BUY CMP 289.20 Target Price 335.00 HINDUSTAN MEDIA VENTURES LTD Result Update (PARENT BASIS): Q2 FY16 DECEMBER 2 nd, 2015 ISIN: INE871K01015 Index Details Stock Data Sector Publishing BSE Code 533217 Face Value 10.00 52wk. High / Low (Rs.) 300.00/192.70 Volume (2wk. Avg. Q.) 4399 Market Cap (Rs. in mn.) 21224.39 Annual Estimated Results (A*: Actual / E*: Estimated) YEARS FY15A FY16E FY17E Net Sales 8185.80 9118.98 10030.88 EBITDA 2229.30 2810.68 3260.30 Net Profit 1408.60 1805.63 2108.32 EPS 19.19 24.60 28.73 P/E 15.07 11.75 10.07 Shareholding Pattern (%) As on Sep 2015 As on Jun 2015 PROMOTER 74.91 74.91 FIIs 5.91 5.42 DIIs 12.84 13.08 OTHERS 6.34 6.59 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 2 nd quarter of FY16 rose by 43.13% to Rs. 2269.20 million from Rs. 1995.40 million, when compared with the prior year period. The company s Net Sales for the quarter rose by 13.72% to Rs. 2269.20 million from Rs. 1995.40 million, when compared with the prior year period. During Q2 FY16, EBITDA increased by 38.91% to Rs. 710.80 million from Rs. 511.70 million when compared with the prior year period. In Q2 FY16, Other Income of the company stood at Rs. 190.20 million against Rs. 120.60 million in Q2 FY15, an increase of 57.71% y-o-y. Profit before tax stood at Rs. 627.10 million in Q2 FY16 compared to Rs. 475.60 million in the corresponding quarter of previous year, an increase of 31.85% y-o-y. During Q2 FY16, advertising revenue grew by 18.2% to Rs. 1681 million from Rs. 1422 million primarily due to increase in advertising volumes. Circulation revenue rise by 7.6% of Rs. 534 million in Q2 FY16 compared to Rs. 496 million in Q2 FY15, due to higher circulation & higher net realization per copy. Net profit grew by 32.75% to Rs. 867.40 million for the end of H1 FY16 compared to Rs. 653.40 million for the end of H1 FY15. Net Sales and PAT of the company are expected to grow at a CAGR of 12% and 26% over 2014 to 2017E 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 289.20 21224.39 19.19 15.07 2.87 12.00 D B Corp Ltd 334.90 61526.80 16.15 20.74 4.78 77.50 HT Media Ltd 81.70 19157.40 3.83 21.33 1.28 20.00 Jagran Prakashan Ltd 254.80 50606.00 7.23 21.41 4.90 175.00
QUARTERLY HIGHLIGHTS (PARENT BASIS) Results updates- Q2 FY16, 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 th September, 2015. Months Sep-15 Sep-14 % Change Net Sales 2269.20 1995.40 13.72 PAT 450.30 314.60 43.13 EPS 6.14 4.29 43.13 EBITDA 710.80 511.70 38.91 The company net profit jumps to Rs. 450.30 million against Rs. 314.60 million in the corresponding quarter ending of previous year, an increase of 43.13% due to improvement in EBITDA. The company achieved a turnover of Rs. 2269.20 million for the 2 nd quarter of the financial year 2015-16 as against Rs. 1995.40 million in the corresponding quarter of the previous year. In the same, Earnings per share of the company stood at Rs. 6.14 a share as against Earnings per share of Rs. 4.29 a share over previous year period. During the quarter, Profit before interest, depreciation and tax is Rs. 710.80 million as against Rs. 511.70 million in the corresponding period of the previous year, registering 38.91% increase primarily due to growth in advertising and circulation revenues. Break up of Expenditure Break up of Expenditure (Rs. in millions) Q2 FY16 Q2 FY15 Chg % Cost of materials consumed 857.50 847.60 1% Employee benefits expense 298.80 257.70 16% Dep and Amortisation exp 53.30 64.50-17% Other expenses 588.40 498.90 18%
