BUY CMP 167.00 Target Price 190.00 HINDUSTAN MEDIA VENTURES LTD Result Update(PARENT BASIS): Q2 FY15 OCTOBER 25 th 2014 ISIN: INE871K01015 Index Details Stock Data Sector Publishing BSE Code 533217 Face Value 10.00 52wk. High / Low (Rs.) 179.95/100.00 Volume (2wk. Avg. Q.) 104000 Market Cap (Rs. in mn.) 12256.13 Annual Estimated Results (A*: Actual / E*: Estimated) YEARS FY14A FY15E FY16E Net Sales 7297.20 8610.70 9730.09 EBITDA 1818.10 2192.10 2472.39 Net Profit 1112.10 1362.29 1541.24 EPS 15.15 18.56 21.00 P/E 11.02 9.00 7.95 Shareholding Pattern (%) 1 Year Comparative Graph HINDUSTAN MEDIA VENTURES LTD BSE SENSEX Highlights Hindustan Media Ventures Limited (HMVL) was incorporated on July 9, 1918 and is one of the leading print media companies engaged in the printing and publishing. Net profit for the quarter rose by 26.29% to Rs. 314.60 million from Rs. 249.10 million, when compared with the prior year period. The company s revenue for the quarter rose by 12.87% to Rs. 1995.40 million from Rs. 1767.90 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs. 4.29 a share during the quarter, registering 26.29% increase over previous year period. During Q2 FY15, EBITDA increased by 20% to Rs. 512 million from Rs. 425 million primarily due to growth in advertising and circulation revenues. During Q2 FY15, advertising revenue grew by 12% to Rs. 1422 million from Rs. 1270 million primarily due to increase in advertising yield and volumes. Circulation revenues rise by 11% to Rs. 496 million from Rs. 446 million primarily due to higher circulation and realization per copy. Raw materials consumption increased by 20% to Rs. 848 million from Rs. 706 million due to increase in newsprint price and consumption. Net Sales and PAT of the company are expected to grow at a CAGR of 15% and 22% over 2013 to 2016E respectively. PEER GROUPS CMP MARKET CAP EPS P/E (X) P/BV(X) DIVIDEND Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%) Hindustan Media Ventures Ltd 167.00 12256.13 15.15 11.02 2.01 12.00 D B Corp Ltd 353.95 64966.30 17.01 20.80 5.68 42.50 HT Media Ltd 110.00 25793.30 6.07 18.12 1.83 20.00 Jagran Prakashan Ltd 123.85 40488.00 7.03 17.62 4.23 150.00
QUARTERLY HIGHLIGHTS (PARENT BASIS) Results updates- Q2 FY15, Hindustan Media Ventures Limited (HMVL) is one of the leading print media companies engaged in the printing and publishing of Hindustan reported its financial results for the quarter ended 30 Sep, 2014. Months Sep-14 Sep-13 % Change Net Sales 1995.40 1767.90 12.87 PAT 314.60 249.10 26.29 EPS 4.29 3.39 26.29 EBITDA 511.70 425.20 20.34 The company net profit jumps to Rs. 314.60 million against Rs. 249.10 million in the corresponding quarter ending of previous year, an increase of 26.29%. The company achieved a turnover of Rs. 1995.40 million for the 2 nd quarter of the current year 2014-15 as against Rs. 1767.90 millions in the corresponding quarter of the previous year. Reported earnings per share of the company stood at Rs. 4.29 a share during the quarter, registering 26.29% increase over previous year period. Profit before interest, depreciation and tax is Rs. 511.70 millions as against Rs. 425.20 millions in the corresponding period of the previous year. Break up of Expenditure Break up of Expenditure (Rs. in millions) Q2 FY15 Q2 FY14 Other Expenditure 498.90 435.00 Employee Benefit Expenses 257.70 215.50 Depreciation & Amortization Expense 64.50 55.00 Cost of Material Consumed 847.60 706.00
