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HT Media: Advertising revenues drive top line
Jan 21, 2011

HT Media has announced its 3QFY11 results. The company has reported a 27.0% YoY and 28.4% YoY increase in top line and net profits respectively. Here is our analysis of the results

Performance summary
  • Top line increased by 27.0% YoY on back of robust advertising revenues during the quarter. For the 9 months period, the revenues were up by 25.0% YoY
  • Operating margins declined marginally by 1.3% YoY during the quarter. For the 9 months period, the margins were up by 1.4% YoY.
  • Net profit margins remained almost stable at 10.3% during the quarter. For the 9 month period, the margins were up by 1.2% YoY.


Consolidated financial performance snap shot
(Rs m) 3QFY10 3QFY11 Change 9mFY10 9mFY11 Change
Net sales 3,661 4,651 27.0% 10,528 13,157 25.0%
Expenditure 2,917 3,767 29.2% 8,693 10,675 22.8%
Operating profit (EBDITA) 745 883 18.6% 1,834 2,482 35.3%
EBDITA margin (%) 20.3% 19.0%   17.4% 18.9%  
Other income 19 64 234.6% 114 175 52.8%
Interest 72 46 -35.3% 224 165 -26.3%
Depreciation 165 217 31.8% 526 622 18.3%
Profit before tax 527 684 29.7%         1,198         1,869 55.9%
Profit before tax margin (%) 14.4% 14.7%   11.4% 14.2%  
Tax 160 184 14.9% 314  546 74.0%
Profit after tax/(loss) before minority 368 500 36.1% 884         1,322 49.5%
Share of minority -5 22   -16 43  
Profit after tax/(loss)  372 478 28.4% 901         1,280 28.4%
Net profit margin (%) 10.2% 10.3%   8.6% 9.7%  
No. of shares (m)         235  
Diluted earnings per share (Rs)*           7.5  
Price to earnings ratio (x)*         19.7  
*Trailing 12 months and excluding extra ordinary items

What has driven performance in 3QFY11?
  • Topline rose by 27% YoY driven by a 26% YoY growth in printing/publishing segment (96% of sales) on back of boost in advertising revenues, both due to volume growth and better price realizations. However, this was slightly offset by 2% decline in circulation revenues of print segment due to lower realizations. The revenues from radio segment (4% of sales) also surged 80% YoY.

  • Operating profits were up by 18.6% YoY versus a 27% YoY top line growth due to 45% YoY growth in raw material costs that increased from 31% last year to 35% this quarter (as a % of sales).This was offset by slightly better management of other expenses like staff and advertising costs .

    Cost breakup
    (Rs m) 3QFY10 3QFY11 Change 9QFY10 9QFY11 Change
    Raw materials         1,135          1,648 45.2%           3,605         4,600 27.6%
    % sales 31.0% 35.4%   34.2% 35.0%  
    Staff cost             621             760 22.3%           1,889         2,243 18.7%
    % sales 17.0% 16.3%   17.9% 17.0%  
    Advertising & sales promotion             351             361 2.9%               889            969 9.0%
    % sales 9.6% 7.8%   8.4% 7.4%  
    Other expenditure             810             999 23.3%           2,310         2,863 23.9%
    % sales 22.1% 21.5%   21.9% 21.8%  
    otal cost         2,917          3,767 29.2%           8,693      10,675 22.8%
    % sales 79.7% 81.0%   82.6% 81.1%  

  • The readership for the English daily ‘Hindustan times' grew 2% q-o-q and it maintained its top position in Delhi with a significant lead over competitors in the premium segments. The Hindi daily ‘Hindustan' also registered a readership growth and maintained its top position in Bihar with 74% readership share and further consolidated its position in U.P and Uttaranchal markets with 10% readership growth. To strengthen its presence in U.P, it commissioned a new printing press in December 2010. In the business daily segment, ‘Mint' for which 81% of readers are exclusive, also registered a growth and consolidated second position in main markets of Mumbai, Delhi and Bangalore.

  • While net profits were up 28% YoY driven by strong top line performance, the margins remained stable at 10.3%.

What to expect?
We believe that the growth in advertising volumes will continue to drive HT Media's revenues. Further, the revenues will benefit from a hike in the ad rates effective from 15th January 2011. The company has got a strong balance sheet with a net cash position which we believe will help it in consolidating its growth further and exploring new opportunities. Though internet segment is still a loss making division, we believe it will break even soon. At the current share price of Rs 147, the stock is trading at 19.7 times its trailing 12 months earnings. While the growth prospects for the company look strong, we believe it is fairly valued at the current levels.

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