Latest Updates During Q2 FY16, advertising revenue grew by 18.2% to Rs. 1681 million from Rs. 1422 million primarily due to increase in advertising volumes. Circulation revenues rise by 7.6% of Rs. 534 million in Q2 FY16 as compared to Rs. 496 million in Q2 FY15, due to higher circulation and higher net realization per copy. Bihar/ Jharkhand belt to continue increased traction due to State elections and growth potential. The company continue driving both volume and yield growth across geographies on the back of improving economic environment and festive season spending with Strong balance sheet position with Net Cash of Rs. 6301 million, capable of funding its expansion as on 30 th September, 2015. For the half year ended Sep 30, 2015 Net sales was at Rs. 4506.40 million, registered a growth of 10.01% compared to Rs. 4096.20 million for the half year ended Sep 30, 2014. 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). Hindustan has a strong regional presence and enjoys a leadership position in Bihar, Jharkhand and Uttarakhand whilst consolidating its 2 nd position in Delhi and UP 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, 2014-2017E HINDUSTAN MEDIA VENTURES LTD FY14A FY15A FY16E FY17E I SOURCES OF FUNDS A) Shareholder's Funds a) Share Capital 733.90 733.90 733.90 733.90 b) Reserves and Surplus 5358.10 6652.70 8189.47 9991.16 Sub-Total Net worth 6092.00 7386.60 8923.37 10725.06 B) Non Current Liabilities a) Deferred Tax Liabilities (Net) 64.70 58.70 56.00 58.02 b) Other Long Term Liabilities 0.20 0.60 0.95 1.14 Sub-Total Non Current liabilities 64.90 59.30 56.95 59.15 C) Current Liabilities a) Short term borrowings 203.30 984.50 1220.78 1416.10 b) Trade payables 762.00 971.50 1194.95 1338.34 c) Other Current liabilities 502.60 596.00 685.40 753.94 d) Short term Provisions 118.70 216.20 281.06 337.27 Sub-Total Current Liabilities 1586.60 2768.20 3382.19 3845.66 TOTAL LIABILITIES (A + B + C) 7743.50 10214.10 12362.51 14629.87 II ASSETS D) Non-Current Assets a) Fixed Assets 1803.10 1833.00 1858.66 1877.25 b) Other non-current assets 82.40 433.90 598.78 808.36 c) Non-current investments 1250.00 4591.10 5894.97 7427.67 d) Long Term Loans and Advances 234.70 120.70 132.78 143.40 Sub-Total Non-Current Assets 3370.20 6978.70 8485.19 10256.68 E) Current Assets a) Current Investment 2436.10 881.00 1215.78 1387.51 b) Inventories 329.60 448.40 460.06 510.66 c) Trade receivables 933.20 1071.70 1189.59 1308.55 d) Cash and Bank Balances 259.90 396.20 461.18 530.35 e) Short-terms loans & advances 231.20 207.20 171.98 151.35 f) Other current assets 183.30 230.90 378.73 484.77 Sub-Total Current Assets 4373.30 3235.40 3877.32 4373.19 TOTAL ASSETS (D + E) 7743.50 10214.10 12362.51 14629.87
Annual Profit & Loss Statement for the period of 2014 to 2017E Value(Rs.in.mn) FY14A FY15A FY16E FY17E Description 12m 12m 12m 12m Net Sales 7297.20 8185.80 9118.98 10030.88 Other Income 305.70 564.40 722.43 903.04 Total Income 7602.90 8750.20 9841.41 10933.92 Expenditure -5784.80-6520.90-7030.73-7673.62 Operating Profit 1818.10 2229.30 2810.68 3260.30 Interest -56.90-105.40-125.43-141.73 Gross profit 1761.20 2123.90 2685.25 3118.57 Depreciation -215.60-243.20-228.61-250.10 Profit Before Tax 1545.60 1880.70 2456.64 2868.47 Tax -433.50-472.10-651.01-760.14 Net Profit 1112.10 1408.60 1805.63 2108.32 Equity capital 733.90 733.90 733.90 733.90 Reserves 5358.10 6652.70 8189.47 9991.16 Face value 10.00 10.00 10.00 10.00 EPS 15.15 19.19 24.60 28.73 Quarterly Profit & Loss Statement for the period of 31 st Mar, 2015 to 31 st Dec, 2015E Value(Rs.in.mn) 31-Mar-15 30-Jun-15 30-Sep-15 31-Dec-15E Description 3m 3m 3m 3m Net sales 2020.90 2237.20 2269.20 2327.06 Other income 156.80 116.70 190.20 220.63 Total Income 2177.70 2353.90 2459.40 2547.70 Expenditure -1576.40-1692.20-1748.60-1810.46 Operating profit 601.30 661.70 710.80 737.24 Interest -26.70-28.70-30.40-33.44 Gross profit 574.60 633.00 680.40 703.80 Depreciation -56.60-55.00-53.30-56.18 Profit Before Tax 518.00 578.00 627.10 647.62 Tax -128.60-160.90-176.80-169.68 Net Profit 389.40 417.10 450.30 477.95 Equity capital 733.90 733.90 733.90 733.90 Face value 10.00 10.00 10.00 10.00 EPS 5.31 5.68 6.14 6.51
Ratio Analysis Particulars FY14A FY15A FY16E FY17E EPS (Rs.) 15.15 19.19 24.60 28.73 EBITDA Margin (%) 24.92 27.23 30.82 32.50 PBT Margin (%) 21.18 22.98 26.94 28.60 PAT Margin (%) 15.24 17.21 19.80 21.02 P/E Ratio (x) 19.08 15.07 11.75 10.07 ROE (%) 18.26 19.07 20.23 19.66 ROCE (%) 32.30 29.53 29.96 28.91 Debt Equity Ratio 0.03 0.13 0.14 0.13 EV/EBITDA (x) 10.30 9.39 7.39 6.36 Book Value (Rs.) 83.01 100.65 121.59 146.14 P/BV 3.48 2.87 2.38 1.98 Charts