Latest Updates During Q2 FY15, advertising revenue grew by 12% to Rs. 1422 million from Rs. 1270 million primarily due to increase in advertising yield and volumes. Circulation revenues rise by 11% to Rs. 496 million from Rs. 446 million primarily due to higher circulation and realization per copy. During Q2 FY15, EBITDA increased by 20% to Rs. 512 million from Rs. 425 million primarily due to growth in advertising and circulation revenues. Raw materials consumption increased by 20% to Rs. 848 million from Rs. 706 million due to increase in newsprint price and consumption. Employee cost increased at 20% to Rs. 258 million from Rs. 216 million due to impact of new hiring, increments and a charge for regulatory compliance. COMPANY PROFILE Hindustan Media Ventures Limited was incorporated on July 9, 1918 under the Indian Companies Act, 1913 as a public limited company under the name 'The Behar Journals Limited' and received the certificate of commencement of business on January 14, 1919. On November 17, 1987 the name of the Company was changed to 'Searchlight Publishing House Limited' to reflect the name of the Company more in consonance with its publication, 'Searchlight'. Subsequently, the name of Company was changed to its present name 'Hindustan Media Ventures Ltd.' to reflect the expanded business activities intended to be undertaken by the Company and to be in consonance with the prevailing industry trends and a fresh certificate of incorporation to this effect was issued on November 11, 2008. Hindustan Media Ventures Limited (HMVL) is one of the leading print media companies engaged in the printing and publishing of Hindustan, the second largest newspaper daily of India based on Total Readership, along with two Hindi magazines Nandan, a children s magazine and Kadambini, a general interest magazine. Hindustan began publication in 1936 owing its origins to and serving as a medium for the freedom movement. At present it has 14.25 million readers all over the country (Source: IRS 2013). It enjoys a leadership position in Bihar and Jharkhand whilst consolidating its 2nd position in Delhi and 3rd position in Uttar Pradesh and Uttarakhand. The Company also operates the website www.livehindustan.com, which complements the newspaper and focuses on providing news in Hindi with regional content. Hindustan has 4 editions and 113 sub editions across the Hindi belt. They are spread across Delhi, Bihar (Patna, Muzaffarpur and Bhagalpur), Jharkhand (Ranchi, Jamshedpur and Dhanbad), Uttar Pradesh (Lucknow,
Varanasi, Meerut, Agra and Kanpur) and Chandigarh. Apart from these, the paper is also available in key towns like Aligarh, Mathura and Allahabad. Brands Hindustan: 'Hindustan', covers news across the entire spectrum of international, national and local news relating to politics, business, entertainment, sports and other general interests. The reach of newspaper now extends to six regions, namely, Uttar Pradesh, Uttarakhand, Bihar, Jharkhand, Mohali and Delhi NCR. LiveHindustan.com: LiveHindustan.com is the recently launched Hindi News website. Its comprehensiveness and exclusive online content by the online editorial team adds to the huge print repository of stories carried in the parent brand Hindustan, and is updated round the clock with the latest in breaking news action. Nandan: Nandan is HT Media's monthly Children Magazine is more than 47 years old brand. The magazine was started in November 1964 in the memory of Pandit Jawahar Lal Nehru. Nandan provides a mix of traditional and modern stories, poems, interactive columns, interesting facts and many educative columns, leading to wholesome development of children. Kadambini: Kadambini is a monthly magazine for the evolved, discerning reader who is yearns for something 'intelligent' to read. A socio- cultural magazine that was started in 1960. The only magazine of its kind with a unique blend of literature, culture, science and life, it sees things in a different perspective, and goes behind the scenes instead of looking at things superficially.
