and job portals.

For the year ended March 2018, Net profit stood at Rs 307 cr.(up 80%) cr. on net sales of Rs 2,346 cr..(down 4%). On a equity of 46.55 cr. (Promoter’s stake-69.5%, FII/DII stake-14.73%), the EPS for FY18 on a Rs 2 paid up share stands at Rs 13.2 and the dividend declared is 20% (Rs 0.40 per share). HT Media has invested behind a significant set of newspapers/ editions over the past 5 -6 years, and these properties have now reached a threshold level of readership that portend strong, industry-beating growth. Opportunity size for HT Media properties remains large, with significant scope for catch-up in Mumbai, the business newspapers' space, and Uttar Pradesh.

HT Media’s business outlook continues to be strong on the back of 1. Increasing returns in new businesses like HT Mumbai, Radio and Mint to contribute towards revenue growth and improved profitability 2. Gaining traction in the digital businesses and 3 Strong balance sheet capable of supporting investments in growing businesses whilst exploring new opportunities. Going forward, the focus is on improving profitability of Digital segment by focusing on growing revenue exponentially. Going forward, the Management is optimistic that sentiment and business will both improve in the second half of the year. HT Media’s Radio and Digital segment would continue to show robust growth trajectory in the next two-three years. Advertising growth is expected to accelerate with an eventual recovery in the Indian economy and considering company’s status as one of the most read Hindi newspaper in the country and its strong presence in the rapidly growing Hindi markets should boost profitability. The stabilisation of GST will also help. It expects the core business to start showing growth and the new businesses to continue to profitably scale up -- thereby delivering value to shareholders. HT Media has Net cash Rs 1424 cr. as on March 31, 2018

HT Media is a company with multiple growth opportunities, and the company has made significant headways in many markets at once -which bode well for long-term returns from the stock. The company near term focus is on regaining revenue growth in Print business in post-demonetisation era. Continue to drive revenue and profitability of newly launched Radio stations. Improve Digital footprint by executing on its digital strategy and aim to grow revenue in this space. HT Media’s Radio and Digital segment would continue to show robust growth trajectory in the next two-three years. The HT Media stock appears attractive as it is valued at about 6.3 times FY18 earnings(Rs 13.2) and has a market cap of 1,931 cr.. Also HT Media holds 74.3% stake in Hindustan Media Ventures Ltd.(Market Cap-1,570 cr.).

Investors can start accumulating the HT Media stock at current levels and add more on declines for decent returns of 40%-50% over the next 8-12 months.             

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