OUTLOOK AND CONCLUSION At the current market price of Rs. 289.20, the stock P/E ratio is at 11.75 x FY16E and 10.07 x FY17E respectively. Earning per share (EPS) of the company for the earnings for FY16E and FY17E is seen at Rs.24.60 and Rs.28.73 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 12% and 26% over 2014 to 2017E respectively. On the basis of EV/EBITDA, the stock trades at 7.39 x for FY16E and 6.36 x for FY17E. Price to Book Value of the stock is expected to be at 2.38 x and 1.98 x respectively for FY16E and FY17E. The company grew faster than the industry in terms of both revenue and profits and robust performance, coupled with expected improvement in the macroeconomic environment, gives confidence that will continue to outperform the market in the coming year. Further strengthened its dominant leadership positions in Bihar and Jharkhand despite a higher intensity of competition. We recommend BUY in this particular scrip with a target price of Rs.335.00 for Medium to Long term investment. INDUSTRY OVERVIEW The Indian Media and Entertainment (M&E) industry is a sunrise sector for the economy and is making high growth strides. Proving its resilience to the world, the Indian M&E sector is on the cusp of a strong phase of growth, backed by rising consumer payments and advertising revenues across all sectors. The industry has been largely driven by increasing digitisation and higher internet usage over the last decade. Internet has almost become a mainstream media for entertainment for most of the people. Recent statistics and developments pertaining to the sector are discussed hereafter. With 161 million television households in 2013, India stood as the third largest television market after the US and China. It also has one of the largest broadcasting industries in the world with approximately 800 satellite television channels, 245 FM channels and more than 100 operational community radio networks. The total subscriber base for the Indian television industry is expected to increase to 173 million by 2016 from 95 million in 2009. The market size of the Indian entertainment industry is anticipated to grow at a compound annual growth rate (CAGR) of 14.2 per cent in the period 2013-18 and reach US$ 29 billion by 2018. The entertainment industry is dominated by the television segment with 45 per cent of the market share, which is expected to reach 50 per cent by 2018. Television, print and films together accounted for 86 per cent of the market share in 2013.
The Government of India has supported this sector's growth by taking various initiatives such as digitising the cable distribution sector to attract greater institutional funding, increasing foreign direct investment (FDI) limit from 74 per cent to 100 per cent in cable and DTH satellite platforms, and granting industry status to the film industry for easy access to institutional finance. The Indian media industry has tremendous scope in the gaming segment with the PC gaming segment, which was estimated at US$ 44.5 million in 2013, expected to touch US$ 112 million by 2018. Also, there is great potential for growth in the digital cable segment with the total subscription for DTH expected to increase to 75 million subscribers by 2018 from 37 million in 2013. Disclaimer: This document is prepared by our research analysts and it 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 we do not represent that it is accurate or complete and it should not be relied on as such. Firstcall Research or any of its 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. Firstcall Research and/ or its affiliates and/or employees will not be liable for the recipients investment decision based on this document.
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