FINANCIAL HIGHLIGHTS (PARENT BASIS) (A*- Actual, E* -Estimations & Rs. In Millions) Balance Sheet as at March 31, 2013-2016E HINDUSTAN MEDIA VENTURES LTD FY13A FY14A FY15E FY16E I SOURCES OF FUNDS A) Shareholder's Funds a) Share Capital 733.90 733.90 733.90 733.90 b) Reserves and Surplus 4349.00 5358.10 6720.39 8261.63 Sub-Total Net worth 5082.90 6092.00 7454.29 8995.53 B) Non Current Liabilities a) Deferred Tax Liabilities (Net) 65.70 64.70 75.70 83.27 b) Other Long Term Liabilities 0.00 0.20 0.23 0.25 Sub-Total Non Current liabilities 65.70 64.90 75.93 83.52 C) Current Liabilities a) Short term borrowings 32.40 203.30 164.67 144.91 b) Trade payables 603.40 762.00 876.30 963.93 c) Other Current liabilities 379.20 502.60 422.18 367.30 d) Short term Provisions 121.90 118.70 112.77 108.25 Sub-Total Current Liabilities 1136.90 1586.60 1575.92 1584.40 TOTAL LIABILITIES (A + B + C) 6285.50 7743.50 9106.14 10663.45 II ASSETS D) Non-Current Assets Fixed Assets I. Tangible Assets 1790.60 1803.10 1882.44 1976.56 a) Sub Total - Fixed Assets 1790.60 1803.10 1882.44 1976.56 b) Other non-current assets 51.00 82.40 108.77 135.96 c) Non-current investments 1250.00 1250.00 1475.00 1795.33 d) Long-term Loans and Advances 43.60 234.70 262.86 307.55 Sub-Total Non-Current Assets 3135.20 3370.20 3729.07 4215.40 E) Current Assets a) Current Investment 1528.40 2436.10 3086.58 3796.49 b) Inventories 324.00 329.60 346.08 359.92 c) Trade receivables 790.80 933.20 1110.51 1299.29 d) Cash and Bank Balances 284.40 259.90 285.89 305.90 e) Short-terms loans & advances 124.20 231.20 300.56 369.69 f) Other current assets 98.50 183.30 247.46 316.74 Sub-Total Current Assets 3150.30 4373.30 5377.07 6448.04 TOTAL ASSETS (D + E) 6285.50 7743.50 9106.14 10663.45
Annual Profit & Loss Statement for the period of 2013 to 2016E Value(Rs.in.mn) FY13A FY14A FY15E FY16E Description 12m 12m 12m 12m Net Sales 6362.70 7297.20 8610.70 9730.09 Other Income 284.60 305.70 504.41 575.02 Total Income 6647.30 7602.90 9115.10 10305.11 Expenditure -5237.10-5784.80-6923.00-7832.72 Operating Profit 1410.20 1818.10 2192.10 2472.39 Interest -52.80-56.90-103.56-117.02 Gross profit 1357.40 1761.20 2088.54 2355.37 Depreciation -217.00-215.60-250.10-272.60 Profit Before Tax 1140.40 1545.60 1838.45 2082.76 Tax -295.20-433.50-476.16-541.52 Profit After Tax 845.20 1112.10 1362.29 1541.24 Equity capital 733.90 733.90 733.90 733.90 Reserves 4349.00 5358.10 6720.39 8261.63 Face value 10.00 10.00 10.00 10.00 EPS 11.52 15.15 18.56 21.00 Quarterly Profit & Loss Statement for the period of 31 st Mar, 2014 to 31 st Dec, 2014E Value(Rs.in.mn) 31-Mar-14 30-Jun-14 30-Sep-14 31-Dec-14E Description 3m 3m 3m 3m Net sales 1838.80 2100.80 1995.40 2095.17 Other income 106.00 125.40 120.60 137.48 Total Income 1944.80 2226.20 2116.00 2232.65 Expenditure -1503.40-1671.80-1604.30-1676.14 Operating profit 441.40 554.40 511.70 556.52 Interest -19.20-24.20-28.90-30.63 Gross profit 422.20 530.20 482.80 525.88 Depreciation -52.40-61.40-64.50-65.15 Profit Before Tax 369.80 468.80 418.30 460.74 Tax -97.70-130.00-103.70-115.18 Profit After Tax 272.10 338.80 314.60 345.55 Equity capital 733.90 733.90 733.90 733.90 Face value 10.00 10.00 10.00 10.00 EPS 3.71 4.62 4.29 4.71
Ratio Analysis Particulars FY13A FY14A FY15E FY16E EPS (Rs.) 11.52 15.15 18.56 21.00 EBITDA Margin (%) 22.16 24.92 25.46 25.41 PBT Margin (%) 17.92 21.18 21.35 21.41 PAT Margin (%) 13.28 15.24 15.82 15.84 P/E Ratio (x) 14.50 11.02 9.00 7.95 ROE (%) 16.63 18.26 18.28 17.13 ROCE (%) 31.81 32.30 32.05 30.03 Debt Equity Ratio 0.01 0.03 0.02 0.02 EV/EBITDA (x) 7.43 5.37 4.13 3.36 Book Value (Rs.) 69.26 83.01 101.57 122.57 P/BV 2.41 2.01 1.64 1.36 Charts
