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4QFY11 Results
We upgrade HT Media earnings by 3-5% led by a continued robust
advertising environment, positive surprise in 4QFY11 results,
encouraging trends from the readership survey and stable newsprint
prices. The publisher’s English newspapers registered ad growth of 21%
YoY while the Hindi editions saw a 20% YoY rise. We project an average
13% advertising and 17% earnings growth for FY12-13 despite the
challenge of high newsprint prices and the stock now trades at 15x
forward earnings. Maintain OPF
Robust ad-environment, stable newsprint prices
HT Media’s 4QFY11 revenue of Rs4.7bn, up 26%YoY, was 3% ahead of our
estimates, led by a surprise in English print ad-growth of 21%YoY and Hindi
ad-growth at 19.5%YoY driven by both volume and improved realisation. In
FY11, HT raised ad rates across its Hindustan Times (English) and Hindustan
(Hindi) editions by 15-35% and the year ad-growth has been 22%YoY. While
circulation revenues although flat QoQ were up 9%YoY in 4QFY11 with cover
price increase and consolidated Ebitda margin were flat at 18.6% with raw
material costs too flat at 35% of revenues. For FY11 HT Ebitda margins are
up 72bps to 18.8% and the profits are up 33%YoY about 7% ahead of
estimates. HT quarter internet revenue increased 78%QoQ to Rs36.5m and
radio by 42%QoQ to Rs258m - Ebitda was Rs65m with a four-city presence.
Consolidating in Mumbai and in Hindi publications
During the year nearly five years after the launch of Mumbai edition HT’s
Hindustan Times overtook DNA to be the number two newspaper after Times
of India in the largest print media market in the country. Besides HT’s
business paper Mint continues to consolidate its number two position in
business daily segment and in April 2011 launched in Hyderabad taking the
total to ten editions. HT’s improved positioning in Mumbai alongside
leadership in Delhi and Hindi publication Hindustan becoming the second
largest newspaper, surging ahead of Dainik Bhaskar (as per management) on
basis of total readership will provide potential for upside to our forecast 13%
advertising growth in FY12-13CL.
Earnings upgrade; Maintain O-PF.
With a robust ad environment leading the positive surprise in quarter results
and the company consolidating market positioning, including in Mumbai for
Hindustan Times and Mint as well as strength of Hindustan, we upgrade HT’s
consolidated earnings by 3-5% for FY12-13CL. Although newsprint prices at
Rs32,000/tonne are still high and we remain negative on HT’s radio business,
the company may bid for more stations in upcoming phase III of licensing. HT
is net cash at Rs6bn and following our upgrade, we now project an average
17% earnings growth over FY12-13. With the stock trading at 15x forward
earnings, we maintain Outperform.