OUTLOOK AND CONCLUSION At the current market price of Rs. 167.00, the stock P/E ratio is at 9.00 x FY15E and 7.95 x FY16E respectively. Earning per share (EPS) of the company for the earnings for FY15E and FY16E is seen at Rs.18.56 and Rs.21.00 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 15% and 22% over 2013 to 2016E respectively. On the basis of EV/EBITDA, the stock trades at 4.13 x for FY15E and 3.36 x for FY16E. Price to Book Value of the stock is expected to be at 1.64 x and 1.36 x respectively for FY15E and FY16E. We recommend BUY in this particular scrip with a target price of Rs.190.00 for Medium to Long term investment. INDUSTRY OVERVIEW India s media and entertainment (M&E) industry reaches 161 million TV households, 94,067 newspapers (12,511 dailies), about 2000 multiplexes, and 214 million internet users of which 130 million are mobile internet users. The year 2013 saw growth in the digitisation of media products and services, as well as development of regional media. Gaming and digital advertising were two sub-sectors which recorded strong growth compared to 2012. Today, the industry continues to grow, playing an important role in bringing about awareness on many issues that impact the populace. India s massive consumer base also gives the M&E industry a tremendous opportunity
for progress and the sector has the tools to exploit this potential. The current industry is armed with digital technologies, state-of-the-art mobile devices, penetration of broadband internet and digital cinema, not to mention backing from the country s government. Market size In calendar year 2013, India s M&E industry registered a growth of 11.8 per cent over 2012 and touched Rs 918 billon (US$ 14.93 billion), as per a report by FICCI-KPMG. The industry has the potential to grow at 14.2 per cent to more than Rs 1.78 trillion (US$ 28.95 billion) in the next four years. The television industry in India is anticipated to increase at a compound annual growth rate (CAGR) of 16.2 per cent over 2013-18, to reach Rs 885000 million (US$ 14.39 billion). Digital advertising is projected to have the highest CAGR of 27.7 per cent with other sub-sectors projected to grow at a CAGR in the range of 9-18 per cent, till 2018. The foreign direct investment (FDI) inflows in the information and broadcasting (I&B) sector (including print media) in the period April 2000 - July 2014 stood at US$ 3,735.77 million. Government Initiatives The Indian and Canadian governments signed an audio-visual co-production deal in early 2014 that would help producers from both countries to harness their technical, creative, artistic, financial and marketing resources for co-productions and, subsequently, lead to exchange of culture and art amongst them. The Centre has given the go-ahead for licences to 45 new news and entertainment channels in India. Among those who have secured the licenses include established names such as Star, Sony, Viacom and Zee. Presently, there are 350 broadcasters which cater to 780 channels. We want more competition and we wanted to open it up for the public. So far, we have approved the licences of 45 new channels. It s a mix of both news and non-news channels. Road Ahead Digitisation will drive India s M&E industry forward. The internet user base which is already over 200 million will likely generate vast revenue. Some time back, telecom companies began to focus on data as a means to create revenue. Additionally, advertising agencies began competition with each other to acquire in the digital and social media domains. These developments suggest growth for the M&E industry in India. Opportunities outside the country also beckon. Africa and the Middle East are two burgeoning M&E markets, and Indian M&E companies will do well to tap the regions potential.
Disclaimer: This document prepared by our research analysts does not constitute an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. The information contained herein is from publicly available data or other sources believed to be reliable but do not represent that it is accurate or complete and it should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of it s affiliates shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. This document is provide for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision.
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